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Comment by spooky_action | Hacker News Reader

I lived through the entirety of Zimbabwe's hyperinflation era. I don't quite recall how the updates of prices were done, whether you would pick the item up, and it would just be updated by computer while you were waiting in line, or if you'd only hear the price at checkout, or if you would just learn the price at checkout. What I do recall is how utterly empty every store was, and the massive queues that people would stand in to get a loaf of bread.

Also, a lot of money in the streets, in the literal sense. As greater and greater denominations were printed, and earlier denominations became worthless, people would toss the old bills out. It's somewhat amusing that tourists actually buy this 'worthless' money for its novelty.

Realistically, by mid to late 2008, you would have had to purchase basic necessities (and certainly petrol) in South African rands or USD.

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The whole thing sounds to me like a method of forced equality. Everyone had nothing, and everyone had to try their best to participate in the economy in order to get any of the limited supplies that were available. If you didn't work today, you wouldn't have anything of value to buy food today. Only after rebuilding a foundation for a more normal economy could the pressure be decrease. Is this a reasonable way to view it?

From what I've read, it seems that the reason for Zimbabwe hyperinflation was an attempt of "forced equality" but in a different way.

As an heritage of colonialism, 1% of the white people owned the 70% of the land, and agriculture was the main product of the economy and the main source of employment.

Mugabe decided to take the land from the whites and give it to their soldiers and mates who had not idea what to do with it. The production fell spectacularly. The following supply shock created the hyperinflation. The "printing" of money was just a consequence.

Edit: just to be clear, I'm not saying that a minority owning most of the land was a good thing. Just trying to explain my understanding of what happened.

Not disagreeing with you, but if it had been handed over to specific people it might have worked, but what happened is anyone and anyone in the local area just went into the farms and took whatever they wanted. No production, no employment on the farms, no taxes or foreign exchange from the produce -> economic collapse.

I worked for a telecoms company back in 2006 and a Zimbabwean cellular network wanted to buy our software. They had the money in an escrow account, but pulled out of the deal before it could complete. It wasn't as bad back then, but that was the year inflation hit 1,000% so it was clear what was happening.

Supply shocks can't cause general or sustained inflation. If farms stop producing anything, that should cause a shortage of farm-originated goods, and the prices of those things should increase. But the prices of other things should not change much; some prices will actually go down as people aren't as willing to pay as much as before.

If the farm workers all aren't getting paid anymore or a lot of loans are cancelled, that should cause deflation, not inflation.

Hyperinflation is always caused by inflationary treasury finance.

Well, following your theory, a dollar in the desert have infinite value ;-)

If your only export is farm-originated goods (as it's basically the case of Zimbabwe), that means that you have to import everything else.

That means that you need foreign currency for getting everything that it's not farm-originated goods.

If you stop producing farm-originated goods, the value of your money will drop respect the other currencies and you will need more and more or your currency to buy imports.

But even in a closed economy, less production and the same quantity of money, means, obviously, more expensive prices.

How could be otherwise? After all, you agree that the same production and more money means more expensive prices.

Isn't it worse than that? People are disincentivized to anything beyond survival. Plus you need inputs (goods and services) from abroad, like fuel, medicines, technology, etc. But those places will not honor your local currency so you get none.

Sounds like equality only among the poor. The well-off probably had savings in foreign currency and other assets that kept their value.

It was anything but equal. My mother was well connected to a manager of a major supermarket, so instead of waiting in line for hours for a loaf of bread, she could go in the back door of the store.

My family were also property owners, so their wealth was not diminished as rapidly as the rest of the economy (though it certainly was diminished).

Hyperinflation is not a route I recommend if greater equality is what you seek :)

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