After World War II, Finland implemented a unique policy called setelinleikkaus where citizens cut their banknotes in half to avoid hyperinflation caused by post-war demand. The policy failed as it only affected a small fraction of the total money supply and citizens anticipated it by depositing their cash. In contrast, Belgium’s Operation Gutt dramatically reduced the entire money supply by two-thirds, eventually leading to low inflation and rapid growth. The experiment challenges the quantity theory of money and may foreshadow a future where authorities control spending by freezing accounts, a controversial and precise inflation-fighting tool. Finland’s central bank remains silent on the matter, suggesting a distrust towards authorities potentially due to the policy’s failure.
http://jpkoning.blogspot.com/2024/11/setelinleikkaus-when-finns-snipped.html