Trillionaire from the slums: why money stoked the furnace and poured them down the toilet

© AP Photo / Tsvangirayi MukwazhiМужчина carries wads of cash in Harare, Zimbabwe. March 5, 2008Trillionaire from the slums: why money stoked the furnace and poured them down the toilet© AP Photo / Tsvangirayi Mukwazhi

MOSCOW, February 13 — RIA Novosti, Natalia Dembinski.Inflation in Venezuela is completely out of control. By 2018 it can reach 13 000%. Continuous operation of the printing press led to the fact that the supply of currency for the 12 months increased by 14 times. Prices are rising with great speed, and the authorities do not manage to print banknotes.

Not knowing what to do with worthless pieces of paper, people turned to barter. As payment, for example, take eggs. In history, however, enough examples of the money had depreciated so that they stoked the furnace, used for domestic purposes and even for toilet paper. About what use «useless pieces of paper» — in the material RIA Novosti.

Venezuela — barter and barter

Inflation in Venezuela over the past year exceeded 4 000%. Per U.S. dollar on the black market now give about 236 thousand bolivars, the rate fell to 80 times in the last 12 months. A few years ago for that money you could buy a small apartment, but now they don’t have enough to eat.

A Cup of coffee in Venezuela has risen from fifteen thousand to 45 thousand bolivars — 718 times, or 448 025%. This is the data of the Bloomberg Cafe Con Leche, to give an idea of the rate of inflation in the crisis-ridden country, where not published official statistics.

The same kind of calculations are also local residents. For example, the local priest measures the dynamics of price growth in eggs. The donations received in the course of one Sunday six months ago, it was enough to buy 30 eggs. Now to buy three dozen, you need to hold more than 50 services, he told The Wall Street Journal.

Payments to veterans and victims of world war I, unemployment benefits and the provision of 8-hour working day — an impressive social obligations laid an unbearable burden on the budget. And the government turned on the printing press.

For the first six months of 1923 was released 17 trillion marks. The printing of money connected private printing houses, but the capacity is still not enough.

By November 1923, when the dollar was given more than 4 trillion German marks, hyperinflation has been tamed. Authorities conducted a monetary reform, old money was exchanged for new at the rate of 1 trillion to one. The largest banknote issued in Germany, was the banknote in 100 trillion paper marks.

Soviet Union — salt, grain and cigarettes

In Russia, the hyperinflation started earlier than in Germany, and continued until the end of the civil war. In 1919 the Soviet notes were issued, which for some time was the main currency of the young state. Their credibility was low. Finally it blew uncontrolled emission, using the plug holes in the budget.

As a result, farmers stopped taking Soviet notes, and the urban population moved to barter, paying with salt, grain, vodka and cigarettes.
Zimbabwe — currency instead of toilet paper

In the new century the highest recorded hyperinflation in Zimbabwe. 20 years ago the African country was one of the most economically successful on the continent, and now it is the main consumer of humanitarian assistance.

To hyperinflation of 2007-2008 led to an unsuccessful land reform of President Roberg Mugabe. In 2000-2001, the land expropriated from white farmers (they owned about 70% of agricultural land) and redistributed among the black population. In the subsequent 9 years the volume of production in the country fell by 50%.

Already in 1998, inflation in Zimbabwe was 32%, and by 2007 reached 7635%. Prices doubled every 25 hours.© AFP 2018 / Alexander Oemichen counts the money in Harare, Zimbabwe. January 23, 2008Trillionaire from the slums: why money stoked the furnace and poured them down the toilet© AFP 2018 / Alexander Oemichen counts the money in Harare, Zimbabwe. January 23, 2008

For six months the government spent two denominations, removing from the bills first 10 zeros, and then another 12. The record for the number of zeros was first Zimbabwean banknote one hundred trillion dollars, then two hundred trillion dollars, then five hundred.

«The Central Bank began to print money at will, adding or removing zeros. All events were «casino economy». We have become a country of millionaires, billionaires and trillionerov. Nobody paid attention to what the currency was worth less than the paper on which it was printed,» said the former head of the country’s Central Bank Gideon Gono.

To buy a loaf of bread, needed a whole bag of banknotes for 100 trillion Zimbabwean dollars, a can of beer rose in price by 1.5 times every hour.

«In the bathroom at the gas station we couldn’t afford toilet paper — one roll cost bundles of Zimbabwean dollars. Then we put a metal box, jam-Packed with local currency. We literally poured down the toilet billions of dollars,» — says the owner of one of the gas stations.

Advertisements were published on bonded bills — it was also cheaper. In the end, the economy has become fully barter.

«When we wanted to buy something, merchants would look at our shoes, backpacks and only in the last turn for US dollars. Fortunately, we had some ordinary ballpoint pens, which they happily took. At that time, pen was the local currency,» — says one of the tourists who visited Zimbabwe in August 2008.

In 2009 Zimbabwe finally abandoned its currency, switching to American dollars and South African Rand. And in 2014 the first legal tender recognized as the Chinese yuan, Japanese yen, Indian rupees and Australian dollars.

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