Victor
I have lived in Rhodesia/Zimbabwe my whole life and was still a government scientist when the economy collapsed. Basically it went as follows.
1) After a massive, unbudgeted payout to party supporters the Zimbabwe Dollar (Z$) collapsed from 10:1 against the US$ to 17:1 in November 1997. This bankrupted many small businesses that relied on credit- eg a mate had a nice little business importing paints. His supplier gave him 60 days to pay, and he invoiced his distributors on 30 days…In early November ’97 a shipment worth US$100,000 arrived- he sent it out with his usual 20% mark up…so invoices totalled 1,2 million zim (ie US$120,000)…but by the time the money came in, he needed 1,7 million Zim to buy the US$100,000 he needed to pay his supplier in South Africa….So South African company didn’t get paid and my mate emigrated to Aussie.
2) By printing money and increasing subsidies the government held things more or less stable for two years. During this time the farm invasions began and I was being pressurised to quit government as they couldn’t have a white man in a senior position. With inside knowledge, I went to the bank and borrowed the money to buy a house and a decent truck so I could go hunting full time. I couldn’t get a mortgage for the house (at the prevailing rate of 18% interest) and had to settle for a bank loan at a fixed interest rate of 35%. I set of for the USA to do some marketing and got home to find (as per my information at the central bank) that the government had lost control and inflation had jumped in 10 days for 15% p.a. to over 600% . There was now also a black market for hard currency- official exchange rate was 35:1 but you could get 55:1 on any street corner…The main victims of this collapse were the banks (breaks my heart) and the poor and lower middle class who bought goods on credit from stores. The lines of credit from the stores were inflation linked- salaries were not and anybody who had anything on HP lost it and just about anything else they owned as the sheriff of the court tried to collect back the ever increasing amount of money they owed the shops. This wasn’t entirely legal, but unless you could afford a good lawyer, you were just taken to the cleaners. The bank had to go to the high court to try and alter my contract (at 35% interest) and I eventually settled with them by paying them 1/10 of what I had borrowed.
3) Inflation continued to increase and cash was in short supply- government couldn’t print it fast enough- but if you accepted a cheque it had lost a fair portion of its face value by the time it cleared. The banks increased the ‘clearing’ time for cheques from 3 days to 7 to try and recoup losses. So, Business started charging a ‘commission’ for accepting a cheque. Initially 10% but within a few months goods cost twice as much if you paid by cheque.
4) When inflation hit 1,000,000% everybody stopped accepting anything but cash Where we could we moved onto the US$ but for many services the government regulations held sway and you had to pay in zim$...which were always in short supply (deliberately to try and hold down the rate of inflation).
5) Over 3 years the government ‘revised’ the currency 4 times dropping a total of 25 zero’s off the money. At the end you needed 20,000,000,000,000,000,000,000,000,000,000,000,000 original Zim dollar coins to buy 1 US$ bill (of course, with all the zeroes that had been dropped you actually only had to hand over two 100 trillion ‘revised’ $ bills.)
Very few folk over the age of 50 could keep up with the pace of change and how to fiddle the money, work the black market etc. I used to phone my dad every Monday and tell him how much a pennyweight of gold was worth so he could comprehend the figures on the goods in the shops.
6) Final straw- Government introduced ‘price controls’ to stop inflation. You were not allowed to charge more than about US$1 for a pair of shoes or a suit, and fuel had to be sold at US 3 cents a gallon…Maximum retail price for a TV was US$1.25…The senior government officials backed by police and army descended on the shops and ‘bought’ all the goods…but to the governments surprise, the shops didn’t re-stock!!! And everything then moved onto a black market economy where gold was king and the US$ not too far behind.