Introduction

First, a relevant video link. No, your eyes don't deceive you. The 100 trillion Zimbabwean dollar note represents a curiosity in fiat money and hyperinflation.

Fiat money

From the lens of economics, money serves as a medium of exchange, unit of account, and store of value. In plain terms, this means money serves as a persistent, comparable amount of value that enables people to easily trade valuable items.

Historically, people made money out of intrinsically valuable materials, such as gold. We call this commodity money. However, making commodity money at scale becomes difficult because of material limitations. The world only has so much gold, and mining it takes a lot of effort.

To work around this problem, nations now use fiat money. As opposed to commodity money, fiat money has no intrinsic value. For example, the US prints dollars on paper; the paper and other materials used to print the dollar by themselves cost much less than a US dollar.

So how does fiat money get its worth? In a wonderfully circular definition, the money gets value because people think it has value. Worded less amusingly, the government declares it has value and the people trust the government.

Inflation

A government may print more money into circulation for many reasons, e.g. paying off national debts. However, as more money enters circulation, each unit of money loses relative value. For instance, with only 100 dollars in existence, each dollar would have much more value than with 100 million dollars in existence.

A little bit of inflation generally signals a healthy economy, and encourages people to spend their money (while it has more worth). However, in unstable times, a government may start to print so much money at such a fast pace that its currency experiences hyperinflation, accelerating inflation. The government prints a lot of money, so the currency loses relative value, so the government prints even more money, and so on.

Zimbabwean dollars

This happened in Zimbabwe around 2008. By 2009, inflation had risen so high people had effectively abandoned the Zimbabwean dollar, favoring more stable currencies like the US dollar. Sadly, despite the big number, the 100 trillion Zimbabwean dollar note doesn't have much value. The WSJ reported at the time of the linked video that it equaled roughly 40 cents. Perhaps now most of its value comes from the curiosity (novelty) of the big number. What would life look like if you, or even anyone, had 100 trillion dollars?