Ten Trillion Dollar Bill, an Economics Object Lesson

TomD

TomD

e publius unum
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This is an object lesson in what happens when governments print money out of proportion to the backing country's ability to produce value to back it up. Inflation of some degree is the result. This is a process that is underway to some degree in virtually the entire world. Zimbabwe is just the latest of about 10 examples of hyperinflation in the last 100 years.

I bought a few Zimbabwe bills, I have several $500 million bills and a couple of $100 trillion coming in addition to this $10 Trillion. All of you need one of these on your refrigerator, what a lesson.

The bill is funny, ironic and tragic. A close up shows a number of devices incorporated into the printing to act as anti-counterfeiting as if counterfeiting on a bill worth less than the ink used to make it would be an issue. It's very nicely done, beautiful in reality, perhaps in an unconscious effort to have the citizens desire the currency based on it's aesthetic value. Little Bitty Rembrandts for everyone, we're wealthy!

Mostly I can't understand it's existence. One of Einstein's more cogent quotes was "A definition of insanity is doing the same thing over and over while expecting different results". (well, paraphrase anyway) You would have thought that by the time the mint had made it to the level of around $1 million dollar bills they should have seriously suspected something was really wrong and by the time they got to a couple of $ hundred million, have been pretty sure. I mean I can see the Zimbabwean Fed sitting around the table contemplating the fact that their $500 million bill was worth somewhat less than belly button lint. As they cast about for solutions, the Under Secretary in charge of Redundancies and Redundancies cries that they are saved and that the solution is a $10 Billion bill. The meeting dissolves as they laugh until they puke.

Just how does someone propose a $10 Trillion bill because the $100 Billion bill has proved wanting? The really funny part is this doesn't take into account the 5 revaluations like last year when they declared that $1 Trillion new-new-new-new Z Dollars were worth $1 (one) new-new-new-new-new Zimbabwe dollar. This was the 5th such revaluation. It's a little hard to keep track of that but those who do say that one $ Zimbabwe at the country's formation has now inflated 10 to the 31st power times. If you'd like a perspective on that number, it is several thousand times the weight of the earth in grains.

That would make the value of this bill, in monetary terms, as quintillions of times less than the value of the ink to dot an "i".

The politicians who foist this "currency" on their starved and dying population have bank accounts measured only in levels of 10 to the 9th power (billions) but most assuredly not denominated in Zimbabwean Dollars.

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Well

If we go into hyper-inflation, and the Government has to issue some ridiculous note such as that, we know whose picture will be on it.........jackie
 
My pick

I was thinking a Kenyan Chief, with them trying to convince us it's a Hawaiian Queen.
 
This happened in Germany after World War 1

After world war one the Germans were forced to pay war damages and compensations to the allies of the magnitude that it was never doable. Hyper inflation took place and at sone point you had to have a wheelbarrow full of million and trillion mark bills in order to buye one bread. There is a famous story of the German who had with him a huge basket of bills to buye a bread. He left the basket out side of the bakery while he went inside. When he went back to get the bills to pay for the bread all he saw outside was this huge heap of bills but the basket was gone. A thief had stolen the basket but didnt think it was worth the trouble to lug the bills around.

Inflation in a smaller scale is almost everywhere. For an example Iceland cut two zeeros from the Icelandic krona 30 years ago to compensate for inflation that raged in those years and came to almost 100% per annum when it was at its worst. Before the financial crises Iceland had inflation under controle to the more normal 1%-5% per annum. There has been inflation in the States also reaching ower 10% at its worst. Most of us will remember custom benchrest bullets selling under $10 they are up to about $25 now. The first barrel I bought, I guess 25 years ago was a McGovern HV .224 crome moly for $ 49,95 My guess is that comparable barrel would to day be about $150

When inflation reaches unnatural heights and comes close to triple figure the economy in question is realy screwed. Nobady lends money unless its indexed and nobady saves any money either unless savings have interest rates in addition to index. Rationality and profitability requierments for investments goes down the drain. Any investment in durable goods like like bying house of course and cars and such is better than having the money in a bank on one digit interest rates devaluing at the reate og tree digit figure.

BA
 
Dear OP

That is the coolest/saddest thing I have ever read.

Well written sir!

Chad
 
jackie schmidt said:
If we go into hyper-inflation, and the Government has to issue some ridiculous note such as that, we know whose picture will be on it.........jackie
Click to expand...
Bernie Madoff probably. He's the hero of that band of thieves so far. Or, how about Alan Greenspan. He's the one single person who guided the US into this mess.

Order and read the new book by economist Dr. Dean Baker, "Plunder and Blunder". This book takes you through all the recent "bubbles" like the dot-com bubble, the stock bubble and now the housing bubble.

http://www.amazon.com/s/ref=nb_ss_gw?url=search-alias=aps&field-keywords=Plunder+and+Blunder
 
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