When inflation rises too sharply and currency loses its’ value, governments can and do take away all the value of the currency in a process called “demonetization”. In this episode, Ronni and Brittany talk about what’s happening in Zambia.

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Here’s a transcript of our conversation:

Ronni: Hey, Brittany.

Brittany: Hi, Ronni.

Ronni: So, I know that we talk often about the gold standard here at Tutle Twins and Money and inflation and value and fiat and currency and all of that. But I was reading about something happening in Nigeria called Demonetization. Are you familiar with this term? It was new to me.

Brittany: No, but if I may break down.

Ronni: Awesome. I love it. I was hoping for an offer.

Brittany: Always, So, Demonetization. Well, we can look at M O N, and E. What is that money? It has to do with money, right? So it’s going to have to do with currency of some sort. And D is usually the opposite of, so I’m trying to think of another word with what can’t I think of something? Well, deescalate, if you’re going to escalate a situation, what you’re going to bring it up, if you’re going to deescalate it, you’re going to bring it down. So, it’s going to do the opposite. So if you’re going to monetize something, monetizing means finding a way to earn money from it. If you’re going to monetize something that would to me say, you’re going to not get money or lose money from doing something. So, that’s my guess.

Ronni: Well, it was an excellent guess. It was actually a good guess. It was right, except I would maybe say that D could be kind of the reverse of, so if we say Demonetization would be kind of to undo something having value. So, it’s like to undo the conversion of money or take away money from something. So, here’s an example. So, it’s a slightly different example, but in today’s world, I feel as though the term Monetization or Demonetization is pretty popular in the vlogging world or in the online social influence world. So, I used to vlog fun facts, and for a while, I was actually making a little bit of money vlogging. And so monetization would mean that you were able to use your vlog or social media channel to make money by having things like ads on it. So to vlogs or to online social media presence, if you are monetizing, then it means you are turning the value of your vlog or your words into money. So, Demonetization would mean that if your social media post or your vlog is no longer making money, or if you wrote a post about something and it was bringing in money, now it is no longer bringing in money. You would call that Demonetization. So, this is a quick little in case anyone is interested in it, but there’s a bunch of Demonetization going on in the world, especially in a place called Nigeria, and I want to talk about it. But as kind of a segue, I know that we have a lot of listeners and title twins, readers and Title twins, and TV show watchers who might be familiar with what happened to money and inflation in Zimbabwe in the mid to late 2000s. Brittany, are you familiar with the hyperinflation that happened in Zimbabwe?

Brittany: Yes, I think Connor said he even has one of the, I can’t remember what the money is called, what their currency is called, but yeah. Yeah, it’s crazy. But yeah, please tell me the story. I love hearing it. Well, I don’t love hearing it anything.

Ronni: So, basically is just a great example. I mean, a poor example is a bad situation of major hyperinflation where the government was printing so much money that the value, I believe there were the Zimbabwe dollars actually, I think that’s what it was called, but the value of the Zimbabwe dollar just crashed. And so there were bills being printed that were things like trillion dollars on Zimbabwe dollar bills. So it was just pretty crazy. But an interesting story is, once upon a time, I used to work in reality TV, I may have alluded to that at some point. So, in 2004 I was working on Richard Branson’s reality show. He had a reality show and I was working on it.

Brittany: That is Richard Branson is the guy who owns Virgin Airlines, and he used to do a big record store actually, we did an episode about him once because he’s one of my favorite entrepreneurs.

Ronni: Yeah. Have I ever told you that I worked on that reality show?

Brittany: No. That’s so cool.

