Zimbabwe is introducing a 100 billion-dollar note so that people can buy, well, stuff. Not that there’s much stuff to buy.
Zimbabwe’s inflation is pegged at somewhere between 2.2 million percent and perhaps 15 million percent – on the low side it means that something that cost 1 Zimbabwean dollar on July 1st will cost 22,000 Zimbabwean dollars next July first – or 150,000 Zimbabwean dollars, depending on which inflation figure you believe. To put it another way, the cost of goods in Zimbabwe is doubling every 21 to 25 days. (That’s not very good for any Zimbabweans hoarding their cash). The Zimbabwean government isn’t yet close to the record for hyperinflation, but by all accounts they certainly seem willing to hunker down and surpass it.
This is not the first time that rampant hyperinflation has gripped a country. The German Weimar Republic of the 1920s is noted for hyperinflation so great that paper money was burned for warmth because it lasted longer than the wood one could purchase with it. Hungary in 1946 and Yugoslavia during its disintegration in the 1990s are more recent examples. I have about 100 cruzeiros of Brazilian money from my days as an exchange student in the 70s; today they are worth about 1 billionth of a penny, due to Brazil’s hyperinflation in the 80s and early 90s.
Those of us old enough to remember the late 1970′s lived through some tough times when the U.S. inflation rate hovered around 15% for three years. Many pensioners lost half their buying power during that brief period. That was pretty bad but nothing compared to what countries like Zimbabwe, Brazil and Yugoslavia went through. Worthless money is money quickly spent. There is no such thing as savings. There is also no such thing as commerce. Zimbabwe suffers from mass shortages of everything.
The Zimbabwean disaster is continuing with no letup in sight. What’s going to happen after 84-year-old Robert Mugabe dies in the near future is anyone’s guess. Hyperinflation and anarchy do not bode well for that country and its people and to date, there is little to indicate that other world powers will come to the country’s aid. Read about current events and expectations here.