As a child, I learned how a central banker creates hyperinflation. I was the central banker issuing my child's currency.
When I was about nine years old, sometime around the year 2000, I was at a "camp" with my five-year-old sister in Italy. For the first time in my life, I met a foreign currency - the Italian Lira. The currency was interesting - I carried a nominally 100 Lire, which at that time corresponded to about 000 CZK.
To give you an idea, it can be estimated that, for example, a lollipop, which cost us 20 crowns in Italy, cost about a thousand in Italy. Imagine the experience when a small child at the age of nine holds a pile of banknotes with a face value of up to tens of thousands.
I have a relatively harmonious relationship with my sister, but some of the vagaries of sibling coexistence did not escape us either. So, as a kid, I kept running here for drinking, here for food, and so on. I no longer enjoyed providing these services for free at all times - and so the idea was born in my little child's head after returning from Italy: If Italians in Italy can have their own currency, why can't we have our own currency at home?
My sister and I agreed that we would start paying for each other's "services" with our own money - I ceremoniously called the currency "Sira" as the creator of the idea. I took a few A4 sheets, cut them into smaller pieces, took crayons and wrote numbers from 1 to 10 on pieces of paper. Of course, I did not forget to color our "money" properly.
Subsequently, I quite randomly redistributed the money between me and my sister. I didn't keep many of them myself, I knew that if necessary, I will simply draw another one.
The beginning of the end of the great currency Sira!
What happened must have happened (probably?). Confidence in our currency was not very great. My sister knew that I would draw her papers if necessary. There was no trust in the papers - and so did my sister, who was generally mine services used more often, one day the papers ran out.
And what about the papers, when was there nothing behind them? My sister did not have enough time to be able to satisfy as many services as I could buy for my "unlimited quantity". She was just home less often than I was.
Remember how I said at the beginning that the face value was from 1 to 10? It did not take long, for about a week or two - and the whole "first series" of my famous currency was invalid by my decision. I simply exchanged them for my sister's "new series", but I'm startingat a nominal value of 1000 Sir.
Our "prices for services" have risen enormously high. At the time, when I was nine years old, I had a relatively simple thing: I can't just give my sister money. Then he does not respect so many of them and even loses them and the original purpose (exchange "services") then the money doesn't work anyway.
And so I created a "draw competition" similar to the Athlete. I drew tickets where one ticked a few tip numbers and then I drew lots. The ticket cost something when you won, you could win a relatively large amount (up to millions of sirs), if not, you lost the deposit (ticket price). That was my new way of issuing money.
But it was easy to win. The range of numbers was small (who would draw with tickets with dozens of numbers that), so - so I don't have to draw a pile of thousands of sirs as a "win" for example a million sirs - I began to issue prizes in the competition in one banknote. Was there 45 million sirs in the bank? Did my sister win? Ok, that's how it came about 45 million banknote!
Initially, there was a problem with applying high banknotes - simply because none of us had a refund. So I sat down and made a million bills. There were also a few banknotes for "one shift" - so that I wouldn't have to return a pile of banknotes, I drew a new one, with the exact value of what I was supposed to return.
I think it is clear to everyone in which order the prices of services started to move - it was in the millions, tens of millions.
One of the first signs of the disintegration of our entire system was that we stopped paying for the smallest services. The second feature was the more frequent loss of banknotes and their use for various other purposes (bookmarks, note paper, and so on).
Over time, the speed of price changes has become incredibly fast - they have changed with each new shift. I started writing amounts on banknotes that I didn't even understand. They had a huge amount no.
Due to the rapid devaluation, I became almost a slave - my sister logically tried to get rid of her "Sir", so she changed them for me as soon as possible. service (otherwise she couldn't use them), even though she just didn't need them and I wasted time with them.
A large number of banknotes with whale-sized numbers have become an obstacle to our "exchange". It took longer to agree on the payment and make it than to make that service. And so we simply coughed at Siry - our famous currency ended up in the trash.
By the way, it is interesting that my sister stopped using me so much after leaving our "Fiat currency". She asked me for services only those she wanted to ask for - and I, of course, offered them these services "out of brotherly love". And it worked the other way around. A system without an uncovered currency was much easier, smoother, more functional and, as a result, cheaper than a system with that currency.
Just how much paper was wasted, how many man-hours of drawing and inventing fell on creating an increasingly complex system!
We experienced our own hyperinflation at home. But this is not hyperinflation as such - the effects of inflation are basically the same as in hyperinflation. However, if we stretch "inflation" over a longer period (instead of a quarter of a year, for example to fifty years), it will only be slower. Slower, but with the same effects.
To claim that small inflation gradually dosed over a long period of time - in contrast to hyperinflation - is "beneficial" is the same as to claim that cutting off a person's head slowly is - in contrast to a quick cut - positive for the person (victim). However, it is slow and his arteries get used to it, notwithstanding that it is human blood circulation leads to further investment of air in the healthy spirit of the human body!