Law / Why is US $ getting so high or Polish zloty falling? [60]

That's basically my point. It's insane. However, I can't really do anything about the other countries. I CAN do something to wake people up to these facts here in Poland. We all can.....

BTW - Try asking a politician about M3 (money supply) and see what kind of response you get. Just try it and see.....

Law / Why is US $ getting so high or Polish zloty falling? [60]

Thanks again for the interesting discussion..... I'll comment below each item.

Does it matter what nationality I am? I live in Poland and pay taxes here. At what point am I "good enough" or "qualified" to comment? After 10 years paying into the decrepit system? What's the minimum criteria? Again, it's a Republic.... so Elvis has left the building, and socialism is on the way out....


Own country? Where are you from? Do you live in Poland? Is everyone in such a high ivory tower that we can't ask questions and comment? Anyhow, who's telling who how to run things? I'm speaking from the point of view of liberty and history. Empirical evidence proves my previous statements correct. If we want examples, we don't have to look further than Greece or Ireland..... BUT we could continue across the pond to the USA where it's quite possible they might go "tits up" because they over-extended themselves. So how long should we wait before sounding the alarm about BAD economic decisions?


Ok, let me clarify are you labeling a majority of Poles as socialists? I agree that there are undoubtedly socialists still here in Poland, but I believe they are a dying and shrinking minority.

To that point, let's take a look at the young generation. More educated than ever before, and yet unable to find a job in their fields. It's a HUGE problem. I encourage you to talk to a recent graduate. I know a young man in his late twenties that just graduated SGH and all his classmates are JEALOUS that he found an internship making a measly 1000 zloty to the hand monthly. They've all been looking for work for about 8 months - some for 2 years!! Hoe long do you think an educated economist, doctor, or nurse is going to wait to get a job?? It's a key question. If young people don't believe they will get a fair shake, they will either leave or fight. In psychology it's called FIGHT or FLIGHT. It's a human reaction. We already have seen the FIGHT aspect in Northern Africa and some in the Arabic countries. We've seen a small bit of that in the UK. Don't you recall what happened jsut a few weeks ago?? We're about to see it in the USA, too but I don't know if it will be a fight there or not - it depends on the elections in 2012.

So, my question: Do you think young people will sit idly by while they get screwed out of their money, unable to save because the burden of previous generations is so enormous? Whatever "socialist" fantasies they were present will vanish as the tax burden becomes so great. Even Tusk even had to break his campaign promises not to raise taxes! He raised VAT to 23% (other VAT's raised as well) as well as excise taxes across the board on fuel, vehicles, cigarettes, alcohol, etc. etc.....

So when inflation is up, unemployment is up, social benefits are decreasing, and salaries are down, where do you think the chips will fall? I'd be shocked if we didn't see a protest or two in the next decade. I'd be further surprised if the young generation didn't overturn this "socialist" ways you referred to. Either that or start leaving in flocks. Oh, but wait lots of people did that already..... some came back, but lots didn't. Step one. We're waiting on step two. I know I'm not crazy because I was talking last week to the president of a large bank in Poland and he even echoed fears that young people could start protesting and doing the same things as seen in the UK or in Africa. What would you say if your bank's president said that? Would you take it seriously? Maybe it's time for people to start thinking about this.....


I see your point entirely. I guess I just don't agree there. I know in big corporations 40 million dollars can be called "peanuts", bit it is all relative. Poland is not the UK and not the USA. We don't hold the world's reserve currency and MOST external investors are not greatly concerned with Polish economy inasmuch that we can just continually print cash to monitize the debt..We can't run up a big or even mild deficits here because it WILL sink the country with no way out.

Everyone, we have to remember the state has NOTHING apart from what it can forcibly take from its citizens. So if I'm taking 40 million from Polish citizens, (or worse from other EU citizens), then the time will definitely come to pay the piper. THat 40 million would otherwise be saved or put to work in the economy. Failing to see this is a misunderstanding of how the free market works. When you take away capital (savings) from people no matter how much, it REDUCES the amount available to be used both for investments by companies and by consumers to purchase goods. Anything else is just robbery in disguise. "A fool and his money are soon parted." Let's NOT be fools with our money, even more so with other people's money.

Hi CP! Thanks for joining in the conversation.

Sure, lots of thing contributed to Rome's fall. But you have to admit the monetary policy was key. Don't take my word for it, read history. They over-extended themselves and started de-valuing their currency. It's not rocket science, rather it was a recipe for disaster. One that other countries are following. One that I hope Poland will avoid.

