Scrooge Strategy

Where a roll of toilet paper costs $145,750

8 comments — written on May 2nd, 2006

Puts our personal-finance questions in perspective:

How bad is inflation in Zimbabwe? Well, consider this: at a supermarket near the center of this tatterdemalion capital, toilet paper costs $417.

No, not per roll. Four hundred seventeen Zimbabwean dollars is the value of a single two-ply sheet. A roll costs $145,750 — in American currency, about 69 cents.

[...]

“There’s a surrealism here that’s hard to get across to people,” Mike Davies, the chairman of a civic-watchdog group called the Combined Harare Residents Association, said in an interview. “If you need something and have cash, you buy it. If you have cash you spend it today, because tomorrow it’s going to be worth 5 percent less.

[...]

“Like potatoes,” Regai said. “I went last week, and it was $500,000 for a packet. And when I went this weekend, it was $700,000.

Full NYT article: How Bad Is Inflation in Zimbabwe?

8 comments

Leave your own

  1. 1
    May 2, 2006

    Eric von Rothkirch

    Like us and gas, huh?

    Was thinking the other day how rich somebody could get if they could have started stockpiling gasoline in some warehouses in the late 1990s. It was only around $1/gal then where I lived in Minnesota.

    I’d be curious to study the market of Zimbabwe and see which kinds of products are affected by the inflation. I’d imagine that household goods is a huge one (as demonstrated by the toilet paper example) and that the lesser an item is ‘necessary’ for everyday living, the less it is affected by the inflation?

    More common sense than economics ‘deep thoughts.’ Just a thought.

  2. 2
    May 2, 2006

    Nathan

    Just wanted to add to what Eric mentioned about
    “and that the lesser an item is ‘necessary’ for everyday living, the less it is affected by the inflation?”
    This has a direct bearing to the elasticity of demand concept in economics. The more necessary an item, the less elastic its demand is and consequently, the harder its effect on us. eg: gasoline. We can not drive to work just because gas now costs $3.

  3. 3
    May 2, 2006

    Wilson

    Re: Eric
    Laugh. You’d be up about 200% less costs of storage and upkeep of the gas… also including the fact that gasoline deteriorates and loses quality over time if stored improperly… so the storage costs of any worthwhile volume would be pretty great… you’d have to go industrial… like they do in our federal oil reserves :P

    It is astounding the amount of inflation in some third world countries though. Bad death-spiral…

  4. 4
    May 3, 2006

    NA

    Makes me fear for *any* paper money. But it’s what we have to use, so I’ll do my best. :) Today we’re fine.

    re: Inflation affecting everyday goods more? Nah. If it uses money, the money is what’s being affected first of all in inflation, not the subjective valuation of the good. Two different issues (elasticity of demand and inflation).

    If you have an apple and an orange and the apple costs 1$ and the orange 2$, all inflation means is that there’s more money, so the apple costs 2$ and the orange 4$. If there is no change in the money supply and the apple is 1$ and the orange jumps to 3$, we wouldn’t call that inflation. Something has changed in the supply or demand of oranges to change that price. If inflation occured and people don’t really want to buy oranges at 4$ the price may drop to 3.75$ to reflect that valuation, so inflation and elasticity are intertwined.

    The most icky parts of inflation are that the first people that get their hands on the new money (goverment) benefit because it hasn’t filtered down and therefore its value is still high (they can buy apples for 1$ with the new batch of money but after they spend the new money the rest of us have to spend 2$). Also, inflation really helps borrowers (*cough*USgovernment*cough*) because the value of each monetary unit falls and therefore they owe less but inflation really hurts savers (grrrrreat) because the value of our savings decreases.

    And we can’t really tell how much the money supply is being inflated anymore because they no longer track M3.

    Ramit, I appreciate you giving us risk-adverse people swift kicks in the ass for being such wimps, but if we really do fear the fall of the dollar should we just invest slightly in precious metals?

    Thanks, love the site.

  5. 5
    May 3, 2006

    Sheridan

    I had a Spanish Language Professor in College who told me that when she lived in South America the inflation was so bad that every payday her and her husband would go and buy a television. They would never take the television out of the box, but instead would have several of them stacked up in their living room. Then, when they had to go buy something, groceries say, they would take one of the unopened televisions and return it to the store on the way to the grocery market.

  6. 6
    May 4, 2006

    Maureen

    Here I sit in stinking vapor,
    because that bastard,
    stole the toilet paper.
    Shall I lie, Shall I linger
    or shall I be forced
    To use my finger?

  7. 7
    May 4, 2006

    Ramit Sethi

    The disparity in these comments is astounding. We have people talking about price elasticity and inflationary policy, and then a poem about taking a poop. Thank you all.

  8. 8
    January 22, 2007

    jcn50

    Weird…. If you take the rate exchange on April, 25 2006 for 145,750 ZWD, it equals 1.48 USD, not 0.69 USD! (see http://oanda.com/converter/classic ). Worldwide market price for a roll of toilet paper is 0.50 USD per roll (maximum). I guess someone is lying here in this NYT article!!!

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