Real inflation:

Back when I was in kindergarten, I found a 5,000 Deutchmark postage stamp on the ground - which started me collecting stamps as a kid.

A number of years ago, I bought a $20 billion banknote in Zimbabwe for a US buck - and probably overpaid (but it did have a lot of cool anti-counterfeiting stuff built into it)

The cruzado was the currency of Brazil from 1986 to 1989. It replaced the second cruzeiro (at first called the "cruzeiro novo") in 1986, at a rate of 1 cruzado = 1000 cruzeiros (novos) and was replaced in 1989 by the cruzado novo at a rate of 1000 cruzados = 1 cruzado novo.

In 1998, we decided to spend New Years in Rio de Janiero, Brazil and the currency was the cruzeiro with a "parallel" (black market) exchange rate of about 115 to the US dollar. When we returned to repeat the experience in 1989, the cruzeiro had been replaced by the cruzado at the rate of 1000:1. In 1993, there was another devaluation and 1,000 cruzeiros = 1 (cruzeiro) real.

While we shudder at 10%-15% inflation and how it destroys savings, imagine the above real-world examples.

Jeff

Macroeconomic Trends and Risks FAQ

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