Krisis Ekonomi Terparah Indonesia Karena Cetak Uang Kebanyakan - PART 02 | 1961-1965

Summary

This video, hosted by Luna on the 'Ngomongin Uang' channel, is a continuation of a previous episode on the 'Inspect History' channel, exploring Indonesia’s economic crisis from 1961 to 1965. It highlights how military spending on campaigns like Trikora and Dwikora, along with massive infrastructure projects, led to government deficits. The government's solution—printing more money—triggered hyperinflation, with inflation reaching 594% in 1965. The video covers the impact of this economic mismanagement on daily life, how the crisis worsened, and touches on the political shifts that followed.

Takeaways

• 💬 This video continues from part 1, which discusses Indonesia's post-independence conflicts, leading to economic challenges.
• ⚔️ Military spending became a major burden on the national budget, with operations like Trikora (West Irian) and Dwikora (Malaysia confrontation) draining government funds.
• 💰 Indonesia received significant military aid from the Soviet Union and the U.S., leading to the nation having one of the strongest militaries in the Southern Hemisphere at the time.
• 📉 Despite military strength, Indonesia’s economy declined in the 1960s, with exports like rubber dropping significantly due to falling prices and international tensions.
• 🚫 Economic embargoes, particularly against Malaysia, worsened Indonesia’s export crisis, making it difficult to find new markets for rubber and tin.
• 🏗️ Huge national projects, like the construction of TVRI, Monas, and Gelora Bung Karno, took priority over essential infrastructure in rural areas, adding to financial strain.
• 💸 To cover rising costs, Indonesia printed large amounts of money, causing rampant inflation. Between 1962-1966, the money supply increased 150-fold, leading to hyperinflation.
• 📈 Inflation peaked at 594% in 1965, making basic goods like rice and eggs unaffordable and leading to widespread scarcity.
• 🔨 Measures such as price controls and wage payments in rice failed to resolve the crisis. Even redenomination of currency (Rp1000 to Rp1 in 1965) couldn't stop the economic collapse.
• 📉 Inflation finally began to stabilize after the government stopped printing money, but this happened only after significant political changes, including the fall of Sukarno.

Q & A

What historical events does the video discuss that contributed to Indonesia's economic crisis in the 1960s?

The video discusses multiple historical events, including military campaigns such as Operation Trikora for the liberation of West Papua from the Dutch and Operation Dwikora or the 'Crush Malaysia' campaign. These, along with internal rebellions like Permesta in Manado and DI/TII, significantly drained Indonesia’s national budget, leading to a severe economic crisis from 1961-1965.

How did Indonesia's military expenses impact its economy in the early 1960s?

The government allocated a large portion of its budget to military spending, especially for campaigns like Trikora and Dwikora. Indonesia also purchased advanced weaponry from the Soviet Union, contributing to a massive budget deficit. This heavy military expenditure left little for social welfare and economic development, leading to economic instability.

What role did export commodities, such as rubber, play in Indonesia’s economic crisis during the 1960s?

Rubber was Indonesia's main export commodity during this period. However, the international price of rubber dropped by 50% in the early 1960s, causing a significant reduction in export revenue. Other commodities like copra, tea, tobacco, and tin also declined, further straining the country's economy.

What was the impact of Indonesia's 'Crush Malaysia' campaign on its economy?

The 'Crush Malaysia' campaign led to an economic embargo against Malaysia, which was one of Indonesia's primary markets for exporting rubber and tin. As a result, Indonesia struggled to find new buyers for these goods, further reducing export income and worsening the economic crisis.

Why did Indonesia's infrastructure outside Java remain underdeveloped during the 1960s?

While the government invested heavily in high-profile projects like the TVRI station, Monas, and the Gelora Bung Karno stadium, basic infrastructure in other regions remained neglected. Many areas outside Java lacked paved roads, ports, and markets, preventing balanced economic development across the country.

What was the effect of large-scale money printing on Indonesia's economy during the 1960s?

In an attempt to cover budget deficits, the government printed massive amounts of money, causing hyperinflation. The money supply increased 150-fold between 1962 and 1966, leading to a drastic drop in the value of the currency. This resulted in skyrocketing prices for basic goods and a near-collapse of the economy.

How did Indonesia’s inflation in 1965 compare to other significant periods of economic crisis, such as the 1998 financial crisis?

In 1965, Indonesia's inflation rate reached an astonishing 594%, much higher than the 78% inflation rate during the 1998 financial crisis. The hyperinflation of the 1960s was the worst in the country’s history, causing widespread economic hardship.

How did the Indonesian government attempt to control the hyperinflation of the 1960s?

The government tried several measures, including price controls, paying employees partially in goods like rice, freezing 90% of bank deposits, and redenominating the currency by knocking off three zeroes. However, these measures were ineffective because they did not address the root issue of the budget deficit.

What finally helped to stabilize Indonesia’s inflation crisis in the late 1960s?

Inflation began to stabilize when the government stopped printing excessive amounts of money, which had been the main driver of hyperinflation. This move helped to restore some balance in the economy, though it took time for the effects to be fully felt.

How does the video suggest viewers can engage with the history of the 1960s economic crisis in Indonesia?

The video encourages viewers to reflect on stories they might have heard from older family members who lived through the 1960s crisis. It also directs viewers to the YouTube channel 'Inspect History' for more in-depth content on this period, and to follow upcoming videos for further exploration of Indonesia’s economic history.