www.CostaRicaTicas.com

Currently one U.S. dollar is worth about 517 colones. The price in colones of a $100,000 house is 51,700,000. The price in colones of a $300,000 house is too many numbers for most calculators to handle. It is extremely cumbersome and inefficient to do business with a currency with so many zeroes.

The cause of this problem is that for many years the Costa Rican government policy has been to have a continual high inflation rate, and its central bank has continually printed money at a rate faster than the economy's demand for money. The money supply has grown at a rapid rate for many years. Another way to say it is that they have devalued the colon in relation to almost every other currency in the world.

Why have they been doing this? Because inflation is a tax on holders of the currency. It is an insidious way to tax the people without the people understanding that they are being taxed. As with every country in the world that experiences long bouts of inflation, the government spends more than they tax, and the difference is made up by the central bank by printing excess currency. The Costa Rican government is either unable or unwilling to tax enough to pay all the bills, so they instead devalue the currency. In Germany at the end of World War 2 it took a bushel basket full of marks to buy a gallon of milk because the government's only option for paying its bills was to print money. Costa Rica's inflation rate in the past couple of years has been about 11% to 12%, not in the same league with Germany. Nevertheless, like compound interest, compounding the devaluation rate of the colon can after many years result in a huge amount of devaluation. That is why there are so many zeroes in a few dollars worth of colones today.

What do governments always do after they have inflated by large amounts, and thus have too many zeroes in their currencies? They drop some zeroes. How do they do this? They issue a new currency to replace the old currency. There is no doubt that at some future time Costa Rica will issue a new currency. It may be called "New Colones" or it may be called "Oscars" in honor of Oscar Arias, the current President of Costa Rica, or it might even be called "Jimmies" to honor the great inflator from up north, Jimmie Carter. They can name it anything they want. What is certain, however, is that it will have fewer zeroes. One new Jimmie will likely be worth 1.000 colones, and all colones will need to be exchanged over a certain period of time for Jimmies. The result of this would be that instead of 1,000 colones being worth about two U.S. dollars, one Jimmie would be worth about two U.S. dollars.

This can happen and it will happen. The only question is when. In view of the inefficiences of dealing in all of these zeroes, it would be wise to do it soon (are you listening Oscar?). However, in the land of manana, it may be a long time coming.

Several zeroes will be dropped one of these mananas.

You heard it here first.

I suggest we call the new dollars 'Ronnie-babies' after the king of borrow and spend. When he took office, I was paying $150 a month rent and gas was a dollar a gallon. To be fair, we could also call it a 'Lyndon B.' in honor of our first 'guns and butter' president.

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"The only normal people are those you don't know very well." Joe Ancis

I will tell you this . What about America , We need to do this first. Lets let $ 1.00 be a dime . Lets let a 10 be a 1 and a 100 be a 10. Take Care , H.

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Always nice to wake up and see what will happen today

Sunshine,

While yours was an interesting post, it strikes me as entirely irrelevant in the context of mongering in Costa Rica. Granted, I am not an economist or business major, so maybe I just missed your point. Except for your example of calculators being obsolete if you are trying to buy a house in CR, you have not shown how the number of zeroes in a colone impacts us.

What is important to me is that with $42 and a CRT VIP card, I can go to Zona Blue, get a massage, hummer, and have a sprightly spinner mount me and give me a nut. Further, it is half that amount at New Fantasy.

BTW, Sunshine, this post is not meant to disrespect you. However, a week to go before my next trip has rendered me argumentative.


Ciaociao

Ciaociao,

Many new CRT members arrive in Costa Rica for the first time and don't speak Spanish and don't understand the currency or its exchange rate. Forty Jimmies is certainly easier to comprehend than 51,700 colones.

As to how it affects "mongering" activities, this website covers many more activities than just your favorite.

I like walking arounf with 100,000 in my pocket


BKTUNA
I am never going home

At least the math is simple these days. You can just think of a 10000 col note as a $20 bill. Not exact but gets you close. Of course the 5 col. coins won't buy anything but neither will a penny in the US. rbc100

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In Search of Fine Kittens,
Please... Bring back the Muff

Good evening gentlemen,
RBC you hit the nail on the head. I will use your converstion on my trip in Oct. I have my cheat sheet with me and also my spainish to $ cheat sheet. I guess I could go up to any of the girls around pull my $ and cols from my wallet and say "I want this much". I feel that they would not cheat me, or would they. Just kidding. The barter is part of the hunt/game.
Just a thought. Thanks
Bobshere.

I have traveled extensively and dealt with many foreign currency over the years. Yes it is a bit of a hassle to adapt to diffrent exchange rates and do the calculations.

The bottom line, in my opinion, is if it to much trouble for you to handle the zeros stay home and feel comfortable. Expecting the host country to make your life simple is classic "ugly American".

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Pura Vida
Only Irish coffee provides in a single glass all four
essential food groups:
alcohol, caffeine, sugar and fat.
Alex Levine

Yes ID, the last thing CR needs is to make the currency gringo-friendly for the mentally challenged that would take 15 years and billions of colones What took you so long to say it, you're slacking. Bring DingDong back!

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Living well is the best revenge
http://www.youtube.com/watch?v=MwUtj_YnNoY

Geez Paco you better not go to Italy. You will never be able to figure out how much an espresso costs if you are lost trying to figure out the colon. Better limit your travel to the Bahamas where a simple 1 to 1 ratio will not confuse even you.

_________________
Pura Vida
Only Irish coffee provides in a single glass all four
essential food groups:
alcohol, caffeine, sugar and fat.
Alex Levine

Eh, the euro did away with that 3000 lira to the dollar bullshit...

But the explanation I always heard for the lira was that "everyone in Italy is a millionaire, and they like that!"

If your calc can't handle the 0's, get a better calc... Most of this math should be done in your head...not the little one, the BIG one...

1 USD = 1,354,440 Turkish Lira. Sunshine strike Turkey off the list

My dinner bill in Colombia with a chica and her family was just under a million. That was without dessert