: Why countries with massive inflation where 100,000 is just a few or under a us dollar just decide to cut some zeros out to make it less to carry

180 views

: Why countries with massive inflation where 100,000 is just a few or under a us dollar just decide to cut some zeros out to make it less to carry

In: 0

3 Answers

Anonymous 0 Comments

It’s a lot of work to do that. You have to create a new currency (new banknotes), print a ton of them (enough to completely replace the old ones) coordinate the transition from old currency to new currency (set banks to allow exchanges between the two currencies at government rates), and dispose of the old currency.

All of this expense will just get rid of a few zeroes; it’s not like investing in education or infrastructure to actually develop the economy or in healthcare or social services to make people’s lives better.

Anonymous 0 Comments

Just because one individual unit of the currency is worth very little, does not mean you need to carry lots of money.

South Korea’s smallest banknote is ₩1,000 but that’s the equivalent of like 80 cents US. There’d be no point in having a ₩1 banknote because what would you spend it on?

Anonymous 0 Comments

Countries that experience hyperinflation typically do take practical steps to make their physical currency usable. The easiest way to do this is printing progressively larger banknotes. This is why you can get a note worth 100 trillion Zimbabwean Dollars. Once the hyperinflation calms down, these embarrassing banknotes will typically be swept away by the introduction of a new system with fewer zeros.

Understand that this doesn’t really do much to address the real harm of hyperinflation, which arises not from the fact that prices are expressed in ridiculously high numbers at any given point in time but rather from rapid *changes* in prices. Someone who had savings of $100,000 Zimbabwean Dollars with their bank didn’t see that balance grow as prices rose, effectively making their savings worthless. People who earned a salary needed to constantly renegotiate that salary to keep up with price increases and spend the money as soon as they got it, lest prices be radically higher tomorrow. Once the hyperinflation stops, it doesn’t really matter if the banknotes say $1 or $100 Trillion, but the process of going from one to the other is a total economic upheaval.