Ronni: That could be a whole bunch of episodes probably. But it was a really fascinating experience in my life. And yes, I got to meet Richard Branson, and I’ve been to a few of his residences. Anyways, one of the many places that we traveled to was Zimbabwe. Now, when we arrived, many of us on the crew, all converted some of our money into the Zimbabwe dollar because we were getting used to every time we went to a new country, we would transfer our money to whatever the local currency was. And so when we got there, now, I can’t remember the conversion rate at that time, but this was 2004. And so the hyperinflation had already started, but it didn’t quite get to the place that it got to a few years later when everything really crashed. But even still, I remember all of our crew that we’re cashing in our US dollars for Zimbabwe dollars we’re kind of laughing about how many Zimbabwe dollars we were able to get at the time. And so somewhere I have some Zimbabwe dollars currency somewhere. I have to look for it. I don’t think I have any of the crazy high currencies that Connor may have, but still. So, the Zimbabwe dollar became crazy hyperinflated and in hopes of stabilizing the economy, the Zimbabwe government tried a few different solutions. Namely what they did, or one of the biggest things they did is they switched to using foreign currencies. So they stopped using the Zimbabwe dollar and switched over to the US dollar was not the only currency of use, but it ended up becoming one of the most popular currencies to use. So, over in Zimbabwe, they were using US money in order to trade. This helped for a while to kind of stabilize a little bit as Zimbabwe was moving away from its extremely hyperinflated Zimbabwe dollars. And then in 2015, Zimbabwe decided that they wanted to monetize the Zimbabwe dollar. And so what they did is they said, no one’s really using the Zimbabwe dollar anymore. We’re not going to use it. So, we’re going to make it non-legitimate currency, and if you still have any of those, it’s going to be worthless at this point. So, come bring it in and we’ll exchange it. So that’s what they called Demonetize. So, on the date that they demonetized it, everyone who had any Zimbabwe dollars left, was literally just worth paper, not worth anything. So, that thing, that one Connor has, not worth anything right now. That is nuts. Yeah. Okay. So, the reason why I wanted to explain Zimbabwe is because I think a lot of our listeners and readers are familiar with Zimbabwe, but right now there’s something going on in Nigeria about monetization, but it is a little bit different because, so in Zimbabwe, that was over a process of a good decade where its citizens started using different currencies. So, when the Zimbabwe dollar did become demonetized, it wasn’t really a big deal because a lot of people had already switched over. Well, that’s not what happened in Nigeria. So, in Nigeria, it was October, no, October, December of 2022. So not that long ago, the government announced that they were going to demonetize or get rid of the higher-level bills. So, I’m thinking this is like the twenties and above. It’s any of the higher-level denominations. They were going to no longer be worth anything, and everyone who had these larger bills had to go and trade them in at the bank for this new currency that they were printing out. Now, Nigeria is apparently a largely cash-based economy, meaning that most people do not store their money in a bank. They do not have debit cards, they do not do online banking and they buy stuff with cash. They just use our hard currency. Now, of course, with this hard currency, it’s much more difficult for the government to track any transactions. So, of course, it would behoove, and that means it would be to the benefit of the government to get people off of the cash-based system and get them onto the digital-based system. So, for them to switch everything up is a way of forcing the hand of Nigerians to choose a digital banking system instead. Again, because the government can track it more, but because they only gave them Nigerians two months, they told them in February now is when they need to have all of their larger bills switched out. And because there were not enough bills printed to be able to make up for all the bills they wanted to turn in, now the Nigerians are in this horrible place where they’re strapped for cash. They don’t have money because the money that they have is now being deemed worthless, but the government is not able to give them money to replace it so that they have money. So, it just takes away all their value. I mean, it’s a really crazy situation. So, apparently, something similar happened in India like too, where one night the Indian government was in 2016, they said these bills no longer have any value to them. You have two months to come and swap them. But what was crazy in India is they said that night they said, and as of right now, if you have any bills and these higher denominations, they have no value. And so that was kind of crazy because people were suddenly left without having any money at all.

Brittany: Can Imagine. Yeah. Anyway, it’s an interesting thing happening in the world, but whenever I hear about stories like this, it makes me think a lot about, of course, our money. What value does it have? What would happen if our government suddenly decided that all of our bills were worthless? What would happen? I dunno, have you or Brittany thought about this, or am I just the worst-case-scenario person? No. Yeah, I think that’s why I was an earlier adopter of Bitcoin, and I think that was why you saw it was happening in Greece and all these places, and to me it was like we need to have a backup plan in case this happens. And that is why I was so drawn to Bitcoin. I think all people that are skeptical of government intervention and money and all that, I think we’ve all probably thought about it a little bit.

Ronni: Yeah, I admit this probably won’t happen, but I kind of wish we could go back to some kind of better trade bartering system. I know there’s a lot of, say Facebook groups, which are buy, sell, or buy nothing groups, which are, I love those. They’re community-based and it’s very much a, Hey, what does someone need? I have this. Or even groups that are based on trade. I think it would be really cool if we went back to a society where we did, obviously, we couldn’t get rid of money completely because they do provide a symbol of value and they’re easier to carry around. Cash is easier to carry around. But I do wish we went back to more of a trade-based society. I think that gives us a lot more freedom. But anyway.

Brittany: Even sometimes criminalize that, so, yeah. Oh, go on.

Ronni: Was saying, I know. It’s crazy. Basically, in everything that we try to do to take control of our own finances, the government tries to find a way to control back, and it’s annoying.

Brittany: That’s what they do best. All right, guys, well, we will leave it there. As always, don’t forget to like and subscribe, and share the podcast with your friends. And until next time, we will talk to you soon.

Ronni: Great, see you soon.