Wednesday, May 18, 2022

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    The secret behind Zimbabwe’s $100 trillion note

    Zimbabwe is known to have the worst cases of hyperinflation, due to which it had financially hit a perpetual rock bottom. Hyperinflation emerged when the supply of goods is not enough to satisfy the increase in demand, which in most cases, is exponential.

    This rise in demand increases the prices of goods to whopping levels. This increase in demand roots in a wealthy population. When a government starts printing too much money, the majority of the country’s population becomes rich resulting in hyperinflation. This is how Zimbabwe hit the worst case of hyperinflation.

    The government started printing a copious amount of money to fund a war in the Congo and to promote the salaries of officials and soldiers. The circulation of money increased which led to the amplification of prices so much that
    people had to carry a wheelbarrow of cash to buy just one loaf of bread!

    The government further printed more money of higher denominations like Zimbabwe $1 billion, $1 trillion, and even a $100 trillion note. The monthly inflation rate peaked at 79,600,000,000%.

    In the process, Zimbabwe gave the world a lesson of what happens when a government chooses to ignore the basic principles of the economy.

    Printing more money, after all, can never end poverty.

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