# How is Iceland functioning after bankruptcy? **URL:** \ **Category:** Factual Questions\ **Created:** [December 20, 2008, 6:32pm UTC](https://boards.straightdope.com/t/how-is-iceland-functioning-after-bankruptcy/478094 "2008-12-20T18:32:48Z")\ **Posts on this page:** 8\ **Page:** 2
**Author:** ![sailor](https://avatars.discourse-cdn.com/v4/letter/s/a587f6/32.png) [@sailor](https://boards.straightdope.com/u/sailor)\ **Post date:** [December 21, 2008, 5:21pm UTC](https://boards.straightdope.com/t/how-is-iceland-functioning-after-bankruptcy/478094/21 "2008-12-21T17:21:10Z")
> [@Tapioca\_Dextrin](#): > > [In the banana belt](http://en.wikipedia.org/wiki/Banana_production_in_Iceland) šŸ˜ƒ WOW! Iā€™ll be darned! I learn something every day! ---
**Author:** ![Ace309](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ace309/32/1050_2.png) [@Ace309](https://boards.straightdope.com/u/Ace309)\ **Post date:** [December 21, 2008, 5:27pm UTC](https://boards.straightdope.com/t/how-is-iceland-functioning-after-bankruptcy/478094/22 "2008-12-21T17:27:18Z")
> [@clayton\_e](#): > > I always wondered.. Could a small nation secretly print a small amount of bills and somehow inject it into the economy.. Hell.. Even just have a pack of 20s ā€œfall off the truckā€ here and there? (Iā€™m sure thereā€™s a more effective and less intrusive way to do this.. Hide it in paperwork and such). > > Just a thought, one which Iā€™m sure Iā€™ll be set right on, and Iā€™m not exactly schooled in economics. Thereā€™s a section in Williamsonā€™s Macroeconomics about this. I donā€™t have my book right in front of me, but itā€™s known as the Friedman-Lucas Money Surprise model. Long story short, the mechanism works slightly differently from the inflation caused by open printing of money, but the result is the same. ---
**Author:** ![Racer1](https://avatars.discourse-cdn.com/v4/letter/r/ee59a6/32.png) [@Racer1](https://boards.straightdope.com/u/Racer1)\ **Post date:** [December 21, 2008, 6:14pm UTC](https://boards.straightdope.com/t/how-is-iceland-functioning-after-bankruptcy/478094/23 "2008-12-21T18:14:50Z")
Is the UK/Iceland hair pulling episode over now? I really want to visit Iceland, but I donā€™t particularly want to be arrested on Cod terrorism charges the minute I step into a bar, either. ---
**Author:** ![Elendil\_s\_Heir](https://avatars.discourse-cdn.com/v4/letter/e/7cd45c/32.png) [@Elendil\_s\_Heir](https://boards.straightdope.com/u/Elendil_s_Heir)\ **Post date:** [December 21, 2008, 6:47pm UTC](https://boards.straightdope.com/t/how-is-iceland-functioning-after-bankruptcy/478094/24 "2008-12-21T18:47:28Z")
> [@Bosda\_Di\_Chi\_of\_Tricor](#): > > Well Iā€™ll be dammed. :eek::smack:šŸ˜•šŸ†’ Seconded. God, I love the Dope! ---
**Author:** ![WormTheRed](https://avatars.discourse-cdn.com/v4/letter/w/bbe5ce/32.png) [@WormTheRed](https://boards.straightdope.com/u/WormTheRed)\ **Post date:** [December 21, 2008, 6:57pm UTC](https://boards.straightdope.com/t/how-is-iceland-functioning-after-bankruptcy/478094/25 "2008-12-21T18:57:40Z")
> [@Laudenum](#): > > Soā€¦would this be a great time for a tourist to visit? > [@Racer1](#): > > Is the UK/Iceland hair pulling episode over now? > > I really want to visit Iceland, but I donā€™t particularly want to be arrested on Cod terrorism charges the minute I step into a bar, either. As long as your name isnā€™t Brown or Darling, youā€™ll be well recieved. But Iā€™m pretty sure theyā€™ve sorted most of the mess out. The assets will be sold off and the rest is to be covered 50% by Iceland and 50% by the UK/Netherlands. ---
