Opinion / Blogs
Zimbabwe coins document inflation
21 Jun 2011 at 13:18hrs | Views
Zimbabwe set a dubious world record for highest currency denomination when, in 2009, it issued bank notes in the astronomical value of 100 trillion Zimbabwe dollars. By the time this Reserve Bank of Zimbabwe note was being released, local citizens were stampeding to spend U.S. dollars and South African rands instead, considering Zimbabwe's currency less than worthless.
Coins vanished from the domestic economy a long time ago as inflation ravaged the African nation. President Robert Mugabe insists the Zimbabwe dollar will mount a comeback and increase in value, but there are few people who believe this will happen while Mugabe remains in power.
Zimbabwe Prime Minister Morgan Tsvangirai was heard telling a farmer at a 2010 rally that the farmer should use Zimbabwe bank notes "to fertilize his fields."
Zimbabwe's bank notes, according to a story in the May 11 Wall Street Journal newspaper, "[are] a national symbol of monetary policy run amok."
The focus of the newspaper story is not the hyperinflation that decimated Zimbabwe's economy, and drove its citizens to use foreign rather than domestic coins and bank notes. Instead, the story detailed how the worthless 100-trillion dollar bank note is now a hot item on E-bay, and in collector markets a Crisp Uncirculated example typically realizes $5 in U.S. currency.
The risk bank note dealers selling these notes on the internet are taking is that the Zimbabwe central bank likely has more where these came from, and could flood the market with them to make some money. That is, make some money in anything but Zimbabwe currency.
Coin collectors reading this article are likely thinking that this is all very interesting, but coins aren't issued in such astronomical denominations when inflation gets out of hand. Generally speaking, metal coins vanish during periods of rampant inflation, the government turns on the printing presses to produce notes of increasing denominations, and the purchasing power of these notes plummets.
There are, however, some historic examples of coin denominations that have reached the heights of ridiculousness in an effort to keep up with the ravages of inflation. Inflation can be seen throughout coinage, no matter where in history you look.
The ancient Romans gave up the silver denarius for the silver wash coated antoninianus or double denarius.
The U.S. dumped the half cent as a denomination no longer having much purchasing power a mere eight years after introducing the astronomical $20 double eagle denomination. At the time a Double Eagle represented several week's pay for the average worker. The half cent was last minted in 1857, while the double Eeagle was introduced in 1849.
Most collectors are familiar with the incredibly high denomination bank notes issued by Germany during the early 20th century when inflation went wild, but what about the Westfalia metal notgeld coins of 1923? Those coins were issued in denominations well into the millions of marks.
Yes, it is more challenging to identify hyperinflationary denomination coins than bank notes. This is partly because there are so many non-circulating legal tender commemorative coins that were never meant to be spent. Sometimes you have to look more closely to identify which are the true NCLT coins, and which coins with very high denominations were issued with the intention of keeping up with inflation.
In the later years of the Peoples' Republic of Poland, inflation became a serious problem. That fact can be seen through its bank notes, but there was also an attempt to keep coins in circulation by the issuance of a 1991 ringed bimetal circulating commemorative 20,000-zlotych coin composed of a copper-nickel center and a brass composition outer ring.
In very recent history Turkey, rather than Zimbabwe, is a better example for coin collectors to examine. While coins vanished from circulation in Zimbabwe, the Turkish government continued to attempt to keep metal coins in commerce with such issues as the copper-nickel 50-bin lira (50,000-lira) of 1996-2000, and its 1999 counterpart composed of aluminum. Between 1999 and 2000 a copper-nickel-zinc 100-bin lira or 100,0000-lira coin was also issued for circulation. This was followed in 2002 by copper-nickel coins in denominations of 500,000-, 750,000-, and 1 million lira. Mercifully a currency reform followed.
Coins vanished from the domestic economy a long time ago as inflation ravaged the African nation. President Robert Mugabe insists the Zimbabwe dollar will mount a comeback and increase in value, but there are few people who believe this will happen while Mugabe remains in power.
Zimbabwe Prime Minister Morgan Tsvangirai was heard telling a farmer at a 2010 rally that the farmer should use Zimbabwe bank notes "to fertilize his fields."
Zimbabwe's bank notes, according to a story in the May 11 Wall Street Journal newspaper, "[are] a national symbol of monetary policy run amok."
The focus of the newspaper story is not the hyperinflation that decimated Zimbabwe's economy, and drove its citizens to use foreign rather than domestic coins and bank notes. Instead, the story detailed how the worthless 100-trillion dollar bank note is now a hot item on E-bay, and in collector markets a Crisp Uncirculated example typically realizes $5 in U.S. currency.
The risk bank note dealers selling these notes on the internet are taking is that the Zimbabwe central bank likely has more where these came from, and could flood the market with them to make some money. That is, make some money in anything but Zimbabwe currency.
Coin collectors reading this article are likely thinking that this is all very interesting, but coins aren't issued in such astronomical denominations when inflation gets out of hand. Generally speaking, metal coins vanish during periods of rampant inflation, the government turns on the printing presses to produce notes of increasing denominations, and the purchasing power of these notes plummets.
There are, however, some historic examples of coin denominations that have reached the heights of ridiculousness in an effort to keep up with the ravages of inflation. Inflation can be seen throughout coinage, no matter where in history you look.
The ancient Romans gave up the silver denarius for the silver wash coated antoninianus or double denarius.
The U.S. dumped the half cent as a denomination no longer having much purchasing power a mere eight years after introducing the astronomical $20 double eagle denomination. At the time a Double Eagle represented several week's pay for the average worker. The half cent was last minted in 1857, while the double Eeagle was introduced in 1849.
Most collectors are familiar with the incredibly high denomination bank notes issued by Germany during the early 20th century when inflation went wild, but what about the Westfalia metal notgeld coins of 1923? Those coins were issued in denominations well into the millions of marks.
Yes, it is more challenging to identify hyperinflationary denomination coins than bank notes. This is partly because there are so many non-circulating legal tender commemorative coins that were never meant to be spent. Sometimes you have to look more closely to identify which are the true NCLT coins, and which coins with very high denominations were issued with the intention of keeping up with inflation.
In the later years of the Peoples' Republic of Poland, inflation became a serious problem. That fact can be seen through its bank notes, but there was also an attempt to keep coins in circulation by the issuance of a 1991 ringed bimetal circulating commemorative 20,000-zlotych coin composed of a copper-nickel center and a brass composition outer ring.
In very recent history Turkey, rather than Zimbabwe, is a better example for coin collectors to examine. While coins vanished from circulation in Zimbabwe, the Turkish government continued to attempt to keep metal coins in commerce with such issues as the copper-nickel 50-bin lira (50,000-lira) of 1996-2000, and its 1999 counterpart composed of aluminum. Between 1999 and 2000 a copper-nickel-zinc 100-bin lira or 100,0000-lira coin was also issued for circulation. This was followed in 2002 by copper-nickel coins in denominations of 500,000-, 750,000-, and 1 million lira. Mercifully a currency reform followed.
Source - World Coin News
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