When billionaires are poor

Inflation in Zimbabwe will be running at 500,000% by June 2008.

To put this in perspective, if the whole world economy had 500,000% inflation for a year, Bill Gate's £30 billion fortune would be worth a mere £60,000 at today's values by this time next year. If inflation continued for another year at that rate, Bill Gate's fortune would be worth less than £1 at today's values.

Expressed another way, a litre of petrol today at £1.10 would cost over £500,000 in a year's time with inflation at 500,000%. In other words, you wouldn't be able to drive very far.

To put it another way, if I knew in advance that inflation was going to be 500,000% in a year's time, I could fill up my car with petrol now and not drive anywhere and then sell the tank in a year's time - I would be a multimillionaire and could buy many beautiful houses (since the house prices are going down), but I wouldn't have enough money to eat and, like everyone else, I would be swapping three potatoes for a pint of milk.

© Andrew Hawkins 2008