Why we should not amend the Reserve Bank Act

Now that Labour have abandoned 25 years of bipartisan commitment to sane monetary policy, we may need to get used to bank notes like this if they win in future (unless they quietly drop their policy to have more inflation).

One NZ$ is worth around 4,000 Zambian kwacha, so that note is worth around NZ$1.25. Note that in 1968 the kwacha was worth more than the US dollar.

Their largest note is for 50,000 which is NZ$12.50.

Yes that is a 100 trillion dollar note. Dr Evil, take that!

We shouldn’t have to worry about this scenario unless it is a four-way coalition of Labour, Greens, NZ First and Mana 🙂

In fact the note is “worth” more than 100 trillion as there were three redenominations. The first was a 1,000:1 redenomination, the second was a 10 billion:1 and the third a 1 trillion:1 redenomination.

So in terms of the original Zimbabwean dollar, that note is worth 1×10^39 or 1,000,000,000,000,000,000,000,000,000,000,000,000,000, which could be called a duodecillion dollars.

This note was worth US30 when printed in 2009 but is worthless today. Their inflation rate in 2008 was 231,000,000%. It was only 28 years ago in 1983 that their dollar purchased US1.