Gosh, people send me stuff. Today I discovered a huge windfall. My friend and volunteer moderator DB Stealey sent me 100 TRILLION dollars in the mail today. Here’s a scan of the bank note:
I’m rich! I can fund my own climate research group, I can get that Ferrari! Now all I have to do is convert it to US Dollars…and um…plot like Dr. Evil here.
Oh, wait…
Seems it is worth about $30 in this January 2009 BBC article. Well at least I can buy a nice lunch.
Well, maybe not. McDonalds maybe?
Lessee…what’s the exchange rate today?
Maybe if I hurry, I can still buy a hot dog and a coke at Costco. I wonder why they bother putting a security strip in the banknote?
Well, it’s still worth more than this:
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Happy Friday everybody!
Eduardo Ferreyra (18:50:18) :
Zimbabwe has not yet discovered a “trick” we have been using for years in Argentina: we print new bills taking out zeros as needed.
Actually, they have. The graph which people have been linking to, http://www.zimbabwesituation.com/chartdollar.jpg, indicates there were currency re-denominations in 2008 & 2009. A quick check of Wikipedia [yeah, I know, not necessarily to be relied upon] shows that in 2006, 3 zeros were lopped off, in 2008, *ten* zeros were removed, and in 2009, *twelve* zeros were dropped.
This makes the Argentinian re-denominations look almost insignificant in comparison. Wikipedia shows the three re-definitions you mentioned, plus a “Peso Argentino” in between the “Peso Ley” and the Austral, for another 4 zeros. So a total of four changes, resulting in a “mere” 13 zeros over about 20 years.
Anyway, to get back to that 10^14 ZD bill — because of its 2008 date, I think that the note in the picture was 100 trillion of the third Zimbabwean dollar; that is, before the last 1-trillion-to-1 redenomination. But currency converters are probably converting from the last, or fourth, Zimbabwean dollar, so the US$75K which has been mentioned by prior posters should be reduced by a factor of 10^12. Actually, it appears that Zimbabwean dollars aren’t even used any more [http://newzimbabwe.com/pages/banks86.19673.html] — so the bill’s value is strictly from collectibility.
Ummm, Frank, you are WAY off here. Our unfunded liabilities are in excess of $100 Trillion U.S. dollars!!
http://usdebtclock.org/
Total personal debt alone is in excess of $16 Trillion. I recommend everyone here go take a look at the U.S. Debt Clock, pay attention to the values and look at the sources for the information. I believe everyone in this country should be mandated to study this debt clock. It is unbelievably disgusting. WARNING: Don’t stare too long, you may go blind!
Re: nanny_govt_sucks (Apr 23 22:10),
http://www.usdebtclock.org/
Considering there is $600 trillion in derivatives bursting at the seams worldwide, it won’t be long until Zimbabwe will be buying our debt! 🙂
There was one sound reason for leaving the Gold Standard under Nixon.
Actually, in a modern industrial age there are several.
First, a skillful counterfeiter could have a field day. I’m talking something with enough skill and malice, like North Korea.
The value of gold fluctuates wildly, independently of any control by a government. Freeing a currency of gold actually gives control back to the government. Once most of the world is free the others basically have to follow suit. Otherwise, again, a malicious opponent with the ability to fiddle gold values has you by the … . You might not have noticed in the 19th and early 20th century because it was the US and the UK with that control. And others resented it.
Yes politicians can print money to fund projects in the current system. You know, build schools, bridges etc. Stupid stuff like that. Sure they can print money to waste – but politicians can waste money in any system. It is up to voters to prevent waste, not the monetary system.
It’s not like being on the gold standard was a dream run. Countries left because it was untenable, and with much heartbreak.
Over the long run, governments only have two ways of paying their bills.
Taxation or inflation
Don’t be silly.
1) customs duties and fees (it’s taxation, but of other countries)
2) State run enterprises.
3) Sales of natural assets (oil, minerals etc).
4) Rent of land etc.
