CHINA: The Spiral

In inflation-plagued Shanghai, a Chinese merchant went to his bank to draw out 800,000 Chinese dollars. In a city where a postage stamp costs $1,600, this seemed a routine transaction. But an unreasonable bank clerk refused to hand over more than $100,000, and that in $10 bills. The reckless merchant demanded his money, even if it had to be in 50¢ bills. He got it—$800,000 in small bills.

It was like receiving the price of a Rolls-Royce in pennies. Resignedly, the merchant had his currency baled, then called in a wastepaper dealer. After carefully weighing the bales, the dealer paid...

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