Anecdotes About Money

I met a man who sold his house here in Zimbabwe around the turn of the century, receiving the equivalent of about $50,000 in Zimbabwean dollars. He put all of it, the bulk of his life savings, into an account measured in Zim dollars. In August 2006, the government removed three zeros from its currency. By that time, zeros or not, the account was worth a tiny fraction of its original value.

I heard a story about a man who is rumored to have bought a brand new Mercedes (or the like) for $3. How’d he do it? Certain individuals in this country have the ability to exchange currency at “official” exchange rates. Those rates are dramatically different from the actual exchange rates. (Think 300-1 when the real rate is millions or billions to one.) This man was one of those with access to the official rate. So he took three American dollars and changed it at the unofficial rate, receiving billions, or perhaps trillions, of Zimbabwean dollars. Then, he went to an institution that honored the “official” rate and received greenbacks at the absurdly lower rate. Presto, a new car for three bucks.

During hyperinflation, a business owner I met began to pay his employees in “units” -- because Zim dollars lost a substantial portion of their value each day, and paying employees in any other currency was illegal. The man just basically made up his own currency -- only he didn’t print money. Customers would bring him food or clothing or soap. He would assess the value in “units” of each item, and hand over the appropriate amount of goods he was selling. A great deal of business was transacted in this fashion during hyperinflation. This particular business owner received payments from his customers in grain, fruit, or most anything else they gave him. Fuel vouchers were preferred. He once even accepted a cow as payment.

At one point, the Zimbabwean government printed One Cent notes. At one point, it printed One Hundred Trillion Dollar notes. Official checks in Zimbabwe had spaces for quadrillions and septillions.

At grocery stores during hyperinflation, lines were a problem. Sometimes, you’d be in a line, and someone would produce a gigantic brick of Zim dollars. Counting each and every note would take forever. Other times, you’d be in an aisle and the person at the front would decide to pay by check. It would take ages for the people to write a check with the proper number of zeroes.

Dollars are accepted here, but quarters, nickels, dimes, and pennies are not. Suppose a can of Coke costs 50 cents. (It’s really more like one dollar these days.) If you hand the clerk a dollar for the can of Coke, you will be asked to select other items adding up to 50 cents, because there is no change to distribute. In many stores, as in the United States, there are little pieces of candy at the counter where you pay for your goods. Here, their main use is as a substitute for change. If your purchase adds up to just shy of a dollar amount, you will be asked to take a few candies to make up the difference. As an alternative, stores usually offer vouchers in lieu of change. Many Zimbabweans have an assortment of stray vouchers at home -- 21 cents at this store, 37 cents at that one.

Someone I met told me that a year or so ago, he saw a friend taking bricks of Zimbabwean dollars -- all told, about the size of a loaf of bread -- down the street. The friend exchanged all those dollars for a single pint of milk.

During hyperinflation, Zimbabweans were authorized to keep some of their money in FCAs -- Foreign Currency Accounts. These accounts were not in Zimbabwean dollars, and they held their value. Several people told me that the Zimbabwean government confiscated the money in these accounts at some point in the past two years. Why? They claimed it was because the Reserve Bank of Zimbabwe was broke. Only 5% of Zimbabweans pay taxes. The government cannot print money in other currencies. And it’s not effective to print money in its own currency because the notes are devalued as soon as they’re introduced. So the government resorts to theft, they say. To be sure, the “actual balance” of these peoples' FCAs still states the proper amount. But the “available balance” is zero.