[the original reddit post](https://www.reddit.com/r/interestingasfuck/comments/jyouap/14600000_bolivars_the_amount_of_money_you_need_to/?utm_medium=android_app&utm_source=share)
In: Economics
They did do that. They went from the bolivar, to the bolivar fuerte, to the bolivar sobrano.
The first changeover slashed 3 zeros in 2008. The second slashed 5 zeros in 2018.
Not that it fixes the problem of hyperinflation, and there is some expense in changing over. But it does help with the wheelbarrow full of paper currency issue.
When you have hyperinflation like that, what usually winds up happening is that people start trading (sometimes illegally) in a more stable currency.
The problem with hyperinflation isn’t necessarily that a chicken costs 14 million somethings. If each bill is worth 1 million bolivars, then you actually don’t need that many bills to pay for the chicken.
The actual problem is that the price just keeps increasing. The government can decide to print a bunch of 1 million Bolivar bills, but by the time that process finishes, maybe the chicken costs 14 *billion* Bolivars. Then you’re back in trouble. And for what it’s worth, needing a wheelbarrow of cash to buy a chicken is one of the milder consequences of hyperinflation. The way it destroys savings and requires constant renegotiations of contracts are much worse.
Ultimately, countries beset by hyperinflation need to first stop the hyperinflation. This usually takes the form of a flight to some more stable currency, either by the government itself or by the people. Once prices stabilize, you can start thinking about creating a new currency or redenominating the old one to make the numbers nice.
The story of the Brazilian Real is the classic example of this. The original Cruzeiro was suffering from hyperinflation, so the government and merchants started also posting prices in terms of “units of real value,” which were basically US Dollars. Eventually, they just made whole new a currency based on this second measure and abandoned the first.
>can you solve it by just making a new currency with less zeros?
Yes. The logistical problem of needing a wheelbarrow to carry your lunch money can be solved like that, perfectly fine. They did that in Venezualy at least once, by introducing a new currency with a fixed exchange rate against the old one.
The problem with hyperinflation isnt so much that you need ridiculous sums of money – those sums are essentially imaginary, no one gives a fuck whether the piece of paper you pay your chicken with has 1, 5 or 10 zeros printed on it.
The problem is that hyperinflation carries on. One of the primary functions of money is to “store” value. I earn X money today, then i can spend that whenever i want. Normally, if i can buy a chicken with that today, i can do so next week. Not so in hyperinflation. Currently, the bolivar looses 90% of its value in three months. Meaning if i save enough bolivares to buy ten chickens, i can only buy a single one three months later. This makes saving essentially impossible.
During periods of hyperinflation, trade in the inflating currency often decreases in favor of a informal adoption of a more stable foreign currency such as the US Dollar.
Many transactions are going to be barter, not cash. This favors the rural population over urban.
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