by Brandon Reiter
Inflation. Ever heard of it?
Well, if you’ve put on the news in the last 6 months I’m sure you have, as the US is continuously fighting rising inflation which is largely due in part to the lingering effects of the pandemic.
But let’s take a trip back to the Global Financial Crisis of 2008. Shortly after the US housing bubble burst, the entire world experienced the largest financial recission of all-time and the biggest crisis since the Great Depression. Even though it was caused by the US, the effects were felt around the world…hence why it is referred to as the global financial crisis. Duh.
Different countries respond to economic problems in different ways, especially if they are run by a corrupt regime. One of those countries, Zimbabwe, ended up causing their citizens to experience hyper-inflation. If you think the current inflation rate of roughly 6% is bad, in 2008 Zimbabwe’s peak month of inflation was estimated at 79.6 BILLION percent month-on-month, and 89.7 SEXTILLION percent year-on-year in mid-November 2008. In case you’re wondering how much one sextillion is, it’s a 1 followed by 27 zeroes… or in other words one billion trillion.
In the U.S., the Federal Reserve tries to maintain a “healthy” inflation rate of around 2%. When inflation surpasses 2%, as it does today, it is considered high. Hyperinflation is an extreme case of inflation, to say the least. This occurs when prices have risen by more than 50% per month. Safe to say they should have invented a new word for what Zimbabwe was experiencing, they had the 50% covered by about 79.1 Billion%.
Imagine you always buy the same items at the grocery store. If the economy were experiencing a rising inflation rate of 5% per day, your grocery bill might rise from $500 per week to $675 the next week, to $911 per week the following week, and so on. In Zimbabwe people literally had to carry money in barrels just to pay for items, which eventually led to the creation of the One Hundred Trillion Dollar Bill, the largest denomination for a bank note in the history of the world.
How could inflation like this possibly have occurred? The corrupt government of Zimbabwe couldn’t afford to pay their debts, let alone the paper they were printing these dollars with, so they just kept printing more money. Parlayed with their struggling economy, and failure to do trade with other countries, their inflation quickly spun out of control resulting in this absurd hyper-inflation and need for larger bank notes.
As a result, Zimbabwe reverted to allowing the use of the US Dollar and South African Rand as acceptable currencies in their country which eventually led to stabilization, and in turn, completely abandoning the ZWD.
But now that the infamous mega bills are obsolete and becoming a rare novelty, they are being bought for upwards of $250 on sites like eBay by collectors.