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[LARD]

As someone who has spent a few years of my life in this country I looked around on the forums for things relating to this topic. I saw a few people talking about it, but I was wondering if anybody want's the whole story.  It's amusing at the first level and infuriating deeper down. I was going to ask if you wanted to read it, but then I realized that this is the internet, if you don't, you can just hit the back key.

In 2001 - 2002 the Zimbabwean government, led at that time by Robert Mugabe Dictator President, decided on a way to get more money for themselves. They printed more. It was that simple. Soon, the need came for bigger units of currency. So out came the $500, $1000, $10,000, $50,000, $100,000 and $500,000 bills. But there they stopped. They didn't want to be one of the first countries to print a million dollar bill. That would be humiliating. So they went through a process known as knocking off zeros. They alerted their people that a new set of currency was being printed, and they could trade in 1 million dollars of old currency in for about a penny of new currency. In doing so, they knocked of eight zeros. (I'm not exactly sure how many they knocked off when, but it is something like this)
After that, they inflated right back up there again to the $500,000 and now they printed bearer cheques. These are not technically currency, but function exactly the same. So there was the 1 M, 5 M, 10 M, 50 M, 100 M and 500 M bills. They stopped here too. Even with the bearer cheques, printing a billion dollar bill would be embarrassing. So they knocked off a few more zeros and ended up printing a one cent bill. And back up it went, all the way to the 500M again. And here they did something amusing. They printed a 750 M dollar bill. And to go with that came a 250 M. (Again I'm not sure whether they knocked off zeros here or just kept going) next thing you know, the billion dollar bill was out and with it came $5 billion all the way up until $500 billion. They might have knocked zero's off here again, but I'm not sure. The upshot of it all was that in the end a $100 trillion dollar bill was printed and when it came out, it was worth 10 cents American.
The people who run the Reserve Bank of Zimbabwe (money printing place) were making huge amounts of money, by trading for American dollars and making a lot of money off the exchange rate.

This all happened between 2001 and 2008

Now they have started using American dollars

[Euld]

o_O  Wow, had no idea this was going on... how does someone get away with this sort of thing?

[scriver]

o_O  Wow, had no idea this was going on... how does someone get away with this sort of thing?

Dictatorship. They dictate it.

Heh. Dicktate.

[Graknorke]

o_O  Wow, had no idea this was going on... how does someone get away with this sort of thing?

Dictatorship. They dictate it.

Heh. Dicktate.

I'm not sure that an elected government would try to stop it either. I mean, it makes money for the banks, that's what's important.

[MetalSlimeHunt]

But it doesn't. The entire economy collapsed.

[sneakey pete]

Nothing new to me, I was actually hoping for more info about what's happened post 2008. Any ideas anyone?

[Graknorke]

But it doesn't. The entire economy collapsed.

Okay, individuals involved in the banking. I guess I should have been clearer.

[Ancre]

Yeah, what happened after 2008 ? I was aware of the insane inflation, even if I thought it was just because the country was in a state of utter chaos or something. My uncle worked in Botswana (Zimbabwe's western neighbor) for quite some time. He have a few bills worth less than the paper it is printed on, I think, and used to tell me stories about it.

[Agdune]

The people who run the Reserve Bank of Zimbabwe (money printing place) were making huge amounts of money, by trading for American dollars and making a lot of money off the exchange rate.

Aaah! I was wondering why on earth they kept going. I thought hyperinflation never really helped anyone (particularly those who have lots of money saved when it all starts - the powerful wealthy), so the fact that high-ups can make profits out of it lets it make sense again.

It's hard to envisage the full scale of the chaos hyperinflation like that would cause. I mean, in the short term, people could revert to bartering and such to live off (rather than try to amass a few kilos of bank notes which'll practically be inflated back to worthlessness by the time you've carried it to the shop), but that'd only work for so long (and god help you if you didn't have mountains of desirable crap lying around at home or super, super valuable skills). Guess you'd resort to some other form of universal currency... trading chunks of gold? ...jugs of oil? No idea.

