Bloomberg.com: Latin America

Bloomberg.com: Latin America: Ecuador May Be Forced to Scrap Dollar After Default

This guy is totally screwing up his country's economy:

Ecuador defaulted on their debt. Now nobody will lend to them. Oil revenues are dropping. The economy is contracting. How do you stimulate the economy? You can't sell government bonds to finance - you just flipped off the borrowers by defaulting.

Problem is, monetary policy doesn't work either - you can't print money, because it's in dollars. You can't set interest rates - lower interest rates stimulate the economy - but remember the U.S. has an interest rate of 0.0-0.25%. Hard to beat that.

So what do you do? You change your money, scrap the dollar. Let's call it Funny Money. Originally one dollar buys one funny dollar. Except, now you can print more money. You do it in secret, in the basement. Soon everybody has lots of funny money and is super-rich. In funny money. But now, $1 million funny dollars buys $1 dollar.

Hey - still better than Zimbabwe.