Tuesday, August 18, 2009

Zimbabwe's Inflation Was #2: Prices Doubled Daily


A new paper in The Cato Journal "On the Measurement of Zimbabwe’s Hyperinflation" by Steve H. Hanke and Alex K. F. Kwok, documents Zimbabwe's hyperinflation:

The 20th century witnessed 28 hyperinflations (Bernholz 2003: 8). Most were associated with the monetary chaos that followed the two World Wars and the collapse of communism. Zimbabwe’s hyperinflation of 2007–08 represents the first episode in the 21st century and the world’s 30th hyperinflation. As incredible as Zimbabwe’s November 2008 inflation rate was (see Table 1 above), it failed to push Zimbabwe to the top of the world’s hyperinflation league table. That spot is held by Hungary (see Table 2 above).

MP: Note in Table 2 above that at the height of Zimbabwe's inflation in November 2008, prices were doubling every day, which didn't quite reach the record in Hungary of prices doubling every 15 hours.

Reminds me of a story I heard once about how drinking warm beer was one of the "costs of hyperinflation" in either Hungary or Germany. Because all retail prices were supposedly rising by the hour, beer drinkers at taverns would order and pay for all of their beer at the beginning of the evening when prices were low and then drink warm beer all night, instead of buying one cold beer at a time at increasingly higher prices. It's probably an example of a story that is "too good to check out" but why let the facts get in the way of a good story (as Benny points out they probably didn't have refrigeration for beer back then)?

Originally posted at Carpe Diem.

6 Comments:

At 8/18/2009 6:31 PM, Anonymous Benny The Real Know It All said...

To MP: The story may not be true about beer. After WWII, much beer was warm anyway in Europe, they did not refrigerate brew.
But here is a link to cheer you up:
http://www.economist.com/displayStory.cfm?story_id=14209825

Asia is already well past the recession, according to the Economist. Even Japan.

 
At 8/18/2009 6:43 PM, Anonymous BarryRitholtzIsAnIdiot said...

More great news Benny - the permabear bloggers are gonna go crazy on you.

 
At 8/18/2009 7:25 PM, Anonymous Benny said...

Barry-
My own take is that we are on the cusp of another 20-year global economic boom. A lot like the last 20 years, but better.
R&D and commercialization happens not only in USA, but Asia and Europe now. Never have so many engineers and scientists been around, and never has information been instantly transmitted globally by Internet.
Only man's inhumanity to man can stop incredible progress in the next 20 years.

 
At 8/18/2009 7:25 PM, Anonymous Benny said...

Barry-
My own take is that we are on the cusp of another 20-year global economic boom. A lot like the last 20 years, but better.
R&D and commercialization happens not only in USA, but Asia and Europe now. Never have so many engineers and scientists been around, and never has information been instantly transmitted globally by Internet.
Only man's inhumanity to man can stop incredible progress in the next 20 years.

 
At 8/18/2009 8:23 PM, Blogger mongander said...

During the Florida bubble, in the 20s, I believe it was Will Rogers that said,
"Miami is the only place you can tell a lie at breakfast, and it'll be true by supper."

 
At 8/19/2009 8:21 AM, Anonymous Cooper said...

What I remember about the hyperinflationin Germany was how their long lunch break habbit got started. Burring that time, prices were rising so fast, that wages and labor were basicly worthless the next day. So people would go into work in the morning, get paid before lunch. Get off work and buy what they could. Then go back to work and get paid Again after evening shift.

Yes they were gettign paid twice a day because if they waited till night, their morning wages were nearly usless.

 

Post a Comment

Links to this post:

Create a Link

<< Home