1. Inflation, or ‘funny money’

2. This program was researched, written and illustrated by Bruce Ellison of the Albuquerque Coin Club Contents Copyright © 2011 by Bruce Ellison

3. Inflation, or ‘funny money’ This program is NOT about spending money, or saving money, or making money, or investing money, or even about giving it away. It’s about the physical stuff that you can hold in your hand – and that you have in pocket, purse or bank account right now.. and about what happens when there’s too much of it -- inflation

4. Inflation, or ‘funny money’ So, what IS money? -- a medium of exchange -- a unit of account -- a storehouse of value

5. Inflation, or ‘funny money’ We trade dollars for goods, not goods for goods…(exchange) We keep records in dollars, not just heads of lettuce…(account) We save money because it keeps its value for later. The lettuce would rot before we could trade it…(value)

6. Inflation, or ‘funny money’ But, if there’s wild inflation, money loses its usefulness. No one wants it, because no one knows what it’s worth – or might be worth tomorrow, when you cashed a check.

7. Inflation, or ‘funny money’

8. This is Zimbabwe, in Africa, with about 12 million people – rich agriculture, and plenty of copper

9. Inflation, or ‘funny money’ It’s a modern African country: here’s the capital, Harare, formerly Salisbury (Rhodesia).

10. Inflation, or ‘funny money’ It has a Central Bank, and central bank head: Gideon Gono

11. Inflation, or ‘funny money’ It has industry, like this copper smelter:

12. Inflation, or ‘funny money’ But in Zimbabwe, inflation got the better of them. It skyrocketed… so much so that the currency became worthless,

13. Inflation, or ‘funny money’ Carrying all that cash around became a problem

14. Inflation, or ‘funny money’ Zimbabwe was called Rhodesia before independence. It used dollars, each then worth more than a U. S. dollar

15. Inflation, or ‘funny money’ The first currency (1980) from the new Republic of Zimbabwe was this $2 bill:

16. Inflation, or ‘funny money’ Later bills were similar

17. Inflation, or ‘funny money’ These balancing rocks, in a park near Harare, appear on almost all Zim currency.

18. Inflation, or ‘funny money’

19. But things soon inflated (2001):

20. Inflation, or ‘funny money By 2003, the nation was slipping into economic chaos. Money was hard to come by. The Cargill Cotton Co., printed bearer checks used as cash.

21. Inflation, or ‘funny money’ In October 2005, the Reserve Bank announced a revaluation 1000 old Zim dollars got you $1 new Effective when available, June 2006

22. Inflation, or ‘funny money Printing, in Germany on security paper, lagged, and special travellers’ cheques were issued --$5,000, $10,000 and $20,000.

23. Inflation, or ‘funny money Here’s a $20,000 check, used this time but not countersigned.

24. Inflation, or ‘funny money’ New bearer cheques arrived for the new currency, in August 2006. They were payable months later in “real money.”

25. Inflation, or ‘funny money’ The new money was dated August 1, 2006;. So sure was the government that it had whipped inflation that it also issued cents:

26. Inflation, or ‘funny money’ But inflation returned quickly:

27. Inflation, or ‘funny money’ On Dec. 20, 2006, cheques for $250,000, $500,000 and $750,000 were printed and distributed. In January, 2007, cheques for $1 million, $5 million and $10 million appeared.

28. Inflation, or ‘funny money’ In April 2007, along came checks for $25 million and $50 million. On May 5, they added $100 million and $250 million – and 10 days later, with inflation raging-- there was a $500 million check.

29. Inflation, or ‘funny money’ Bananas were somewhat costly:

31. Inflation, or ‘funny money’ So in July 2008, they lopped off 10 billion dollars – 10 zeros– and started over. On August 1, there were new agro-checks for $1, $5, $10, $20, $100 and $500. On September 11, the $1,000 bill arrived.

32. Inflation, or ‘funny money’ No stopping it now: Sept, 29 – $10,000 and $20,000 Oct. 13 -- $50,000 Nov. 3 -- $100,000, $500,000 and $1 million Dec. 4 -- $10 million, $50 million and $100 million. More More !!!

33. Inflation, or ‘funny money On 26 June 2008, the Zimbabwe Independent reported annual inflation rose by 7,336,000 percentage points to 9,030,000% by June 20. It was set to end the month at well above 10,500,000%.

