Jakaleel

Zimbabwe released a 25 million and 50 million bank note last week. The 50 million note is worth one US dollar on their black market and would at the time buy three loaf of bread at 16 million each. The inflation rate is around 100,000% and a BILLION note is expected soon.

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|TG-21| Jakaleel

MagnaCentipede

lol, fiat currency.

Wiki says the highest printed nominal value is 500 Billion, so Zimbabwe has a bit more to go.

Question: Do the guys printing the money get paid in paper?

I figure in Africa, commerce would centre around barter. Barter is neat because it is inflation-proof.

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Jakaleel

The goverment pays it's goverment bills in US dollars and print what they need to make the exchange. Some goverment officials exchange for personal gain at the official exchange rate of 30,000 Zimbabwe to one US dollar for a killing.

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|TG-21| Jakaleel

Switchcraft

No it's not. If today I would have been willing to sell you my car for 3 chickens, but tomorrow I decide I want 4, you just experienced inflation.

leejo

And you just experience seller's remorse!

Edit: damn. You said would have been willing. Curse you, subjunctive mood!

Edit redux: btw, exactly what do these chickens do such that they are worth 1/3 of a car? PM me: I might be interested in working something out.

El_Gringo_Grande

a story about it

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Sen. John McCain (AZ) For President '08
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Switch

Thats not inflation... inflation happens to a currency as its value goes down because its volume goes up or other such things happen that effect only the currency but not what is bought with it.

Changes in barter values are just a matter of supply and demand.

Inflation happens ON TOP OF supply and demand.

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|TG|Switch

Better known as:
That noob who crashed the chopper.
That noob who ran over the mine.
That noob who TK'd me with a sniper rifle.
That noob who hit that APC at 300m with light AT! Our APC...

Kerostasis

I don't think that's quite accurate, Switch. Inflation is just a fancy word used to describe the impact of supply and demand on the value of a currency instead of on the value of a good. But its really the same process at work either way.

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ScratchMonkey

I've been told in other threads that inflation is good, that it means you don't have a shortage of currency as the population increases. So Zimbabwe is all set for population growth!

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Sig

leejo

I agree that moderate inflation is good. High inflation is still better than moderate deflation. So yeah, inflation is very good insofar as we need to stay well away from deflation.

High inflation is not so good. It stifles capital investment and encourages converting cash into commodities like gold or oil or bullets.

MagnaCentipede

You need just enough inflation to encourage investment. I hear the sweet spot is around 2%.

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leejo

Bingo.