5) Passage rights (prime source for, say, Panama).
etc
Or for more malicious places:
1) theft from citizens
2) theft from other countries
3) blackmail and extortion
Unlike the dollar, I guess. The dollar has only lost about 96% of its value since the Fed took over in 1913. In the meantime, gold has pretty much held its value. Gold still buys about the same amount of T-bone steak as it did in the 1920s. See
Gold: The T-Bone Steak Indicator
http://www.lewrockwell.com/rozeff/rozeff229.html
I have some data that helps make the impact of such inflation a little more concrete. I tracked Zimbabwe’s inflation by polling the price of a USB flash drive watch worth about $US40. The prices were from a website that supplies the Zimbabwe PC market – see http://www.technopartners.com/index.php?link=prod&prod=81
Date Flash Drive price in $ZWL
03/03/07 364,560
22/03/07 954,800
10/04/07 1,085,000
19/04/07 1,085,000
30/04/07 1,215,200
09/06/07 2,951,200
27/06/07 5,208,000
07/07/07 6,510,000
15/07/07 6,510,000
08/09/07 11,718,000
08/10/07 23,870,000
30/10/07 42,098,000
10/11/07 56,420,000
25/11/07 58,590,000
22/12/07 151,900,000
30/01/08 295,120,000
13/03/08 1,345,400,000
05/04/08 1,953,000,000
24/04/08 5,208,000,000
29/05/08 27,342,000,000
26/06/08 1,953,000,000,000
17/07/08 13,020,000,000,000
31/07/08 43,400,000,000,000
07/12/08 $US 43.40
Towards the end of 2008, the Zimbabwe govt permitted purchases in foreign currency.
The steepest rate of increase in the above was around May 2008, when prices were doubling every week. At around that time there was an election battle for the presidency and the Zimbabwe govt introduced the $500 million note and a special $50 billion agrarian note for farmers.
Pete H (18:38:49) :
R. de Haan (16:48:32) :
“Anthony, this all looks very funny but it is in fact a big tragedy.”
“You beat me to it ! We can all have a giggle but the country was once the bread basket of Africa, dragged to its knees by its despot ruler. Before long it will be Nigeria following this ragged road!”
You are welcome Pete H, I think we will see a similar process develop in South Africa!
This country too has white farmers carrying the economy who need to taught a lesson.
Meet the man playing South Africa’s death card.
http://www.telegraph.co.uk/news/worldnews/africaandindianocean/southafrica/7572374/The-man-playing-South-Africas-death-card.html
ShrNfr 15:07:43:
The country is called Zimbabwe, nowadays, not Rhodesia. Rhodesia is what it was called when it was run properly.
I’d appreciate it if you’d post a nice scan of the back of that note.
Just for artistic purposes.
Money is complicated. This 40 minute animation, ‘Money as Debt’ helps explain how the money/banking system works, I highly recommend it:
http://video.google.com/videoplay?docid=-2550156453790090544#
lowercasefred (04:20:05):
“I’d appreciate it if you’d post a nice scan of the back of that note.”
You can find scans of that and many similar notes here: click
Images embiggen when you click on the magnifying glass icon next to “Enlarge.” Otherwise, just click on the picture or link, then click on “Enlarge” on the page that comes up, or on the image itself.
@ur momisugly brc (20:42:10) : I would quibble a bit about gold. It is also a proxy for value in the same way that paper, seashells, or beads are. The confusion arises in defining “value”, which is different than the thing that is used to represent that value. A gold coin has no intrinsic value in and of itself (ignoring actual industrial use as a mineral ), but only in relation to what amount of labor, food, etc. the recipient of it is willing to part with. Barter of goods and labor is the only way to establish the true value of anything. Gold, silver, diamonds, paper, beads, etc. are only of use if they are accepted by convention among the trading parties as substitutes for the actual goods, labor, etc. with some expectation that the “money” can be transferred to others in future bartering.
nanny_govt_sucks (00:02:32) :
The value of gold fluctuates wildly,
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Reply: It isn’t the value of an ounce of gold that fluctuates wildly; it is the piece of paper that represents that commodity. Hence the falacy of fiat currency and any argument that government needs nifty economic irresponsibility to function properly.