As for gold supply or production, maybe you know something everyone else doesn't? According to the world Gold production, gold output is around 2,000 tons annually. So to say "there's not enough" is not in the least bit true. Here's the chart: en.wikipedia.org/wiki/File:World_production_gold2.jpg

Law / Why is US $ getting so high or Polish zloty falling? [60]

Ok, I see the point about the "insurance" aspect, I just disagree. It's not the government's job to bail out bankers or private investors that made bad choices. LEt the free market sort those guys out. Anyhow, bailouts create something that's called "MORAL HAZZARD". I'm sure you're familiar with that term.

As for the numbers, you're correct. I checked dlugpubliczny.org.pl/pl and it is more like a deficit of 790 Billion if I read it correctly. So, it would take longer to pay off, but hey 40 million dollars is a good start!

...and the argument of 1 zloty per person, well that would be per taxpayer, and since there are supposedly about 38 million Poles and some percent working and paying taxes (I have no idea at the moment what that is), but let's say for discussion sake it's 55%... then you've given every taxpayer about 2 zloty. Then we have to add in the reduced government bureaucracy, and the salary of the guys no longer needed to collect the money, and the "economists" they hired, and the office space, and insurance/health benefits and so on, and so on.... So that 2 zloty becomes probably quite a bit more. But even if it is only 2 zloty per tax payer - it's their money. After all, it's supposed to be a Republic here, and I don't recall any referendum on a bailout of any kind..... so the government is then demanding something which it does not have? Doesn't sound very much like a Republic to me....

Anyhow, it's all about understanding capital and what happens with mal-investment. Bankruptcy or liquidation or sale is the natural correction a free market provides to bad investments. Let's say I decide today to start a musical band and tour Poland. I'd buy or rent a bus, musical gear, audio gear, and so on.... If that band goes broke form lack of ticket and CD sales, I need to sell off the company or any assets of value to repay my debts. It's called bankruptcy. It's not fun, but it's there to take care of mal-investment. It also serves as a waring to the rest of us entrepreneurs of what MIGHT be waiting for our companies or investments if we make the wrong choices or take on too much risk. It's that fear that makes us use money wisely. You hear now of banks being RISK-ADVERSE.

If we take away this risk and give money away at record-low rates, we encourage the bad investments. Doesn't anyone recall the American housing crisis? Too many people took adjustable rate loans. Once those loans adjusted up, many could no longer afford the payments and defaulted. There IS NO BAILOUT for individuals. Even if the government has the money from the IMF, what the hell makes you think they're going to give it to YOU or ME in a real crisis situation? Do you REALLY believe they're going to show up at your office with cash to help you if/when the economy tanks? Are you living in a fantasy? Can you show me in history when this ever worked?

History shows this money rarely if ever goes to private companies, instead it finds it's way into the banks and mega corps which make up a SMALL percentage of the total real economy. I read recently that in Poland like many places, small business makes up about 95% or so of the market. What are we doing to help small companies? Show me the plan for helping small business. You can't. It doesn't exist. Government doesn't give a fair deal to anything but big corps that are able to make big deals and trade favors. It's call crony capitalism.

Law / Why is US $ getting so high or Polish zloty falling? [60]

Thanks for the reply. So let's take these one by one:

Who can predict the future? Well the finance ministry and economists seem to be all too eager to polish up their crystal balls for the media, so maybe ask them?

In the meantime, I'm not saying all insurance is bad. I'm saying AFFORDABLE insurance is good. EXPENSIVE insurance is not a good idea for a country trying to make budget cuts and get the GDP-to-Debt ratio back to the ERM2 standards. THat's what got us on the topic to begin with - currencies.... and Poland trying supposedly to get to the Euro zone.

I find most of what politicians are claiming publicly about finance and the Euro adoption to be disingenuous.

Law / Why is US $ getting so high or Polish zloty falling? [60]

So, you said:
delphiandomine et. al.
It's not a bad idea to have it available just in case - certainly, makes more sense than needing it and not having it available.

Ok... Well if you can't afford it , then IT IS a BAD idea. Ever heard this addage: "No deal is a good deal if you don't have the money" ??

How could we be paying a foreign government for a 40 million dollar insurance policy when we could be paying OURSELVES that money by getting rid of that tax burden? Just think about how far that would go here in Poland. You wanna talk about "RECOVERY" like you've never seen?? Direct that money right here into the economy. Then, if people save, invest, or blow it all, we're still MUCH better off than sending it to a far away land, much less the IMF. THe same IMF that held Argentina's hand and walked their economy off the cliff. Yeah, that IMF.

Insurance Shminsurance....... as I asked before - against WHAT? I know I could take out a 20 million life insurance policy, but WHY? If I had that much net worth it would make sense. But if I couldn't afford it, then I'd be setting myself up for financial ruin.

