Shoeleather cost

History

The term shoeleather cost refers to the extra wear and tear on the shoes of people who made frequent trips to the banks to deposit their earnings during times of hyperinflation. The goal was to spend the money or convert it to forms that were protected against inflation(such as money in the bank, which at least bears interest) as soon as possible.

Definition

A shoeleather cost describes a cost incurred (in terms of time, effort and resources) by people engaged in financial activity in order to protect their savings and earnings in a situation of severe financial stress, such as hyperinflation. Such financial activity typically involves:

• Using the money to buy goods that are either of direct use or can be bartered for other goods.
• Depositing the money in banks that guarantee interest rates that counter inflation at least in part.
• Converting the currency to a more stable currency, usually on the black market since official exchange is difficult in a time of hyperinflation.