How the government can keep track of its own logistics I don't even know - '10,000 tons of raw materials bought for the mint, cost approx $700 quadrillion ($50,000 US dollars). By the time the raw materials are manufactured into bank notes in 2 weeks (approx quantity; $100 Sextillion in notes), inflation is estimated to have climbed by a further eleventy billion percent. Necessary required funds to make up the shortfall in currency will be somewhere in the vicinity of $4 googol ($50,000 US dollars).
Also, new computers will be required by the budgeting department, as our computers can no longer compute the exchange rates, due to excessive digits. This should be done at the next budget session, by which time inflation will have raised the cost to somewhere around half a googolplex. We apologise for not being able to provide an exact number: we have contacted the staff at the IBM Sequoia, however as they have not responded for 12 hours, the figures we provided them are no longer accurate.

PS; three members of the team appear to have suffered mental breakdowns. Require new staff. Approximate cost; PLEASE SIRS MAKE IT STOP'

[Shadowlord]

This is called hyperinflation. It happens when you print money like there's no tomorrow.

Hyperinflation[2] results from a rapid and continuing increase in the supply of money, which occurs when a government prints money or creates credits in bank accounts, instead of collecting taxes to fund government activities. The price increases that result from more government spending create a vicious circle, requiring ever growing amounts of money creation to fund government activities. Hence both monetary inflation and price inflation rapidly accelerate. Such rapidly increasing prices cause widespread unwillingness of the local population to hold the local currency as it rapidly loses its real value. Instead they quickly spend any money they receive, which rapidly increases the velocity of money flow, which in turn causes further acceleration in prices.[3] Hyperinflation is often associated with wars or their aftermath, political or social upheavals, or other crises that make it difficult for the government to tax the population.

See also http://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe

This is hilarious:
"In 2007, the government declared inflation illegal. Anyone who raised the prices for goods and services was subject to arrest. This amounted to a price freeze, which is usually ineffective in halting inflation.[24] Officials arrested numerous corporate executives for changing their prices.[25]"

What people did (or do? Not sure if it's over or not) was exchange Zimbabwean dollars for other currencies as soon as they acquired them (although I cannot imagine what the people making the exchange would want the Zimbabwean dollars for) for use on the black market, apparently.

[Zrk2]

This is basically DF logic. Mugabe is even crazier than I thought.

[MetalSlimeHunt]

Poverty is now illegal. Anyone seen committing disgusting Acts of Poor will be subject to summery execution.

[Shadowlord]

So out came the $500, $1000, $10,000, $50,000, $100,000 and $500,000 bills. But there they stopped. They didn't want to be one of the first countries to print a million dollar bill. That would be humiliating.

http://en.wikipedia.org/wiki/Paper_money_of_the_Hungarian_peng%C5%91

In 1945-1946, Hungary printed progressively higher denominations of money, eventually ending at 10²⁰ pengő (100 million billion pengő - that's 100 quadrillion pengő).

Here's a 50 million mark banknote from the Weimar Republic in 1923: http://en.wikipedia.org/wiki/File:50_millionen_mark_1_september_1923.jpg

http://en.wikipedia.org/wiki/Hyperinflation lists many instances of million-unit bills (or higher). Hyperinflation is a bitch.

[IronyOwl]

Thanks. Was familiar with this, but not in that much detail (was only aware of one "okay, we fucked up, we're resetting the currency numbers now" incident, for instance).

Also, as I understand it they "fixed" the issue by officially stating that they'd be using American dollars now, which obviously everyone who was physically able to had been doing for quite some time.


Oh, and on a note that may make me a slightly worse person, when this was happening I briefly looked into getting some Zimbabwean money, figuring this was my chance to get a briefcase full of millions of dollars in Official Actual Currency^TM. Sadly, while there were a number of novelty bills for sale, nobody appeared to be selling them in bulk for reasonable prices. Which was odd, since the money obviously wasn't worth anything, you'd figure somebody's scoop it up and sell it off to jackasses like me.

[Nulzilcho]

And on that note I find it's pertinent to add I have one of these pinned to the corkboard above my desk.

Spoiler (click to show/hide)

The highest second highest highest non-Hungarian denomination of (at some point) legal tender to date.