34. Inflation, or ‘funny money’

35. Dec, 8, 2008 -- $200 million Dec. 12 -- $500 million Dec. 19 -- $1 billion, $5 billion, $10 billion Jan 12, 2009 -- $25 billion, $50 billion Jan. 16 -- $10 trillion, $20 trillion, $50 trillion, $100 trillion. Oops! Start over again.

36. Inflation, or ‘funny money’ Yes, trillions:

37. Inflation, or ‘funny money’ Zimbabwe's Annual Inflation Rate is now 516 Quintillion Per Cent Dec. 2, 2008 Hyperinflation has Zimbabwe in the throes of a financial crisis The monthly inflation rate is currently running at 13.2 billion per cent … The latest figures put the annual inflation rate at 516 quintillion per cent. That's 516 followed by 18 zeros.

38. Inflation, or ‘funny money Hundreds of trillions, the highest denomination ever: :

39. Inflation, or ‘funny money’ Feb. 2, 2009 Lop off one trillion – 12 zeros. Start over with new notes $1, $5, $10, $20 $ 50 $100 and $500.

40. Inflation, or ‘funny money’

43. In the end, it was about the same inflation as Hungary after World War II – devalued first by clipping off 000; then by 10 zeroes, then by 12 zeroes.

44. Inflation, or ‘funny money’ You could not buy anything with the money. ATMs could not keep up; cash registers could not keep up; bank accounts could not keep up. For a time, it cost more to have Zim dollars printed in Germany than they were worth at home.

45. Inflation, or ‘funny money’ The post office sold non- denominated stamps for letters within Zimbabwe; to Africa; the U.K. and elsewhere. The price changed daily.

46. Inflation, or ‘funny money’ The government, reacting to complaints from government workers, raised salaries every few days, then every few hours. But by the time you could spend the money, you needed ever more. Eggs cost billions of Zim dollars.

47. Inflation, or ‘funny money

48. Inflation, or ‘funny money’ The Zim dollars could not be used as a medium of exchange – nobody wanted them. They couldn’t be used as a unit of account – there were too many. They were not a storehouse of value. They were worthless.

49. Inflation, or ‘funny money’ The Zimbabwean economy collapsed. Barter returned. Zim dollars were totally useless, except to kindle the stove

50. Inflation, or ‘funny money’ People began using South African rand notes, British pounds, and U.S. dollars. There was political chaos. Finally, in early 2009, another new Zim dollar came along.

51. Inflation, or ‘funny money’

52. It seems to have lasted; there are about four of those Zim dollars to a U S dollar in this new currency.

53. Inflation, or ‘funny money’ But looked what happened: 1 dollar = 1,000 (they dropped 000) When that new $1 got too high, they knocked off 10 zeroes. 10,000,000,00 (that’s 10 billion) became yet another new $1.

54. Inflation, or ‘funny money That third new dollar skyrocketed in only a few months to almost one quadrillion: they knocked off 12 zeroes. 1,000,000,000,000= 1 new Zim dollar. So-called Third Dollar

55. Inflation, or ‘funny money Let’s put all the zeroes back: 1 2009 new Zim dollar equals (000, plus 0,000,000,000, plus 000,000,000,000) or 1,000,000,000,000,000,000,000,000+ of the dollars we started with in 2005 Wow!

56. Inflation, or ‘funny money In Zimbabwe, they quit using security measures on high-denomination banknotes: the quality printing was too costly, and the notes almost worthless by the time they could be counterfeited. Printing took place in Harare, by litho. Most of the notes, even crisp uncirculated, are worth very little today.

57. Inflation, or ‘funny money Two sets of notes are hard to find. They are the bearer cheques written on the Standard Chartered Bank, by Cargill, a cotton producer. They circulated for a few months as currency. Most were used and then cancelled..

58. Inflation, or ‘funny money Soon thereafter the Reserve Bank of Zimbabwe issued a series of so-called “emergency travelers cheques”… which are also not too easy to find. Then came government bearer cheques, and special Agro-cheques, in place of bank notes. They are common.

59. Inflation, or ‘funny money Breaking News -- December 2010: Zimbabwe's President Robert Mugabe says his country will nationalise all US and UK companies operating in the country unless Western sanctions are removed. He told a Zanu-PF party conference it was time to fight the sanctions imposed on him and party leaders. Mr Mugabe also said it was time to end power-sharing with the party of Prime Minister Morgan Tsvangirai. The agreement with the MDC, struck in 2008, is due to expire in February..

60. Inflation, or ‘funny money It was that power-sharing agreement after contested elections in 2008 that finally put a halt to the ruinous inflation. Stay tuned for updates in 2011. -- B.E.