Monday, January 2, 2012

My Two Cents About Money and Zimbabwe



Zimbabwe has suffered from crippling inflation. Paper money became virtually worthless, so the government printed new bills in higher and higher denominations, in amounts that were staggeringly, and in fact, unbelievably high -- notes in the hundreds of thousands of dollars, then millions, then billions.
Eventually, the country has righted its problem. As a practical matter, the people of Zimbabwe use U.S. Dollars or South African Rand. First choice is dollars. Strangely, the smallest U.S. dollar bill available is the $2 dollar bill - in abundance. One dollar bills are rare.
Now that Zimbabwe has stabilized a bit by conducting transactions in dollars or rand, the people are beginning to rebuild their lives. It was tragic to hear stories of life savings, in fact means of survival being wiped out as inflation soared. Things got to the point where it became unaffordable to buy meager provisions to eat. For some time, the government issued special currency called agricultural notes which looked like regular paper money except they included both an issue date and an expiration date a few months later. For example. a 5 million dollar note would buy a loaf of bread for a brief period. Shopkeepers now offer to sell those old notes as souvenirs (if you ask). I bought a $5 billion dollar agricultural note (and paid with a US $2 Dollar bill).