A few years ago, the Ghana money – the cedi – experienced very high inflation, driving prices of ordinary things into the 1 million cedi range. So new money was introduced, with the same name. They lopped off four zeros. So 10,000 old cedis equaled one new cedi. All the old cedis were exchanged for new.
But a lot of Ghanaians still give prices in old cedis because that is what they know best. A long time ago, a similar thing happened in France with the French Franc and many French people kept giving prices in old francs for quite a few years.
But for me it is confusing. I am trying to develop the ability to divide by 10,000 and multiply by 10,000 quickly in my head, while carrying on a conversation and at the same time converting the new cedis to dollars, in my head, by dividing by 1.7. I’m too old for this! I do have one conversion down pat: 1,000,000 old cedis is 100 new, which is about 60 dollars.
One Sunday at announcement time in church, the man making an announcement about money, gave it in new cedis, but people wanted the amount in old cedis. So he tried to do the conversion in his head on the spot. He gave a number. That was wrong and the congregation let him know. So he revised the figure. Wrong again and again he was informed of that fact. We went round and round until everyone was thoroughly confused, not least of all the man giving the announcement. The figure he was trying to communicate was the amount for the church’s annual fund-raising drive!
And so it was that I discovered a negative effect of high inflation which is not discussed in economics textbooks.