Friday, August 8, 2008

To Infinity, and Beyond!

How many zeros can you append to a number before the mind can't process them? Six? Nine? Twelve? Fifteen?

The question is one of more than theoretical importance. Until just a few days ago, the poor folks of Zimbabwe had to deal with household budgets that regularly used numbers once limited to describe the distance between objects in space: quadrillion, quintillion, and sextillion. In July, a loaf of bread cost between $2 billion and $5 billion, depending on when you bought it.

By early August, a loaf of bread cost $200 billion. So the government finally decided to do something about its exponential inflation problem. It acted swiftly and decisively by declaring that it was dropping ten zeros off of its currency. Overnight, $10,000,000,000 became a $1, and bread cost $20.

Rapidly adding zeros was not the problem, and rapidly removing zeros is not the solution. Inflation is a monetary phenomenon, caused by an irresponsible expansion of the nation's money supply. In Zimbabwe's case, that means running the printing presses to crank out more and more worthless paper. Unless the monetary authority begins to behave responsibly -- an unlikely event -- it won't be long before all those zeros reappear.

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