Hyperinflation in Seratof

Hyperinflation in Seratof was a period in Seratofian economic history, commonly referred to being between 1952 and 1954, in which the currency (Auja) was highly unstable. During the height of the inflation in 1954, it was difficult and nearly impossible to measure inflation as the government had stopped publishing daily inflation rates since the 31st of December of 1953. It has been estimated that the country reached a peak annual inflation rate of 3.2 × 10441 percent, or prices doubling every eight hours. During this period, the government tried to print denominations of bigger and bigger values, however by the time they are distributed to the public, they have been rendered worthless. Shopkeepers had to constantly tune into the radio to recieve the latest exchange rates to determine their prices for the next couple of hours.

In 1954, President Árnab Arša scrapped the Auja gradually for the Zakka in what is now known as the "Z-Plan". Starting from the 1st of July 1954, prices were denominated both in Zakkas and Auja. While the Auja was allowed to inflate, the Zakka was pegged to the Legantine currency, enabling it to become more stable. The Auja was finally scrapped completely on the 29th of January 1955.

Background (1949-1951)
The Seratofian State, later known as the People's Republic of Seratof, was born out of a bloodless coup overnight which shocked the general populace and most importantly businessdoers both domestically and internationally. The new nationalization programs of the new politburo of Seratof proved catastrophic to the already faltering industrial sector as the nation faces an employment shortage after a series of wars in the last 20 years. The uncoordinated events leading up to the nationalization of several key companies accompanied with the nationalization of most secondary or tertiary companies saw many employees now having little to no say in the running of their business. The mismanagement of most state-owned industry decreased economic output and created a recession. 1951 was then known as the "black year" within Seratof.

Prior to the formation of the People's Republic of Seratof, the Auja, a historically signficant and stable currency, was still respected and massively traded, especially in central Artemia, for its continued use of the which ensured that the value of the Auja does not stray that far from the value of gold itself. The politburo scrapped the idea of a gold standard early on in 1949 and made the currency an entirely free-floating one, driving away most foreign users and traders, causing the relative value of the Auja to plummet. The official rationale of the government was that "the subsequent loss of Value in our Auja is a good side effect for the booming rebirth of Seratofian industry, which will make our exports more favorable in the outside world."

Heightening inflation (1951-1952)
Mismanaged industry and collectives brought food and industrial production down. Seratof, which relied both on domestic production and international imports, suffered from the brutal wave of shortages. Domestic production fell by over 40% in most industries causing massive shortages and crises in shops, most of them state-owned by now. With the value of the Auja plummeting and foreign reserves dwindling in order to supplant the Auja, Seratof failed to garner its once-prized imports from overseas. The few that made it into the country were sold at extravagantly higher prices than the ordinary Seratofian could afford, and was seen as the beginning of they hyperinflation period in Seratof.

To combat this increase in prices, the government tried to forfeit some of its gold reserves to purchase foreign reserves, thus stabilizing the Auja somewhat. In mid-1952, the government tried to make inflation illegal by jailing whoever raised prices, but this tactic failed as the shortages were worsened by rising tensions over very limited resources which everyone now could afford. The parallel rate of the Auja kept plumetting, and by mid-1952, Seratof entered a state of hyperinflation, with an annual inflation rate approaching 60% according to a government inflation report for the month of November 1952.

Hyperinflation (1952-1954)
Public trust in the Auja diminished very rapidly after the publication of the 1952 annual economic report. The People's Bank of Seratof decided to print banknotes of larger and larger denominations to combat the increase in prices, as well as raising the minimum wage multiple times in a month to give an incentive to the public that the situation is under control. However, most of the working class simply stopped showing up to work when their monthly salary wouldn't even pay for lunch. Production in many firms and factories was halted, further increasing the scarcity of resources. The People's Bank of Seratof issued a "cheque Auja" which was equal to 1 billion Aujas, and issued cheques for the new unit inteded to be a soft redenomination of the Auja. Eventually, the cheques were freely circulated as currency and suffered the hyperinflation that continued to occur under the normal Auja.

In late 1953, presiden Kusman resigned from office and his vice sworn in as president, creating panic and confusion among the populace. Inflation continued to rise, and bigger and bigger denominations of the cheque Auja were released. Eventually, the cheque Auja was abandoned, and the T-Auja was introduced as another attempt at a soft redenomination pegged a 1 T-Auja equal to 1 Trillion Auja in the short scale.. The nominal unit of T-Auja became synonymous with Auja, and most referred to the currency as just the "Auja". The situation did not last long, and the release of a 1 Billion T-Auja banknote soon appeared. By January of 1954, prices double every 24 hours, and all subsequent larger denominations of banknotes once printed were already deemed worthless by the time they got circulated.

Eventually, the A-Auja (Auja-Auja, literally Gold Auja) was concieved on the 15th of February 1954 equal to 1 billion billion T-Auja. The situation remained relatively the same until the president resigned, leaving no formal leader of Seratof. Amidst the panic, prices began to double every 16 hours by March 1954, Every 12 hours by April of 1954, and upon the resignation of the vice every eight hours, meaning that the currency one holds now would be rendered worthless a mere two hours later. The final banknote issued by the People's Bank of Seratof, that being the 1 Sextillion A-Auja dated on the 14th of May 1954.

Aftermath
The former president of the First Republic of Seratof Árnab Arša was chosen by the remainder of parliament to be the next president, being sworn in on the 1st of July 1954. Arša had been wary of the developing situation, and after much consultations with noted economists, devised the Z-Plan to restore Seratof's national currency. Arša initially thought of using the Samot currency as a placeholder, but would give the international world bad press and reputation.

The Z-Plan was started on the same day as its signing. It was the first bill signed into law by President Arša and the only bill that was promulgated, debated, and passed in the house of parliament all on the same day. Under the Z-Plan, the Bank of Seratof (previously the Seratofian People's Bank) would start issuing an additional form of currency the Zakka. The Zakka would be pegged to the legantine currency and would be backed by gold still leftover from the first republic as well as other precious metals and even gems. The Auja, which had lost all credibility, was kept alongside the Zakka to be massively inflated, with the government even issuing even bigger denominations such as the 1 million SA-Aujas (short for Sextillion A-Auja), the biggest denomination ever released by any bank in Anterra. During the same time, the government issued Zakka notes to be circulated alongside the Auja.

Since the populace expected the Auja to be continuously inflated, the Auja kept inflating. The purpose of the Zakka was now to be some sort of "equalizer" and a form of "foreign currency" used by Seratofians to facilitate trade and to restore confidence. Along the way, once nationalized enterprises were privatized, and the government mandated the international world to conduct business in Zakkas only, which regained the trust of most trading partners. Eventually, the Auja was phased out after the Zakka succesfully took over the country, finally being removed from circulation in 1955.

Trivia

 * One day before the Z-Plan took place, the collective value of all the banknotes in the country equalled 1/1,000,000,000,000,000 the value of 1 Legantine cent.
 * The largest banknote ever produced, the 1 million SA-Auja, when converted into scientific notation, equalled 10^57 Aujas, or 1,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000 Aujas, or 1 Octodecillion Aujas.
 * The final unofficial exchange rate of the Auja was 1 Legantine Areus = 23,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000 Auja, or 2 Quattuorvigintillion Aujas on the 31st of December 1954.