I understand what inflation is, to the degree that we experience it in the United States and in other western nations. I don’t understand how this concept continues to have meaning in Zimbabwe, where the BBC asserts the rate of inflation is 168,000% annually. My notion that goods cost more now than last year by a ratio approximately equal to inflation doesn’t seem to apply here. A single currency can’t accommodate this rapid decrease in value - it would take buckets of bills to pay for something that cost only $1 last year.
What’s going on in this economy? Is there even a currency that’s used to trade for goods? If so, is the government printing increasingly large denominations? Are people in this economy who are paid for services being given raises anywhere in the range of 168000%?
Here’s a good place to start reading. It has a section in Zimbabwe.
Wiki link with picture of the Zimbabwean $250,000,000 note.
They are printing increasingly larger denominations. I believe I heard a few weeks ago on NPR that they’re up to a billion dollar bill (Zimbabwe dollars).
Actually, I see they’re up to a $50 billion bill. Yes, you read that right. 50 Billion. I do believe that Zimbabwe is screwed.
They might be but I am not. I always wanted to be a billionaire so I think this is the easiest way.
Yeah, just realize that Zimbabwe is approaching Canadian exchange rates from about 5 years ago, so it’s not worth too much. You might net a nickel if you cash in in the next 5 minutes, after that it’s about a penny if you’re lucky.
But what fool would accept currency in exchange for any real goods in a transaction? Why would people not immediately resort to barter when the currency devalues by several percent over the course of days? What good is it to continue to print currency under these circumstances?
I know I’m asking a lot of questions, but I’m quite perplexed. It’s far outside my realm of experience and I’m having difficulty understanding why people would use a currency in this circumstance.
“Hey mom? Can I have a couple billion dollars to go see a movie?”
You accept it if you have no other choice. Refusing it may result in a visit by representatives of the ruling party.
I’ve mentioned this a bunch of times before, but when I was in Zimbabwe in 2002, it was Zim$400 to the US dollar. A week later, it was Zim$600 to the US dollar. That was only 2500% inflation or something like that. People probably think of those times as the good old days. I have a Zim$10 note somewhere here on my desk. I’m pretty sure I have a Zim penny somewhere. IIRC, the Zim dollar used to worth close to a US dollar not all that long ago.
I think it means that you’re better off wiping your butt with a $100 bill because you need $10K to buy a roll of Charmin. 
What happens when the economy goes back to normal? Do people who put aside bucket loads of money during the period of hyperinflation suddenly become rich? Or is it neccessary to introduce an entirely new form of currency and declare the old one worthless?
“That’ll cost you a hundred South African Rands.”
“What’s your exchange rate? How much is it in Zimbabwean dollars?”
“All of them.”
You get to pay off all your debts so you come out ahead there. Unless you had loaned someone money.
Eventually the government announces that it’s issuing New Dollars which have an 1000000000:1 exchange rate with the old Dollars. Zimbabwe has already done this a couple of times but they don’t stop overprinting money so the new currency is as bad as the old stuff.
<hijack>Who is it that Mugabe hasn’t pissed off that prevents him from getting a coup in the etat?</hijack>
Are Zim$ worth anything to numismatists?
Thanks,
Rob
While that’s bad, Post-WWII Hungary had banknotes up to 100 million b. pengő (100 million trillion, or, 100 quintillion [1x10[sup]20[/sup]] pengő ) in circulation (worth about 20 cents at the time). When they introduced the forint (which they currently use) to stabilize the currency, one forint was set equal to four hundred octillion (4 x 10[sup]29[/sup]) pengő. When you need scientific notation to express your currency, you know you’re pretty well screwed.
I just like sharing that fact, because it still boggles my mind.
Nobody can afford to buy a bullet.
Um, wow?
Oh, and I forgot the parallel to the thread title. The rate of inflation in mid-1946 Hungary was 4,190,000,000,000,000,000%.
OK. So, I know it’s a quintillion. Does anybody else?
Some numbers defy description. That is one of them. And we thought we had it bad. We got nothing on that.