It's either one way of the other. Either Poland really is doing ok and everything is fine or it isn't. Which will it be gents? I agree affordable insurance is prudent, but as I mentioned with such a HEFTY price tag, it's approaching ludicrous. Let's put it into perspective.... The entire DEFICIT of Poland in 2010 (as I read) was only about 10 bln Euros. So why pay 40 billion dollars to protect +/- 10? Does that sound reasonable?

Here's another one to frame my argument: In 2011, Poland's spending budget is supposed to be about 313 Billion zloty (around 105 Billion dollars). The USA/IMF credit line is costing 40 million dollars or roughly 120 million zloty. This doesn't seem right, does it? Now do you see where I'm coming from?? Who still thinks it's a great value and a great idea at that price? I could pay off the entire deficit in one year by canceling the IMF credit line. We all know that being OUT of debt is MUCH cheaper and better off than the inverse. So, if I'm wrong, what's going on over at the finance ministry? Surely they can see the same numbers as I.

Law / Why is US $ getting so high or Polish zloty falling? [60]

Bullfrog, You mean creditworthiness...... like for example of the USA who just got a lowered rating or did you mean countries like Ireland or the other PIIGS countries that just tanked or are in the process of tanking? I'd like to know what individual or company goes out and gets a loan just to PROVE he/she/it can? That's absurd...... just "because everyone else does it" is NOT a good excuse. I thought adults gave that line up after adolescence.... ;-)

Seriously, 40 MILLION DOLLARS a year is a hell of a lot for a country that supposedly has a self-described "budget hole". Sure, they'll cut public sector wages and jobs, and save few hundred thousand from the budget, but the HUGE elephant in the room - a 40 MILLION dollar service fee remains? That's REALLY bad policy. In fact that's nothing more than an expensive P.R. stunt! If we're gonna be honest and call it insurance, it begs the question. INSURANCE from WHAT? It's not like they walk in the store and ask the shop keeper "How Much?" and he replies "$40 million". "Ok, I'll take two of those."

So back to my original question - WHY?? If they really don't need it and if they're really not in trouble, and they don't anticipate problems? WHY and WHAT for?

Law / Why is US $ getting so high or Polish zloty falling? [60]

Thanks for the link. Interesting. So maybe I was wrong, however, I think it could be as peterweg suggested as being mis-stated. I know Jan Cienski. I'll call him and ask. I'll post the response. Thanks again for the posts and interesting discussion. :-)

The other issue from the FT article (linked above) is about the "$30bn credit line with the International Monetary Fund" which scares me a heck of a lot more than a few houses backed by CHF. I can't imagine ANYONE taking credit when they don't need it. DOUBLY so for a government. If Poland isn't in trouble and doesn't expect to be in trouble, that's a heck of a line of credit to pay for. Yes, I said PAY, because it's not free. The Government(s) which controls the IMF has to make money somehow.....

Back in 2010 they announced the "don't need it: dalje.com/en-economy/poland-no-longer-needs-imf-credit-line/299894

and here's the numbers on how much it s costing Poland: 40 million DOLLARS a YEAR to maintain! I don't see how that's a good deal for Poland at all.......

Law / Why is US $ getting so high or Polish zloty falling? [60]

Sorry, you typed "HAS TO" abandon the zloty??? You mean like the UK abandoned the GBP Pound Sterling, right? I've never seen so many economic blunders in one post......

Then there's your point comparing GBP, PLN, EUR, and RMB all in the same sentence. What are you trying to say? No country is ever FORCED to devalue it's currency. It's something politicians and central bankers decide to do because they think they can get away with it. History shows that for a little while, they usually DO get away with it until the truth gets to the people and/or the market collapses or makes a HUGE correction. To really compare fiat currencies is mostly folly. There's no standard at which to reference. One might say the "USD" is the standard, but that one fluctuates as well.....

If anyone is interested in this, I'd encourage you to read up on FIAT currency. Rome was destroyed over fiat when they started putting less and less silver into their currency the Denarius. en.wikipedia.org/wiki/Denarius

The truth is, that unless a currency is backed by a commodity (traditionally gold or silver, etc.), it has no other value that what the users perceive. To illustrate my point, let's say we find a chest at the bottom of the ocean.... Half of the chest was old Polish zloty and the other gold. Which one has value? Exactly, the gold. Feel free to fill in the blank with virtually any paper currency in history. You now understand. The Austrian Free-Market economists like Mises, Rothbard, and Hayek teach and warn about this. Read those guys and you will REALLY get an understanding on what money is. For starters, I'd recommend reading things like this from the Mises Institute: mises.org/daily/5577/The-Lure-of-a-Stable-Price-Level

Ok, so returning to the main subject about Euro adoption in Poland..... Poland "should" adopt it according to the Lisbon and Maastricht treaties, but it's not set in stone, so not an "enforceable" law per se. So, sorry, try again..... en.wikipedia.org/wiki/Maastricht_treaty (see point 2 near the top). and this: en.wikipedia.org/wiki/Treaty_of_Lisbon