There wasn’t a single country that went through hyperinflation (Germany, Italy, Brazil, Mexico, Argentina, and Zimbabwe were examples listed earlier) that were on a gold standard when it happened. That should tell you something; it’s a contradiction in terms–remove any real value from a bank note and that bank note can be any value whatsoever, and sure enough, it pretty much will.
And now neither is the United States on a gold standard. Sucks for us; personally I’d strongly recommend that you diversify your portfolio and buy gold and silver if you want to insulate at least some of your wealth from our own errant ways. The rest of your assets will be subject to the whims of irresponsible politicians and bureaucrats.
David S (17:40:58) : OT Did Zeke Hausfather ever come back on your criticism of his comments about Eureka, or can I take your explanation of how GISS fills empty grid cells as definitive?
Do I walk to school or bring my lunch?…
The “or” is orthogonal… I don’t know what Zeke did, but it just isn’t relevant. The GIStemp CODE says what it does, and I’ve read and run the code. The description I gave is what it does. (All up and online for your amusement should you wish, though most folks will not want to “go there”)… see:
http://chiefio.wordpress.com/category/gisstemp-technical-and-source-code/
Or you can just google “The Reference Station Method” and get Hansen’s papers.
http://data.giss.nasa.gov/gistemp/sources/gistemp.html
from comments here:
http://chiefio.wordpress.com/2009/11/09/gistemp-a-human-view/
Oh, the heck with the forensic view. Here’s the GISS web links where Hansen’s name is all over it:
http://data.giss.nasa.gov/gistemp/
History
The basic GISS temperature analysis scheme was defined in the late 1970s by James Hansen when a method of estimating global temperature change was needed for comparison with one-dimensional global climate models. Prior temperature analyses, most notably those of Murray Mitchell, covered only 20-90°N latitudes. Our rationale was that the number of Southern Hemisphere stations was sufficient for a meaningful estimate of global temperature change, because temperature anomalies and trends are highly correlated over substantial geographical distances. Our first published results (Hansen et al. 1981) showed that, contrary to impressions from northern latitudes, global cooling after 1940 was small, and there was net global warming of about 0.4°C between the 1880s and 1970s.
The analysis method was documented in Hansen and Lebedeff (1987), showing that the correlation of temperature change was reasonably strong for stations separated by up to 1200 km, especially at middle and high latitudes.
http://data.giss.nasa.gov/gistemp/references.html
I could go on, but then folks would start to make choking gurgling sounds and we’d have to find the anti-toxin for this Hansen stuff 😉
You see, the ‘spreading’ isn’t hidden, they are actually PROUD of it. It’s one of Hansen’s pride and joy babies. Centerpiece of a paper or two.
So ‘warmers’ have no reason to say “I’m wrong” about it. It is celebrated. For without it they would have to admit that all we have are some sparsely separated data points, in both time and space, that fail Nyquist and it’s useless for saying anything about climate.
Kitefreak (04:33:01) : Money is complicated.
Actually, money is very simple. It’s what folks do with currencies that is very complicated.
“Money” is a medium of exchange AND a store of value.
“Currency” is only a medium of exchange.
Technically, when we went to a fiat money [ paper money ] it ceased to be “money” and became only “currency”. So a lump of precious metal is clearly money. But a pretty picture of rocks, or even a dead politician, is just “currency”. I think we can all agree that an ounce of gold is a fairly simple concept…
It’s fractional reserve banking with fiat currencies that’s complicated. And artificial complication is one of my basic indicators for someone running a scam…
Mooloo (23:12:28) : Freeing a currency of gold actually gives control back to the government.
You say that like it was a good thing…
As soon as politicians have “control” of the money, it starts down the road to toilet paper. The only question is “rate” of decay.
And, FWIW, I lived a good many years under the gold standard. I’ll take it any day over what we have now. No, not perfect, but better than this…
Your comments about building schools et. al. is an emotional sop and nothing more. Yes, governments can do that with money. How they get the money does not change what they do. They ought to be honest about when and from whom they tax it; not stealing it by stealth of inflation. It’s just a matter of not lying about what you are doing. Apparently that’s a hard concept for some folks.
