Activity: Last 10 WeeksLife under hyperinflation
I do not know how I missed it on the papers, but I just learned that Zimbabwe has fallen victim to hyperinflation. The situation is so dire that people are burying the dead in coffins built from the home cupboard. I have never witnessed anything that bad, but coming from Turkey, I have lived through triple digit inflation. I think it is interesting how people’s spending habits can quickly change in the face of inflation. Discretionary spending decreases, then stops. Things are bought in bulk, whenever possible. Eventually these practices turns into a habit, and take some time to shed even after economic conditions have improved.
The banknotes dated so quickly that you could pinpoint the date by knowing which ones were in circulation, or by the cost of common goods. Until recently, the smallest denomination was a million Turkish lira. When everything is measured in milions, it became customary to simply drop the million to save time and make prices easier to read. More recently this usage was formalized by slashing six zeros and releasing the New Turkish Lira. The inflation rate is now in the single digits. I still can’t believe it!
on May 7th, 2006 at 09:46 Quote
Nice picture. Ukraine went through hyperinflation too, but I was a kid back then. The only thing I remember was the rumors that hyperinflation was orchestrated in order to rob millions of their life savings. It was actually hyper-ironic to many to see the accounts that held their lifesavings in the state-run Savings Bank (that’s what it was called) canceled and payed off in sums the total worth of which became equal to pennies.
on May 7th, 2006 at 14:17 Quote
In Turkey, such manipulation of the money markets was commonplace in the 90s. Innumerable banks went under as the owners swiped the money and ran. Some were state insured and some were not. In the former case, the entire population ended up paying for it. Our Middle Eastern neighbors have a certain way of dealing with this: they dismember the thieves’ hands. Then again, Islamic banking is something of an enigma, because interest is prohibited. The situation in Turkey has improved since the passing of banking laws to comply E.U. regulations.
P.S. I just realized we have the same initials. I am so slow.