Sunday, May 15, 2011

$100 trillion bill finally has value

Sunday, May 15, 2011 12:00 AM

Scripps Howard News Service

Zimbabwe’s $100 trillion bill is finally worth something. The Wall Street Journal reports that it is selling as a curiosity in this country for $5, far more than it was ever worth in real life.

The bills, it is reported, are popular with financial doomsayers, who brandish the bank-note as a warning of what’s in store for the U.S. if we don’t follow the doomsayers’ economic prescriptions. House Budget Committee Chairman Paul Ryan, R-Wis., carries one to underscore his demands for more and more spending cuts.

After independence, Zimbabwe in 1980 introduced a new dollar to replace the old Rhodesian dollar. The government of Zimbabwe’s first — and so far only — president, Robert Mugabe, proved not only brutal and corrupt, but also singularly incompetent, and the nation’s dollar began its long slide toward being the world’s least valuable currency.

The Mugabe government’s answer to money problems was to print more money, leading to hyperinflation. Periodic devaluations and other measures failed to halt the out-of-control spiral. Price controls only made matters worse.

In 2008, the last people to exchange their old currency for new currency did so at the rate of 1 trillion to 1. In 2009, Zimbabwe abandoned its currency altogether. Business is now done in U.S. dollars, South African rands and British pounds.

Collectors and dealers began buying up the $100 trillion notes and the unlikely happened: Uncirculated dollars, the kind collectors value most, are hard to come by. Even more unthinkable, considering how worthless the money was, there are rumors it’s being counterfeited.

The Journal cites estimates that the Mugabe government printed somewhere between 5 million and 7 million of the $100 trillion bills, but that only a few million were released.

That means Zimbabwe’s financial wizards, having wiped out the value of their currency as actual money, now have it within their power to wipe out its value as a novelty item, too.

No comments:

Post a Comment