Would you believe that it could be possible for inflation to get so bad that in a few years a loaf of bread would cost a million dollars? A gallon of milk would cost five million? It sounds impossible, but that, and worse, has happened in Zimbabwe. The inflation rate there isn’t five percent, ten percent, or even fifty percent. It’s a whopping 11.12 MILLION percent! That means that what you could buy last year for a dollar will now cost about 12 million. And that figure is from a news article several months old so it may be a good deal higher now. Of course, there probably isn’t anything you can buy for a dollar. A loaf of bread costs several billion dollars.
So how can such a thing happen? It’s simple. The money in Zimbabwe, like just about every other country today has no actual value. In other words, you can’t exchange it for gold, silver, or any other valuable held in reserve by the government. Money all over the world today has it’s value based entirely on the faith of the people in the government. If people loose faith in that government, as they have in Zimbabwe, hyperinflation can be the result. The scary thing is that this could happen in other countries as well. Of course, it isn’t likely to be as bad because major countries rely on international exchange to help prevent such inflation, but in the past year, the value of the U. S. dollar has dropped considerable in exchange for Euros, Pounds, and other foreign currencies. This makes it more expensive for Americans to travel to Europe and some other foreign countries, but makes it cheaper for people from those countries to visit us. It’s starting to level out now as Europe is feeling the recession as well.
I guess one good thing that has come out of hyperinflation for Zimbabwe is that old bills from one or two years ago are being sold in other countries as souvenirs. Even I couldn’t resist the novelty of buying a few billion Zimbabwe dollars on ebay so I to can claim to be a billionaire. Even if the value of the bill in U. S. dollars is about fifty cents.