While we shudder at 10%-15% inflation and how it destroys savings, imagine the above real-world examples.

The introduction of the real to fix the problem (fixed for quite a long time, by South American standards) was brilliant.

To paraphrase my memory, which probably has some very substantial flaws, but the gist of it:
Rather than simply replace the old currency with a new one which would probably have the same problems, they started publishing a credible inflation index, so that you could look up the real price of something any time even though the still-official old currency continued its tumble. It was the ratio between the official currency and the "real" price. Companies started writing contracts in the "real" currency. With government encouragement this practice gradually took over from the old currency, eventually wages and taxes, and replaced it.

It sounds like a bit of magic, but I suspect the key was probably that quoting a price in the "real" currency for a future receivable did not include anticipation of inflation, so overall consumer expectations of inflation plummeted.

Jim

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