Chuck and I did a podcast a while back on the Ig Nobel Prizes, which were hosted at Harvard on October 1. The podcast was based on a fine article by the fine writer Robert Lamb and he apparently keeps tabs on this sort of thing, because he bullied us into writing posts on some of the winners. Of course Robert’s all like, “I get the best ones,” because it was his idea to write about them. Here’s his fine, fine post.

So for those of you out of the know, the Ig Nobel is an annual award in a wide variety of fields, like peace, economics, physics, that sort of thing. Rather than an honor that goes to humanity-saving research or achievements on the order of negotiating a cease fire among nations like the prize named after the guy who patented dynamite, the Ig Nobels go to people whose research or achievements exist outside the fray. Some past winners include research scientists at Wright-Patterson Air Force Base for conceiving of a gay bomb and Central Missouri State University psychologists who found that inappropriate highlighting negatively impacts test scores.

This year’s awards were no different. The cops in Ireland, for example, got the award for literature for managing to write fifty traffic tickets to one Prawo Jazdy, who doesn’t exist because those words mean driver’s license in Polish. My guy who I’m posting on won the award for mathematics. His name is Gideon Gono; he’s the governor of the central bank of Zimbabwe and he was honored by the Ig Nobel committee for his excellence in printing money.

Back at the beginning of the 21st century, president Robert Mugabe’s land grab policy toward white landowners created a brain drain in the country and as a result the country got really, really poor really, really fast. So Gono decides the best way to maintain federal spending is to start printing money.It’s not an unsound policy; reserve banks throughout the world frequently follow a similar method when they issue debt or buy it back. Actually printing money is fairly out of fashion these days, however.  Gono bucked the trend.

There’s an episode of the Simpsons where Homer adopts a pet Lobster, Pinchy. He brings Pinchy home and puts him in a freshwater tank. The inhospitable fresh water causes Pinchy to begin to die and float to the top, so Homer adds some salt to the water. Pinchy is saved, but the added salt begins to kill the goldfish that was already in the tank. So Homer adds some fresh water. Now the goldfish is revived but Pinchy approaches death once more and begins to float toward the top. Little by little Homer adds salt and water until both Pinchy and the goldfish are in a neutral, semi-conscious state floating side by side in the middle of the tank. Plainly, a lesson in the finesse it takes to manage a national economy. Too much salt and you’ve got inflation. Too much fresh water and your economy stalls.

To continue with this metaphor, in 2007 Gideon Gono heaped bucket fulls of salt into the fresh water tank of Zimbabwe. Eyes perhaps blazing with mad, thrilling and reckless determination, Gono continued to order printing money and he covered everything: there were one cent notes, five hundred million dollar notes, ultimately a 100 trillion Zimbabwean dollar note. Just like with anything else, once money is available abundantly it sort of loses its value. There were reports of Zimbabweans showing up to markets literally pushing wheelbarrows full of virtually worthless money. Chuck and I love to cite this fact: In 2008, Zimbabwe’s annual inflation grew at 516 quintillion percent (that’s 516 followed by 16 0s). If you stood in a grocery store for 24.1 hours you would be there when prices doubled.

These days the going exchange rate in the country for a trillion Zimbabwean dollars is about fifty cents and that’s an unofficial rate; it’s what bus drivers informally accept as fare. The country ended the printing binge this summer and adopted a basket of foreign currencies. Ironically, some foreign currency is used to buy useless Zimbabwean cash — on eBay. You can get a 500 million dollar note for 99 cents.

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How much actual money is there in the world?
How do the Ig Nobel Prizes work?
How the Fed Works