**Author:** ![sqweels](https://avatars.discourse-cdn.com/v4/letter/s/f19dbf/32.png) [@sqweels](https://boards.straightdope.com/u/sqweels)\ **Post date:** [December 21, 2008, 7:15pm UTC](https://boards.straightdope.com/t/how-is-iceland-functioning-after-bankruptcy/478094/26 "2008-12-21T19:15:45Z")
> [@Kendall Jackson](#): > > Stores have got a fixed amount of stuff, and they normally see that stuff moved from the shelves at a steady rate. But if everyone in town realizes that the Money Fairy left a heavy wad of cash under their pillows last night, theyā€™re all going to go out and buy the next day. If I own a store, and I see everyone rushing my doors to try to scoop up my wares, Iā€™m going to jack up prices to make the most of it. When all the stores jack up their prices, thatā€™s inflation. The problem compounds, too, with expectations. If the Money Fairy visits everyoneā€™s houses every day for a week, then itā€™s going to be totally reasonable for the stores to jack up their prices again the next business day. After all, once the Money Fairy gets going, why would she suddenly stop? Does this phenomena really happen on the retail level? I kind of canā€™t see store owners raising their prices within a day to exploit a surge in the popularity of their products. Iā€™d say theyā€™d rather keep their prices low to maintain customer loyalty and raise them when faced with increased wholesale costs and/or overhead costs that theyā€™re forced to pass along. But when their suppliers start getting increased orders, it puts them in a position to bargain for higher wholesale pricesā€“and the same holds true for _their_ suppliers. So I think when demand gets passed along to a place where actual haggling take place does it generate inflation, which then gets passed back up the food chain. ---
**Author:** ![sailor](https://avatars.discourse-cdn.com/v4/letter/s/a587f6/32.png) [@sailor](https://boards.straightdope.com/u/sailor)\ **Post date:** [December 21, 2008, 7:37pm UTC](https://boards.straightdope.com/t/how-is-iceland-functioning-after-bankruptcy/478094/27 "2008-12-21T19:37:43Z")
What haggling? You believe there is no ā€œhagglingā€ at the retail level? The haggling goes on every minute of the day. Every single buy / not buy decision by a customer and every decision to set a price by a retailer is a haggling decision. The aggregate of all those decisions are the market at work and it is continuous. The whole premise of this proposal is a fallacy. Suppose doing X (increasing spendable cash) has a good effect Y (raises demand) and a bad effect Z (raises inflation). The fallacy is based on the wishful thinking that we can do just a little of X so that Y would be measurable but Z would be inmesurable. In other words, letā€™s ignore Z as too small to count and letā€™s inflate Y as worth measuring and worth while. Likewise it is a fallacy to think raising or lowering prices by very little will have an effect on inflation but no effect in buying decisions. ---
**Author:** ![Racer1](https://avatars.discourse-cdn.com/v4/letter/r/ee59a6/32.png) [@Racer1](https://boards.straightdope.com/u/Racer1)\ **Post date:** [December 21, 2008, 9:16pm UTC](https://boards.straightdope.com/t/how-is-iceland-functioning-after-bankruptcy/478094/28 "2008-12-21T21:16:38Z")
> [@WormTheRed](#): > > As long as your name isnā€™t Brown or Darling, youā€™ll be well recieved. > > But Iā€™m pretty sure theyā€™ve sorted most of the mess out. The assets will be sold off and the rest is to be covered 50% by Iceland and 50% by the UK/Netherlands. Cool, thanks! I should be ok then - last person who called me Darling was pregnant 20 seconds later. [/Flashheart] šŸ™‚ [Previous page](https://boards.straightdope.com/t/how-is-iceland-functioning-after-bankruptcy/478094.md?page=1)