Best Of

I was looking something up and came across this on Wikipedia:

As the war progressed, the (Confederacy) currency underwent the depreciation and soaring prices characteristic of inflation. For example, when news of the Confederate defeat at Gettysburg reached the public, the Confederate currency depreciated 20%. Confederate President Jefferson Davis asked private citizens to restore the value of the Confederate dollar by mutually agreeing to sell and buy items only at reduced prices. In October 1863, Confederate States Senator Louis Wigfall of Texas said that a Confederate soldier received $11 per month in pay, which was worth the same as $1 had been worth at the beginning of the war. In September 1864, one Confederate dollar was worth the same as three cents of United States currency. People tried to retain their wealth by buying gold to such an extent that, in Richmond, it was impossible to find someone who would sell their gold. On Christmas Day, 1864, the Confederate dollar's worth had decreased to such an extent that a turkey sold for $155 and a ham for $300. By the war's end, a cake of soap could sell for as much as $50, and an ordinary suit of clothes was $2,700.

So we have actually had one releated currency go bust in our history, but the important part is the way it happened and how people reacted. Notice that nobody would sell any gold near the bottom to anyone else, and that prices were so inflated nobody could afford them. It also appears that near the end about two digits was added to the lost value of the currency, so one dollar became the same value as a penny. This is not surprising since other countries that devalued their currencies (Mexico and Russia) had to drop three zeros to stabilize things.

The important lesson is that gold was wanted by those who saw their wealth disappearing daily during the crisis.