How bad hyperinflation can get

The remarkable story about Zimbabwean hyperinflation:

The cumulative devaluation of the Zimbabwe dollar was such that a stack of 100,000,000,000,000,000,000,000,000 (26 zeros) two dollar bills (if they were printed) in the peak hyperinflation would have be needed to equal in value what a single original Zimbabwe two-dollar bill of 1978 had been worth. Such a pile of bills literally would be light years high, stretching from the Earth to the Andromeda Galaxy.

Shadowstats' John Williams: Prepare For The Hyperinflationary Great Depression (via Kottke)

Previously:

I write books. My latest is a YA science fiction novel called Homeland (it's the sequel to Little Brother). More books: Rapture of the Nerds (a novel, with Charlie Stross); With a Little Help (short stories); and The Great Big Beautiful Tomorrow (novella and nonfic). I speak all over the place and I tweet and tumble, too.

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Anonymous

Haven’t a number of countries stopped doing oil trade in the Dollar? I heard many have moved to the Euro or the Renminbi.
jtf

I’m surprised at how retarded this analysis is. Ladies and gentlemen, confirmation bias at its worst. Underneath the layers of jargon, the argument basically goes: we have a financial crisis –> we caused it by being expansionary and not wanting to pay for our spending –> OMG HYPERINFLATION AND WE MONETARIZE THE DEBT.

I don’t see any situation in which the government monetarizes the debt, which is incredibly stupid, as demonstrated by Zimbabwe and less recently, Argentina. What more likely happens is that the US economy has to take some pain. We might have some bad inflation, but most likely no worse than the 70s.

And as for all that debt, well, among economists its actually debatable as to whether or not we ever need to pay off the national debt at all. Unfortunately, my understanding doesn’t go that far so I won’t discuss it, but it ought to be noted that the conventional wisdom and common sense arguments this seems to espouse may not at all be right.
bravestarr

indeed. srsly, just use dollars, probably everyone else does. if you need local currency to interface with the gubmint, buy it on the black market.

You really think they want to do that? Between Bush’s and now Obama’s reckless, irresponsible spending and refusal to allow for a true recession (stimulate! stimulate! stimulate!), our currency is being set up to go into a devastating free-fall sometime in the next 2-3 years.
- octopod
  
  don’t think it matters. the dollar is pretty much a standard medium of exchange in many troubled countries, and stability is always relative, at least compared to zimbabwe/congo/zaire. uk govt advice for zimbabwe travel is:
  
  “The Zimbabwean dollar has been suspended indefinitely. The most widely used currencies are the US dollar and the South African rand. It is inadvisable to carry large amounts of cash. However, credit and debit cards are not widely accepted and it is not possible to withdraw cash from ATMs.”
  
  it’ll be interesting to see when/how soon/if ever/ the euro starts to be accepted as a second currency in failing economies, but whatever, when it does, I’d worry about the dollar.
Anonymous

You can buy 100 trillion Zim$ banknotes on ebay for about 5$. Which is approx 1000000000000000000 times more than they are worth.
Halloween Jack

In other news, John Williams has finally gotten around to reading Snow Crash.
Attila

And so, a scene from Neal Stephenson’s “Snow Crash” comes to reality (in it, workers in federal buildings are prohibited from using U.S. dollars instead of toilet paper, even when they need a bigger wad of dollar bills to buy a roll of toilet paper than the roll itself is in size)
demidan

Er how many “Gippers” would that be?
Attila

In relation to my previous comment: “Snow Crash” is apparently available online at http://vx.netlux.org/lib/mns00.html (no idea whether it’s legal or not). Search for “NEW TP POOL REGULATIONS” in the page for the hilarious toilet-paper memo.
dainel

#1 anon will seem to have a point. Except for one minor pesky fact. At the height of the inflation, the government was not printing $2 notes. Nor was any one using $2 notes.

The notes would have said something like $2 trillion trillion. You wouldn’t need a stack of notes going all the way to the Andromeda. Just maybe 10,000 pieces, which fits quite easily in a small bag.
- Elistar
  
  OK, I know I’m ignoring the point, this is kind of cool, since math of this scale is typically *wrong*.
  
  The Andromeda Galaxy is 2.54 million light years away (2.54 x 10^6); and there are 9.46 trillion kilometers in a light year (9.46 x 10^12).
  
  That puts the Andromeda galaxy at 24 million trillion (2.4 *10^19) kilometers from here (give or take a km or two.)
  
  Bills are about 0.1 mm thick, so you need 10 million (10^7) of them to make a kilometer a stack high (10 to get a millimeter, 10,000 to get a meter…)
  
  Multiply the number of bills needed to make a kilometer (10^7) by the number of kilometers to Andromeda (2.4 x 10^19), and you get 2.4 x 10^26… he actually got height of the stack of bills right!
  
