12 Times Currency Was Rendered Almost Worthless (and Why)

In an effort to combat hyperinflation, Venezuelan President Nicolas Maduro announced the launch of a new paper currency that takes off five zeroes from the country's bills that are losing value all too quickly.

The new bills have paper denominations ranging from 2 to 500. The 2 sovereign bolivar will have the same value as 200,000 bolivars before the switch; the 500 sovereign bolivar is worth 50 million. The new bills are anchored to the state-sponsored cryptocurrency, the Petro. 

President Maduro also opted to raise minimum wage by a whopping 3,000%. 

"I want the country to recover and I have the formula. Trust me," President Maduro said in a televised announcement on August 17. No experts helped create this recovery plan. 

The new banknotes started circulating on August 20, 2018. According to CNBC, the switch devalues Venezuela's currency by around 96%. Other economists agree that these aggressive actions will likely speed up hyperinflation, not fix it. 

Zimbabwe was in significant trouble in the early aughts, as you can see by the $100 trillion bill pictured above. President Robert Mugabe's land reforms had murdered the country's economy by destroying its main export, commercial farming crops. This left Zimbabwe with essentially no foreign exchange to speak of and skyrocketing prices on basically everything. The government tried to keep itself afloat by printing more and more paper money, which led to hyperinflation, further complicating the problem.

By 2008, Zimbabwe was almost out of paper to print its wildly inflating money on because the German company that supplied materials to Zimbabwe's printer saw the writing on the wall and halted delivery. At thiat point, basic necessities such as food, clothing, and beer had ridiculous price tags. You could buy the newspaper for a cool $25 billion. Not the newspaper company, the newspaper. One newspaper.

In 2009, the government was forced to admit its currency problem. It rolled out a multicurrency system that included the US dollar and the South African rand, plus its own bills, with the 12 pesky zeros conveniently removed. The Zimbabwe dollar didn't work out, and the country officially took it out of circulation in 2015.

Germany had a couple currency snafus in the 20th century. During the Weimar era, after World War I, the country tried to pay its reparations by printing money, and prices went through the roof, to the point that in 1923 they were about a trillion times higher than they should have been. People were paying for loaves of bread with entire wheelbarrows full of cash. Money eventually became so useless German citizens used it to light their pipes and stoves, and gave stacks of it to kids to play with like Legos.

After defeat in World War II, Germany faced a similar scenario; the Allies imposed price controls that left the country financially devastated. The German reichsmark became weaker and weaker, and was finally replaced by the deutschmark – at the crippling rate of about 10 reichsmarks to one deutschmark. This conversion process ruined a lot of people whose lives were tied up in reichsmarks, but in the end, the country was able to recover under the new currency model.

During the Revolutionary War, the Continental Congress financed the American rebellion not by taxation, but by issuing fiat bills of credit. These paper bills were known as continentals, and it wasn't long before people were using the phrase "not worth a continental" in reference to anything useless, because that's exactly what the bills were.

Individual states fell in line behind Congress by issuing their own fiat bills, and soon the economy was flooded with paper money that almost immediately began to depreciate. Congress and the states promptly responded by printing even more bills, creating the self-defeating cycle that so many others (including the US, again) have since experienced.  

Nobody wanted anything to do with continentals, so the government made it a crime for businesses to refuse to accept paper money or refuse to sell goods. By law, farmers and merchants had to accept bills that would be totally worthless almost right away, which caused said farmers and merchants to stop growing and producing – which of course ruined the economy. What's the point of business if your client pays you in worthless currency?

By 1778, the army had no choice but to begin seizing whatever it needed. The United States won the Revolutionary War, but the game the government played with money was a disaster for the people.

At the dawn of the French Revolution, France was buried in debt and its government was desperate for a solution. A man named Charles Maurice de Talleyrand had one of those up his sleeve, and it was fairly straightforward – seize church lands and auction them off. By the way, Talleyrand was a bishop when he made this suggestion. The pope excommunicated him two years later, and Talleyrand went on to become a shrewd politician and diplomat who Encyclopedia.com calls "an unabashed liar and deceiver" whose "moral corruption is beyond question." Winning!

Anyhow, Talleyrand's idea sounded pretty great to the government, so that's exactly what happened. France nationalized church properties and began issuing notes called assignats, which the public could purchase with actual money and then use to lay claim to a piece of property.

Unfortunately for France, this easy cash grab turned into hyperinflation when the government kept printing assignats and re-circulating any it received back. By 1796, the face value of assignats in circulation was about 20 times the estimated value of the nationalized church properties. It didn't help that England, France's enemy at the time, was complicating the situation by printing counterfeit assignats and injecting them into the French economy.

December 10, 1894 – or Black Monday, as it became known – was a dark and stormy day for the people of Newfoundland. That morning, the British colony's only two private banks, Union Bank and Commercial Bank, both closed forever, and the notes they'd been issuing for years lost their value. People throughout Newfoundland did business with these notes, so the crash's impact was huge. Everyone from fishermen to fish merchants to bankers (obviously) watched their savings and livelihoods disappear.

Various factors brought about Black Monday. Major causes boil down to irresponsible banking practices (for example, loaning large sums to merchants who happened to sit on the bank board) and a struggling codfish industry, which made up the bulk of Newfoundland's economy in the 19th century. The government Savings Bank, which did not issue paper currency at the time, survived the crash, mainly because it had first claim on deposits at the Union Bank and withdrew what it needed before it was too late.