Economics Question

[nigel99 576]

Zimbabwe has probably dropped off most peoples radar's as the elections fade away, but inflation is running at between 2 and 12 million percent (2M is the government figure, 12M independant economists).

Paper for printing bank notes is only available from 3 or 4 countries in the world and a german firm that were supplying Zimbabwe stopped under pressure from their government. As a result in the hyperinflationary environment where the last bills devalue to being worthless in 2-6 weeks Zimbabwe's cash dried up and they were unable to pay the military.

The solution was to remove 10 zero's so that
$10 Billion = $1. The interesting twist is that due to shortage of paper the government RE-Introduced the OLD $1 coins and bills. There is at least 1 news story of a blind beggar who stashed the "worthless" coins and notes that people dumped on him over the years who is now exceedingly wealthy.

My question is what effect does that have on an economy?

Experienced jumper - someone who has made mistakes more often than I have and lived.

[vortexring 0]

FUBAR

'for it's Tommy this, an' Tommy that, an' "chuck 'im out, the brute!" But it's "saviour of 'is country" when the guns begin to shoot.'

[bfilarsky 0]

What ^ he said. Sounds like that economy is toast.

[nanook 1]

back to the barter system. Neither currency is trustworthy. That blind guy doesn't have much time before that bundle of cash is useless.

_____________________________

"The trouble with quotes on the internet is that you can never know if they are genuine" - Abraham Lincoln

[nigel99 576]

I know it depreciated from $1 to the US$1 to $100 to the US$ in aproximately 48 hours. The thing is people have already "dollarised" and while it is illegal most transactions are conducted in either US$ or South African Rand. So most people swap local cash for forex as soon as possible.

I guess what they did by reintroducing old notes it was no different to printing more money (what they have been doing previously) but this time the average guy on the street got a windfall and not just the government.

Experienced jumper - someone who has made mistakes more often than I have and lived.

[nathaniel 0]

Quote

My question is what effect does that have on an economy?

Not much. It makes life easier for merchants who are less prone to mistaking a $10000000000 bill for a $1000000000 bill, or getting tricked by a $10000000000 wrapped around a roll of $100000000s. Means a little more legwork for accountants and banks, but honestly are there any of those left in Zimbabwe?

Also it makes life easier on the currency printing presses...istr they just lost one of their last sources of paper for currency.

It doesn't do anything about the 800 lb gorilla in the room.

edit: more zeros

My advice is to do what your parents did; get a job, sir. The bums will always lose. Do you hear me, Lebowski?