How do countries end up with worthless currency? Like countries who’s dollar bills lie on the ground or are burned for warmth because it has no purchase power anymore

Question

How do countries end up with worthless currency? Like countries who’s dollar bills lie on the ground or are burned for warmth because it has no purchase power anymore

In: 174

Answer 1

Countries end up with worthless currency when they print too much money and people stop trusting it. This is called hyperinflation.

Imagine you have a lot of candy and you want to trade it with your friends for toys. But then your mom gives you more candy every day, so you have too much candy and not enough toys.

Your friends see that you have so much candy and they think it’s not very special anymore. They don’t want to trade their toys for your candy, or they want more candy for the same toy.

So your candy becomes less valuable and you need more of it to get the same toy. That’s what happens with money when a country prints too much of it.

——This is what Bing Chat (GPT4) said.