So if we want to get technical, those treaties set up something called the ERM2 mechanism which is essentially a "waiting room" for a country that wants to get the Euro. How does it work? Basically, the exchange rates and deficit, debt-to-GDP, inflation, and exchange rate must be fixed or semi-fixed within a 2-year period after ECB approval. Then, and ONLY then can Poland adopt the Euro. *IF* during that 2-year period any of those numbers go outside the strict bounds set by the ECB, the whole deal is canceled. Since the ERM standards are so strict for money-printing central banks nowadays, most Polish economists largely laugh about the government's Euro adoption dates being realistic (although many support the idea of a common currency itself). Oddly enough, most economists KNOW THIS and refuse to speak out about it. They've been taught Keynesian economics which teaches absurd things like running up deficits and increase taxes during bad times. Mostly, the opposite is true.

Specifically in this case, Poland's problem is that the central bank, NBP is printing too much money or monetizing debt as well as doing lots of currency swaps to finance government spending and entitlements (public healthcare, beczikowe, retirement, etc...). How do we know, you ask?? Watch the supply of cash. Money supply is measured by a statistic called M3. Download the spreadsheet yourself from the NBP site and see the increases over the years: nbp.pl/homen.aspx?f=/en/statystyka/m3/m3.html and also here you can see past example reports: The last M3 statistic I read shows a 9% increase year to year. WOW! If the cost of anything in your home (or the value went down) by 9% you would be talking about it. Yet, not a word from Polish economists that are told to kowtow to the financial institutions. literally....

So, sadly, Poland's situation is not all that rosy as MANY would expect or assume. They're by-and-large copying from the USA's playbook in many (but not all) ways.

Law / Why is US $ getting so high or Polish zloty falling? [60]

Hang on a sec LWOSKAKRAKOW....

Where did you get you're numbers? For example:
"54% of Polish homebuyers who got their mortgages in Swiss Francs". Could you provide a source or link to that data? I have a feeling that's not accurate. If so, we'd already be in a meltdown as the WIBOR adjusts those borrowers' payments UP. My understanding is that loan payments taken out in Franks are re-calculated on a 6-month WIBOR (warsaw inter bank offer rate) rate between banks and then a 2 or 3-month rate for individuals. This means individuals do see increases, but it's not like one day it's 500 zloty the next month it is 1000. Obviously many people would default.

Life / American moving to Poland. How do I get/What is the cost of a cell phone, cable, etc...? [16]

My advice is to buy an Apple stateside. There is excellent Mac support in Poland. Windows here is the SAME problems as everywhere else (maybe worse with viruses). I know that ther is Apple support in Poland: MacPomoc.pl near Warsaw and there is another one in Kraków called RCS that I've heard is ok.

As for internet - I have 2MB symmetrical with a static IP and pay 73 PLN monthly. The USB modems that phone companies offer is likely *MUCH* more comfotable. A company called PLAY offers good packages with a free USB stick modem for 80 zloty a month. If you have a laptop, I'd recommend that. The guys at MacPomoc helped me get mine set up without any funky software or drivers to mess with.

Bike - It's too difficult to transport and there are TONS of neat ones here for not too much casg. Buy that here. Probably around 400 to 600 zloty for an average mountain bike.

Phone - GSM phones only (unlocked AT&T, T-Mobile GSM phones would be ok, but I recommend buying or unlocking here. If you know you have a multi-band GSM it'll be fine.). Servies cost about 100 zloty per month give or take a lot depending on what you need. Just a general number to answer your general question.

IN GENERAL - you need to immediately have your Grandma get you zameldowane "signed" to her flat at the local town hall (GMINA). Then go through the process of getting a Carta Pobytu from the Immigration Office. You'll need that as well as a PESEL and NIP to get most services in Poland. The easy way is probably to have grandma sign all the documents in the beginning. You can search this forum and online to find out more about the process of what I described above. They aren't difficult, but mostly just time consuming. Best to do it in the spring and summer months as standing in line outside immigration (or potentially other government offices) in the cold can get old fast. I'd advise you leave yourself 2 months prior to studies to get all that worked out (or at least leave time in your "working hours" schedule to go to the government offices). As I said, it's quite a process if you don't speak Polish and/or have little or no help. usually most places have translators swarming around willing to help for a fee. Just make sure if you hire them you get a written price in advance. Those costs can add up fast. Expect to put aside about 300 +/- zloty for that karta pobutu. I know it is easier now, but it does take a bit to get it all done.

Keep searching the forum and you'll find a lot of your question have already been asked/answered. Good luck!