Belcanto Business Studio

Why say “again”? Because of this fact issue that has been discussed at the beginning of 2011 but again became the talk in the last week. So actually like it or not, willing or unwilling, slowly but surely turned out to plan the Government has continued to perform Rupiah Redenomination on our beloved. This is evident with the approval of the draft Redenomination by the government in mid-March 2011 yesterday. Now we just wait to see whether the proposal would be approved by Parliament to be implemented.

In concept Redenomination is the process whereby a government, in this case Indonesia discard 000 alias three zeros behind our rupiah currency with the aim to simplify the writing, recording, and mention of future transactions, but does not reduce the value of the transaction. So if we now have the money Rp. 1,000,000, – (one million rupiahs), then after Redenomination our money would be “only” Rp. 1.000, – (one thousand dollars) the new currency. This new value of one thousand dollars will be used to buy items (transactions) whose value is equivalent to one million today.

Why? If so simple then why do so many people talk about it? And there are several groups of people who actually oppose it? This is not apart from the trauma of the past where there is never an incident when cutting the value of money (sanering) on ​​the years 1959-1966. Hyper-inflation conditions at that time that caused the government to take action sanering where the dollar value of Rp. 500 cut to Rp. 50 and Rp. Cut to $ 1.000. 100, -.

Although different types, many community members will still be unable to distinguish between the two. It is feared could cause panic. Although in practice in several other countries have done Redenomination had been a hyper-inflation in the first few years of this policy is applied. Hyper-inflation itself is often the case for many things. One of the is the effect of panic psychology of people who “do not believe it” holds its currency so that the spending / buying assets. As a result the law of supply demand occurs and commodity prices could rise. Other causes can occur because the act of businessmen / traders who may be “naughty” that went along with raising the selling price of goods / services because they think their prices are too low. Recent increase in the goods that cause hyper-inflation could have occurred because of rounding prices up if there is no small change for the new currency.

Therefore will need the cooperation of various parties so there are no parties who stole the opportunity “raise the price of” selling their wares because suddenly the price is “impressed” cheap. Example we eat steak “side of the road” for Rp. 75.000 to Rp. 100.000, – with the sudden price redenominasi so “only” USD. 75 and easily impressed, then the steak  so Rp. 150, -.  same steak was immediately increased to 100% of the price duration. Still good if only rose 100%, once wrote elevated from Rp. 75 to Rp. 750 could wrote it? This is what makes the hyper-inflation.

Hyper-inflation will then fall and subside a few years later. This will be greatly influenced by the readiness of the government in this Redenomination to socialize and conduct market operations to prevent employers and rogue traders who raise the selling price of their goods. Or if this is not done carefully could have an impact on people who think the panic is cutting money again. So consequently people will buy other currencies and gold (LM) plus hyperinflasi going to get worse. Many countries especially developing countries that have done this redenominasi. While the last country to successfully perform the Turkish Lira Redenomination her. Within the last 10 years they Redenomination their currencies and quite successful and unsuccessful.

Back to the beginning of the Government’s intentions for his redenominasi the rupiah. For the longer term this will indeed be very useful and beneficial to the people and the dignity of the Unitary State of Republic of Indonesia and our currency. However, once again the process of implementation should be done and heavily guarded. And the socialization process that must be done in the long run so that no parties who seek an advantage in this condition. So that was one of them redenominasi intended to curb inflation even have caused the prolonged hyper-inflation.

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