  The problem is that at a weight of 1 gram, that stack weighs 2.4 x 10^23 kg; about halfway between the mass of Mercury and Titan (Saturn’s moon). So before we build our cash-bridge to Andromeda, we’ll need to develop a fairly major space-mining program.
Anonymous

This is meaningless drivel. The rate of hyperinflation claimed for Zimbabwe last year would have resulted in a ridiculous situation in which your day’s wages wouldn’t have been able to buy a grain of (rice, sand, whatever) by the time you got to the store.

Hence, the only rational course of action for the worker who needed to eat would be to quit his job and acquire food directly, by foraging, agriculture, or theft.

This is a crypto-colonial agenda about foreign money and the rich white elite of the country. To be fair, they faced some fairly strong ‘redistribution’ tactics from the Mugabe administration that must have been quite distressing, but I doubt Mugabe’s “veterans” “drank their blood” (yes, that’s an in-context quote!)
- Pantograph
  
  I would like to congratulate staff at Zanu PF headquarters on finally having a working internet connection.
- Jerril
  
  This is meaningless drivel. The rate of hyperinflation claimed for Zimbabwe last year would have resulted in a ridiculous situation in which your day’s wages wouldn’t have been able to buy a grain of (rice, sand, whatever) by the time you got to the store.
  
  Considering the number of workers and stores who started to refuse payment in Zims, and that those who did were openly worrying about it being worth ANYTHING by the time they could get it to a store and exchange it for something with value, that’s actually not that far off from reality. The BBC was covering it the whole year.
Hobbyekonom

Yes, John Williams inflation data are of a higher quality than what the U.S government supplies. But no, i believe his conclusions are as faulty as the government.

What you ought to keep in mind are the strong deflationary trend that exist for the time being. Since the US government has a Fiat currency, there needs to be some kind of growth, a demographic growth, that causes inflation. There exists some research that points to a relationship between demographics and inflation. In this case you have the baby boom generation that soon will retire and start using their savings. According to the research i have read this is deflationary. This is not unlike Japan who had two decades of deflation. And also a ageing population.

But what i believe will, or to be specific can cause inflation are if the united states manages to loose the reserve currency state of the dollar. As of today and from a macro economic state of view you have the ability to print new dollars, but this inflationary printing are being exported to other countries, mostly to china via their currency peg. If you loose the reserve currency status, their exists according to me a real danger of inflation.

The mechanics of the above stated are your clusterfuck solution to manage Social security and the many recent wars you have not founded. For reference just read about how the Social security thrust found work.

So with that said, and in my humble opinion. There exist a possibility of a coming inflationary trend. But no, this will not come as John Williams has suggested.
- Anonymous
  
  Deflationary on goods, but inflationary on labour.
Bevatron Repairman

10^26? ooh, I can be a molelionaire!
CLAVDIVS

I may not “get” economics, but I’m fairly certain that there’s a point at which you can simply refer to a currency as “worthless”.
- octopod
  
  indeed. srsly, just use dollars, probably everyone else does. if you need local currency to interface with the gubmint, buy it on the black market.
Anonymous

John Williams may know something (?) about economics, but he knows nothing about astronomical distances. Andromeda? Give me a break!
- Anonymous
  
  Andromeda is a vast understatement. US bills are about .0043 inches thick. Assuming Zimbabwe bills are the same thickness, a stack of $2 bills equaling 10^26 dollars would be over 18 TRILLION light years high. The Andromeda galaxy is only 2.2 million light years away. Exact numbers:
  
  18,215,974,065,170 = stack of zim bills
  2,200,000 = distance to Andromeda
MrLMNOP

come on, that much paper would be worth more than two dollars in any currency.
Anonymous

“Such a pile of bills literally would be light years high, stretching from the Earth to the Andromeda Galaxy. ”

No, no it wouldn’t.

A light year is just under ten trillion kilometers.

That works out to 946,000,000,000,000 km.

Let us say that each bill is 1/10th of a millimeter thick. That means you would need 10,000 bills to equal 1 meter, or 9,460,000,000,000,000,000,000 bills to equal a single light year.

Andromeda is 2,500,000 light years away. That means to get to Andromeda, you would need a stack of 23,560,000,000,000,000,000,000,000,000 bills.

Unless someone wants to correct my math?
Anonymous

And to think, at the time of independence in 1980 the Zimbabwe Dollar was almost on a par with the British Pound, despite almost a decade of sanctions.
greengestalt

Reminds me of an old joke back when bOING bOING was a ‘Zine…

–Get$25 in bills from some worthless country where US$25 fills a whellbarrow.
—Divide them into five equal lots.
—Send them to the addr. on your next chain letter in a box, along with an incomprehensible letter…

—————

But we can laugh at other countries-till the parasite rich elite bankers do the same thing to us. They are likely engineering the crash of the dollar. And any “Buy Gold!” nuts are also being set up for a fall. Gold is inflated and it’s value will be crashed to get a ton of people begging to sell at 1/20th the value, then the govt. will likely use one of them going nuts and shooting people to justify martial law and take it back by force, back into the hands of the bankers that inflated the price and sold it.