Anywhere the money supply is determined by government whim instead of the the value of their gold and silver reserves (is there anywhere nowadays where this isn’t the case anymore? Perhaps Switzerland? I can’t recall.), unregulated expansion of the currency produced runaway inflation. It’s a hidden tax you might say since it’s imposed by the government and unlike tax rate increases, it’s done without a vote by some faceless board or government strongman.
In Zimbabwe, the local despot has destroyed the value of their currency. $750,000 Zimbabwe dollars won’t even buy a loaf of bread.
Businesses won’t take checks… by the time they clear the bank the business has lost money.
For example if you run a grocery store and sell a bag of groceries for $50, your profit might be $25. You take a check because by the time it’s deposited in your account in a few days, there’s basically no inflation so your profit is still $25.
In scenarios of massive inflation, by the time the check clears, you may have lost your profits and your capital!
In such situations, hard currencies (either silver and gold based coins or stable currencies like the US Dollar used to be) are the preferred medium of exchange – or value for value barter.
If inflation went insane here how would your home business adapt?
Infation, remember, contracts economies and by necessity makes transactions tend to be more “face to face”. So what do you have to market locally? Who can use your services where you live?
Interesting question. Hopefully we won’t have to deal with it. In any case this article is worth reading:
The Scotsman: The $750,000 note that won’t buy a loaf of bread
charlton mpofu on September 6th, 2010 at 2:39 am
guys can you post mi ideas on what business i can start in zimbabwe