And it also looks like you’ve not handled much real gold or silver. It’s far harder to counterfeit that you let on. Just drop it on the counter. Gold and Silver “ring”, base metals do not. That’s why the best “brass” instruments are made of silver. Platinum can not be counterfeited as nothing else is as dense (well, except for other platinum group metals that cost more..) And of course, there is always the “touchstone” if you are really worried. (Each metal leaves a very distinctive streak on the stone). I learned that at 7 years old when I was taught how to count out the register and make change. When in doubt, see if the coin rings. Worked 100% of the time. And it is far far harder to counterfeit a silver coin than a $20 bill.
Don’t know why you are so hot and bothered about it. There is zero chance of us doing what the constitution mandates. Folks are just too addicted to plastic and paper. They would rather have the illusions of currencies than the realities of real money.
That is amazing. That is a really nice souvenir you have there.
“As soon as politicians have “control” of the money, it starts down the road to toilet paper. The only question is “rate” of decay.”
——————
The money has control of the politicians. The politicians merely do the bidding of money.
It starts down the road to the toilet when politicians are bought and paid for by the banks (at the end of the day).
Hi All,
I have the solution to the world’s economic problems. It took quite a bit of thought to come up with this solution. I feel that I should be rewarded, so send me dollars since my technique will make them (dollars) valuable.
I propose a new VAT tax on INFLATION.
Thank you for your consideration.
brc (20:42:10) : BTW – the above poster who said something about the Russians having all the Gold – I imagine this was the political line spun at the time, but it’s not the main factor in the version of history as I understand.
I think you are talking about me. I did not say they HAD all the gold (in fact, the USA had a large chunk of it) I said they were a major PRODUCER at that time (and they were, and still are. Gold remains a major Russian export.) They did not produce enough to seriously jerk us around, but it did cause minor ripples. (They tended to auction once a year. I do remember one year in particular they auctioned off a large batch and there was talk of how to cope with it in the financial papers and a brief mention on the TV news.)
And, FWIW, that was not the “political spin” of the time. I said it was the only valid reason IMHO; and a very weak one at that, for leaving the gold standard. ( I do not count “The government wants to spend more than it can tax” as a valid reason…)
So being somewhat precocious and hanging out around bankers, stock brokers, et al (they were at the counter, I was washing dishes in the little sink at the counter, with open ears…) I heard what they talked about. The volatility was one of the minor items mentioned. I doubt if 1 in 1000 people then even thought about it.
The major “spin” was about the French raiding the gold window. The reality is that we’d printed so much paper that the official $35/ounce was untenable (and it WAS redeemable in Gold and Silver then). The French started sending bales of paper over and asking for Gold, please. We sent it. So much that it was clear Fort Knox was on it’s way to becoming Fort Echo Chamber… So the “official” price was hiked to $45/ ounce.
That held for about a year, then other folks along with the French started saying “Hey, even $45 is better than paper!” and the redeemers returned. After about another year (both ‘about a year’ being wild ass guesses), they shut the Gold Window. But oddly, it took a couple of more years to admit that the gold price was just a fiction and you could not actually redeem the paper for anything and never would be able to, and might as well just admit it. It was a bit of an international monetary crisis.
The “Spin” was all about how those “Greedy French” wanted to take all our gold and we need to stop them… by abandoning the gold standard.
So it was blamed on the French. Much easier than blaming the politicians for spending more than they had… at least, easier for the politicians. I think it was started by Kennedy with the Vietnam war, then Johnson got going whole hog with the social programs. It all landed on Nixon who, in his typical way, decided not to fix it the right way but to stick it to somebody. And announced we were off the gold standard (and as a consequence one of my friends got to spend 3 days living on a train with a Eurail pass as he waited for the government to decide what his dollars would be worth… and for hotels to take them again…). After that it was collateral damage for about 20 years as inflation went nuts. Then Volker decided 18% Prime Rate at The Fed sounded just fine… and after eventually stabilizing the currency for a decade or two, we’ve now decided to print it like crazy again…
Some folks really do need to read an economic history book… especially the politicians… but I fear they can not read. Lord knows they can’t read the bills they sign and pass…
“Lord knows they can’t read the bills they sign and pass…”
Federal Reserve Act of 1913, for example.
