Hyperinflation in Zimbabwe, the former Rhodesia, was a quadrillion times worse than it was in Weimar Germany.
That's via Jason Kottke (source here). There's also this bit:
The cumulative devaluation of the Zimbabwe dollar was such that a stack of 100,000,000,000,000,000,000,000,000 (26 zeros) two dollar bills (if they were printed) in the peak hyperinflation would have be needed to equal in value what a single original Zimbabwe two-dollar bill of 1978 had been worth. Such a pile of bills literally would be light years high, stretching from the Earth to the Andromeda Galaxy.
yeah? we’re on our way, too.
Hyperinflation is useful to teach young economists about the ONLY situation in which they can apply the quantitative theory of money (=currency).
I’ve seen this quote kicking around several places this morning, but nobody is providing a really valid source for the claim. The source pointed to here is just a quote from Shadowstats, where the article in question is gated.
The freely available source of the claim appears to be some story the guy tells about receiving a framed Zim Dollar, and doesn’t have any data (as far as I can tell) to back it up.
Furthermore, 10^26 Zim Dollars will only reach halfway to Andromeda (assuming they are the same thickness as US Dollars).
Tyler are we in a liquidity trap? Seasonally adjusted CPI is up 1.9% over the last 12 months. So that means we’re not in a trap and the normal laws of economics apply, right? I ask because Paul Krugman continues to talk of paradox of thrift and now paradox of toil.
@Josh,et al,
This sort of thing has value because the average American has no concept of how bad hyperinflation can get. If they did, they’d be much more upset about what’s going on in Washington now.
Frankly, judging by their actions and utterances, I don’t think people like Pelosi and Reid have any understanding of it either.
I always knew the Weimar Germans were a bunch of whiners.
Bernard – this does depend on what you mean by “vaguely accurate”. A calculated inflation rate when prices are changing by the minute is probably less accurate than a calculated inflation rate when prices change every few months, but I can’t think of any reason a priori why the normal basket-of-goods method wouldn’t capture any big changes in the relative rate of inflation. So I would guess that while, say, under a normal environment a basket-of-good approaches would perhaps capture a change from a 1% inflation rate to a 2% inflation rate, in a hyperinflationary environment you might be able to identify something like a change from a 2000% inflation rate to a 20 000% inflation rate.
Don’t cut taxes on labor because it will bring out more workers, lowering wages and create deflation? I don’t think I could stand to live believing what Krugman believes if I really believed it.
Tracy W.,
Maybe, but it looks like there are almost relativistic problems here.
You need simultaneous prices. This is no problem if they change slowly, but a big problem when they change fast. Also, you need to process the data and calculate the index quickly or it’s not current. Also, in that environment it’s at least reasonable to think that relative prices are changing rapidly, so the standard problems with price indexes come into play as well.
To be fair to Krugman, the real quote is:
“The basic point is that the recession of 2001 wasn’t a typical postwar slump, brought on when an inflation-fighting Fed raises interest rates and easily ended by a snapback in housing and consumer spending when the Fed brings rates back down again. This was a prewar-style recession, a morning after brought on by irrational exuberance. To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.”
Here’s the link:
http://www.nytimes.com/2002/08/02/opinion/dubya-s-double-dip.html?scp=4&sq=krugman%20mcculley%20bubble&st=cse
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Also, if anyone is interested, you can buy 100 trn zim dollars on Ebay. I just picked up a pack of 10 for $45 USD. I figure they’ll be a great collectors item/gift/reminder of what once was.
-Chev
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