FUNNY MONEY: ANCIENT CHINESE SPADE AND KNIFE MONEY. ZIMBABWE 100 TRILLION DOLLAR NOTE.

 

A LESSON FOR THE USD.

My Spade and Knife money and Zimbabwe 100 trillion-dollar note are examples of what happens to money when it is not based on a physical asset with inherent value and no counter-party risk such as gold and silver (or bronze in the case of the spade and knife money). 

When in 221 BC the Qin Emperor Shih Huang Ti united all of China, he decreed that all the seven States (Qin, Qi, Zhao, Chu, Wei, Han, Yan) shall use a new standardized bronze coin (see image below: the round coins with sqaure holes in the middle)  The old knife and spade money in its various forms could be exchanged for it based on the weight of their metal content. On the other hand, the Zimbabwe 100 trillion-dollar note was printed into existence (just as the Fed prints into existence new USD) with no physical backing whatsoever in January 2009 but was abandoned just three months later because people did not trust it and refused to accept it for trade and daily use. 

Under the 1944 Bretton Woods Agreement, the USD could at any time be exchanged for gold by central banks at the rate of $35 for an ounce of gold. But as US National Debt increased to unsustainable levels, in 1971 President Nixon terminated the Bretton Woods Agreement thus taking the USD off the gold standard. In 2022 the confiscation of $300 billion of Russian assets by the US in the Ukraine war casuedd many countries to consider the risk of having  USD  as reserve currency and using it to invest in US Treasuries . And now the Iran war has led to countries reducing their use of the Petrodollar.  De-dollarization, debasement, rising inflation, private credit implosion, and soon Fed money printing. All is the beginning of the end.

THE CHINESE AND BRICS ALTERNATIVE TO THE USD ECOSYSTEM

CIPS, mBridge payment systems. Pay in Renminbi; exchange for gold in Shanghai and Hong Kong. Buy cheap Chinese goods from your Renminbi proceeds instead of US Treasury bonds. Store your gold in China, safe from US confiscation and can be withdrawn anytime. Gold Exchanges and bullion shops sprouting up in Saudi Arabia, Dubai, Singapore as even retail investors seek precious metals as safe haven asset.   Iran, Russia, Saudi Arabia, many African countries, Brazil, all the Stans (Uzbekistan, Kyrgyzstan, Kazakhstan, Tajikistan, Turkmenistan) and soon maybe the UAE are using CIPS and mBridge. 

African countries (Kenya, Mozambique, Ethiopia) which took USD-denominated loans from China are swapping them into RMB. Not only do they save hundreds of millions from the interest rate differential (250 basis points), the RMB can be used to buy cheaper Chinese industrial and consumer goods. More countroes will follow. The beginning of a new era. 

FUN FACTS ON SPADE AND KNIFE MONEY AND ZIMBABWE 100,000,000,000,000 NOTE

Ancient Chinese spade and knife currency represent some of the world's earliest metal coinage, originating from the practical agricultural tools used in daily life. 

Spade money is among the oldest known metal currency, with some "prototype" versions found in Shang and Western Zhou tombs dating as far back as 1200–800 BC.

They originated from actual agricultural and hunting tools. Initially, people bartered with real metal tools, but as trade expanded, smaller, non-functional bronze replicas were cast specifically for use as money.

They were primarily used during the Spring and Autumn period (770–476 BC) and the Warring States period (475–221 BC).  

Why these shapes? They reflected objects of inherent value in specific regions. Peasants in central China used spades for farming, while hunters and nomads in the north used knives, thus, currency evolved to mimic these essential tools. 

The Zimbabwe 100 trillion dollar note

The note was issued by the Reserve Bank of Zimbabwe (RBZ). It was the result of a hyperinflationary spiral that began in the late 1990s and accelerated after 2000 following land reforms and economic sanctions. To keep up with skyrocketing prices, the government simply printed notes with higher and higher denominations. 

The 100 trillion note was released in January 2009. It had an incredibly short lifespan as legal tender. By April 2009, the Zimbabwean government officially suspended the use of the Zimbabwe dollar entirely because the currency had become effectively worthless. 

In 2015, the government officially demonetized the currency. People were offered a conversion rate so low (e.g., $5 USD for 175 quadrillion ZWD) that many people kept the notes as souvenirs rather than trading them in.

Ironically, the 100 trillion note is now worth much more as a collector's item than it ever was as money. Depending on the condition (uncirculated is best), these notes often sell for US$100 to US$200+ on the collector market today. 

What could 100 trillion Zimbabwe Dollars buy?

At the peak of hyperinflation, prices were doubling every 24 hours. By the time the 100 trillion note was in people's hands it was often just enough to buy two loaves of bread or a bus fare to work. If you had the note in the morning, it might buy a full meal. By the afternoon, it might only buy a coffee. It was cheaper to use the actual paper notes as wallpaper or toilet paper than it was to buy those items with the money.