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"All other currencies have a bottom floor that they can't fall below" I suspect holders of the Zimbabwean Dollar would disagree, as would the holders of many o

"All other currencies have a bottom floor that they can't fall below" I suspect holders of the Zimbabwean Dollar would disagree, as would the holders of many other hyperflationary currencies going back many centuries. Such currencies were all legal tender, but it didn't make any difference.

zeteo 14y ago
I'm not talking about the value of a single unit of currency, but about the aggregate value of the currency itself. A single Zimbabwean Dollar might have fallen very low indeed, but as long as it was legal tender - and the Zimbabwean government accepted payment in it - the value of all Zimbabwean dollars still had to be sufficient for paying taxes and debts in that country.
- tinco 14y ago
  That's assuming the Zimbabwean government actually survives. At some point people will lose all trust in the currency and start to use a more solid one, this can mean currencies from neighbouring countries, or stable ones from far away like the dollar, euro or yuan. If it that point the Zimbabwean government would still print money it can't back it would go bankrupt, and not be able to pay its staff and cease to be.
  - martinced 14y ago
    "At some point people will lose all trust in the currency and start to use a more solid one, this can mean currencies from neighbouring countries, or stable ones from far away like the dollar, euro or yuan." Sometimes people don't have the choice: in Argentina you cannot exchange your money for other currencies if you're not a tourist and you have to live with 23% inflation per year or so. Not exactly great for the economy. More recently, a few days ago, people in Cyprus cannot exchange their money anymore in other currencies: there are effectively two different euros in the eurozone now. One on which there are restriction and one on which there aren't. If you have a shitload of euro bills with a 'Y' (the code for Chyprus) on them I'd fastly change them to something else because there's a very high risk to lose everything. Also, I can't help but laugh at you describing the euro as "stable". The eurozone is on the verge of gigantic collapse: the situation is very concerning. France just announced that they ran in 2012 at a deficit of 4,5% (!) and that in 2013 they won't be able to reach 3%. France getting out of the eurozone in 2014 is hardly unthinkable. Actually, the probability that before the end of the year the entire eurozone will announce several bank failures and up to 40% confiscation (like in Cyprus) on all the eurozone citizen accounts above 100 K Euros is not zero.

zeteo 14y ago

I'm not talking about the value of a single unit of currency, but about the aggregate value of the currency itself. A single Zimbabwean Dollar might have fallen very low indeed, but as long as it was legal tender - and the Zimbabwean government accepted payment in it - the value of all Zimbabwean dollars still had to be sufficient for paying taxes and debts in that country.

tinco 14y ago
That's assuming the Zimbabwean government actually survives. At some point people will lose all trust in the currency and start to use a more solid one, this can mean currencies from neighbouring countries, or stable ones from far away like the dollar, euro or yuan. If it that point the Zimbabwean government would still print money it can't back it would go bankrupt, and not be able to pay its staff and cease to be.
- martinced 14y ago
  "At some point people will lose all trust in the currency and start to use a more solid one, this can mean currencies from neighbouring countries, or stable ones from far away like the dollar, euro or yuan." Sometimes people don't have the choice: in Argentina you cannot exchange your money for other currencies if you're not a tourist and you have to live with 23% inflation per year or so. Not exactly great for the economy. More recently, a few days ago, people in Cyprus cannot exchange their money anymore in other currencies: there are effectively two different euros in the eurozone now. One on which there are restriction and one on which there aren't. If you have a shitload of euro bills with a 'Y' (the code for Chyprus) on them I'd fastly change them to something else because there's a very high risk to lose everything. Also, I can't help but laugh at you describing the euro as "stable". The eurozone is on the verge of gigantic collapse: the situation is very concerning. France just announced that they ran in 2012 at a deficit of 4,5% (!) and that in 2013 they won't be able to reach 3%. France getting out of the eurozone in 2014 is hardly unthinkable. Actually, the probability that before the end of the year the entire eurozone will announce several bank failures and up to 40% confiscation (like in Cyprus) on all the eurozone citizen accounts above 100 K Euros is not zero.