@ur momisuglycuriousgeorge
@ur momisugly brc (20:42:10) : I would quibble a bit about gold. It is also a proxy for value in the same way that paper, seashells, or beads are.
I agree with you that gold is the worst idea for storing value as money. Apart from all the even worse ones that have already been tried. (With apologies to Winston Churchill)
Gold is rare, durable, divisible and portable, and has been agreed upon as a store of value across diverse cultures as far back as recorded history goes. All the qualities a store of value needs. Unbacked paper is only as rare as the financial discipline of the people printing it, and is a 300 year old experiment with an extremely patchy history. There isn’t one single currency that lasts for more than hundred years or so before it gets replaced. Think about that – because the chances of you starting your life with one currency and ending with the same one are actually quite small.
The idea of a gold standard is to prevent politicians from ruining it, or at least making it quickly and blatantly obvious when they do. In other words, keeping control of the currency away from the government. I’m shocked that on a climate skepticism site, there are people who trust politicians to do the right thing (and even worse, the Federal Reserve). It’s not being about a conspiracy theorist or a tinfoil hat wearer, just a student of history and a knowledge that too much debt and currency issue by sovereign governments eventually leads to currency failure.
The value of gold doesn’t really change much – as already noted the same amount of gold buys a loaf of bread today as it did in ancient Rome. The value of the pieces of paper with numbers on them fluctuates wildly. Don’t confuse the tail with the dog when watching one wag. People see Gold double but don’t realise it’s actually their currency that halved.
Call me strange but I’d like the $100 I earn today to be worth the same amount when I retire. It’s certainly a wrong-way-around world when that is seen as nonsense, and rapidly-depreciating currency is seen as a good thing.
nanny_govt_sucks (00:14:27) : But our government (US) gave control of the currency to highly secretive private bankers (the Fed). So it is not the politicians in charge of the printing presses. At least that would mean some kind of accountability. With the Fed there is no accountability. The Fed does what they want.
Um, I think technically the U.S. Treasury does the physical printing. The Fed has an even more nefarious trick. They do ‘fractional reserve banking’ but have no limit on the leverage (the ‘reserve requirement’) they choose to use. This lets them EFFECTIVELY create any quantity of “dollars in accounts” that they want. In Economics Geek Speak: The Treasury makes currency but The Fed makes M0 and via a leverage system lets other banks make M1, M2 (and eventually M3). You can think of M0 as being currency and Fed deposits (i.e. entries on their computer…), while M1 is “plus checking” and M2 is “plus savings and CD”. M3 includes ‘and all the bigger stuff’ like repurchase agreements, really big CDs,etc. Last I heard, there was some controversy over where to put “credit cards” and some folks thought they belonged in M1, but that was a long time ago…
I guess that’s all just a very long winded way of saying “The Fed doesn’t even need to print the money, they can just wish it into being with some computer bit twiddling.”
In theory, there is a complicated process of the US Govt issuing bonds to The Fed who hand money to the Govt so the Govt is not actually creating the money they spend (in excess of taxes). But it’s more about smoke and mirrors than practical impact. The practical impact is that the Government prints one kind of paper (bonds) sells them to The Fed for M1-M3, then spends it. While the Fed prints another kind of currency (computer bits / account deposits) via the fractional reserve system. Somewhere along the line The Fed ships some bonds or bits to The Treasury for the actual currency needed, if any. But at the end of the day all that has happened is that three incestuous parties have swapped various papers around between each other and then somebody spends the “currency” or M1 to get goods and services.
There was no real wealth creation at any point in the process, so someone who ships goods of real wealth / value in exchange for the money so generated is expecting to move that money on to someone else in exchange for some real value. This keeps up until someone realizes they have less value than they expected and delivered real goods in exchange for bloated promises. That’s when inflation kicks in…
And – he was going to take a share with him????
(Just widening the perspective a bit, looking for non-aligning logic/rationale in the ‘story’; citing now the ZeroHedge motto: “On a long enough timeline the survival rate for everyone drops to zero.”)
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Cue Gail Combs in 5 . 4 . 3 …
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