If you've saved up 175 quadrillion Zimbabwe dollars — that's 175 followed by 15 zeros — congratulations, you're now $5 richer. In fact, the government is in such a generous mood that even if you have less than that, they'll still give you $5.
That, apparently, is how you say sorry for wiping out a country's life savings.
This is the coda to Zimbabwe's monetary madness, which, at its peak in 2008, saw prices double every 25 hours. That made it the second-worst hyperinflation in history, behind only postwar Hungary. And its legacy lives on not only in the hundred-trillion-dollar banknotes still floating around but also in an economy that's smaller now than it was in 2002.
Six years since the hyperinflation ended, though, the government has decided it's finally time to retire its old currency, which made Monopoly money look unambitious, given that nobody uses it anymore. The U.S. dollar, after all, replaced it as Zimbabwe's official currency back in 2009 — that's what ended the inflation — and a handful of others, like the South African rand, have unofficially done so, as well. Zimbabwe dollars are little more than souvenirs now, and, actually, you could probably get a better price for them on eBay than the $5 the government is offering for them. That's how much it's willing to pay for up to 175 quadrillion of your old Zimbabwe dollars, but only for a limited time! It will stop buying them back on Sept. 30, at which point your Zimbabwe dollars will go from being mostly worthless to entirely so.
How did Zimbabwe get to the point where being a billionaire meant you were really dirt poor? Well, if inflation is about too much money chasing too few goods, then hyperinflation is about way too much money chasing no goods, or close enough to it. In other words, it's not enough to just print a lot of money. The economy has to fall to pieces, too. The way it usually works, actually, is that the economic collapse — which makes tax revenues also collapse — is the impetus to start printing so much money in the first place.
Zimbabwe's problems began when the Mugabe regime seized what were mostly white-owned farms to distribute to the country's majority black population. On its own, this would have made sense as a way to try to make up for at least some of the inequities of the nation's not-so-distant colonial past. But it didn't when Mugabe just doled out the land to cronies who had no idea how to run large-scale commercial farms. Agricultural exports, which were a big part of the economy, crumbled. Mugabe tried to shore up his popularity by increasing salaries for soldiers and other friends of the regime. Where did the money come from? Easy: the printing press. With tax revenues drying up, that's where all the government's money came from.
But the bigger its deficit got, the more it had to print, and the more money there was chasing what were now very few goods. Inflation soared from the merely ridiculous to absurd levels— something like 80,000,000,000 percent on a monthly basis — and the government's only response was to declare price increases illegal. This did not work. If you tell people they can only sell something for less than it costs to make, they won't make it. So price controls only create shortages in the official market, and push inflation into the black market, which is even worse than it would have been since there aren't as many things to buy.
This kind of hyperinflation not only robs people of their life savings overnight, but it also makes it impossible for them to plan for any time horizon beyond that. After all, prices were constantly going up — stores would arm employees with label-makers to update them three or four times a day — so you have to spend whatever you have as soon as you get it. But that expectation that prices would rise exponentially made them rise even more so, as the government had to print more and more money to make up for the fact that people expected it to lose its value faster and faster than before. That's how you end up with hundred-trillion-dollar bills.
Eventually, though, people won't use your worthless currency even if you tell them it's against the law to use anything else. That's what happened in 2008, a year after Zimbabwe's inflation turned into the hyper variety, when the U.S. dollar became Zimbabwe's de facto medium of exchange. The government gave in to this reality a year later, and once the country's money was something it couldn't print, the inflation ended. Until now, when the government is telling its people this:
175 quadrillion Zimbabwe dollars isn't cool. You know what's cool? $5.