"Hyperinflation vacation" is the title of a new piece in The Atlantic by Graeme Wood. He espouses his "First Rule of Budget Travel," which states, "where there is runaway inflation, there are great deals for travelers with hard cash." High inflation can allow the budget traveler to live like royalty, provided that he or she has plenty of hard currency from a stabler economy; say, for example, U.S. dollars. But that's only if you don't mind conflict tourism of the economic-warfare sort.
Iran's inflation is indeed high, perhaps as high as 110 percent for 2012, an economist told Wood. It got so bad, he writes, "Authorities tried to ban currency trading for a few weeks in October, when the inflation rate peaked, but they failed. Finally they just asked money changers not to advertise the depressing new rates in their windows."
All of this means that, if you show up in Iran (which is not necessarily as difficult as you might imagine) with a bunch of U.S. dollars, you'll pay exceptionally cheap prices for everything, and not just because of the favorable exchange rate. For Iranians worried about the Iranian rial's dropping value, dollars are not just valuable today but potentially much more valuable tomorrow, making them a safe investment in a place with few of them.
When Wood visited the Iranian tourist island of Kish, everything was wildly expensive in rials and astoundingly cheap in dollars. He found an iPad selling for the equivalent of $900 worth of rials or, when he offered dollars, $200. The value of his paper currency jumped 350 percent just by bearing Benjamin Franklin rather than Ruhollah Khomeini. Imagine the money in your wallet suddenly increasing value by a factor of four and a half -- your nightly hotel budget rising from $70 to the equivalent of $340 -- and you can see the appeal of a hyperinflation vacation.
Still, it feels a little weird to profit off of someone else's pain. In this case, that someone is the entire Iranian middle and lower class. (Something Wood is very aware of and discusses with great care in his article.) The Post's Jason Rezaian has reported from Tehran on the pain that ordinary Iranians feel from inflation, with everything from food to medicine becoming tougher to afford. And Wood points out that wealthy Iranians -- those more likely to be affiliated with the regime, and thus desired targets of the economic sanctions driving so much of the inflation -- are actually able to profit off of the inflation, for example with well-timed imports or by taking out the fixed-interest loans available only to those with political connections.
I've heard Iran described often as a beautiful and hospitable place -- photos certainly bear this out -- but the idea of having a front-row seat to economic warfare, and benefiting from the suffering it causes, sound less appealing. Then again, even if taking a hyperinflation vacation to Iran might be exploiting a bad situation, you're still bringing whatever Iranians you meet some of the business and currency they badly need. The rates are so low for dollar-wielding tourists in large part because Iranians have so much to gain by putting their hands on a few greenbacks.
Any instance of hyperinflation is a crime with many victims and, often, a number of perpetrators. Iran hasn't hit the hyperinflation benchmark just yet, but, if it does, Wood argues that it will be due in large part to the government's decision to keep the rial presses spinning long after it stopped being responsible. Sanctions can do a lot to boost inflation, but it takes the people with access to the currency printer to cause hyperinflation, by minting enough money to keep the government going, even if that means impoverishing many of its citizens. Here's Wood:
A key point in any hyperinflation scenario is a government’s moment of moral self-discovery, when it realizes that it is willing – under pressure of its own making or from external forces – to finance itself at its most vulnerable citizens’ expense. To see the direction Iran is taking, we might consider monitoring not only the imports of uranium, but also those of printer ink.
Could make for a great vacation, if you've got the stomach for it.