Posted on 07/24/2008 2:33:03 AM PDT by Clive
Inflation reaches critical levels in Zimbabwe
German supplier cuts of African country's mint
In Zimbabwe on Wednesday, a Z$100-billion note would just about buy you two loaves of bread - if you were lucky enough to find them. The country's biggest bakery was forced to shut down this month after it ran out of flour.
The new denomination banknote was issued on Monday in an attempt to keep up with the country's roaring hyperinflation, which has reached an official rate of more than 2.2 million per cent. Economists estimate it is actually closer to 12.5 million per cent.
At the beginning of June, a loaf cost Z$600-million, up from a relatively affordable Z$15-million before the March 29 presidential elections.
Things can only continue to get worse as the government of President Robert Mugabe continues to keep the printing presses running, cranking out money with which to pay civil servants and settle its debts.
But even that may no longer be possible. Last week, Giesecke & Devrient, the Bavarian-based company that supplies the special banknote paper, suspended deliveries, reportedly after pressure from the German government.
That could prove dangerous for Mr. Mugabe: the military, the chief supporters of his regime, are among those waiting to be paid.
Harare is looking for new suppliers in Malaysia and Indonesia.
In addition, the licence for the specialist software supplied by another European firm may be withdrawn as a result of the European Union's increased sanctions on Mr. Mugabe's regime announced on Tuesday.
Thirty-seven people were added to the list of sanctions, among them Gideon Gono, governor of the Zimbabwean central bank, two journalists working for state-controlled newspapers and a doctor who reportedly refused to treat victims of political violence.
The situation in Zimbabwe is a classic case of hyperinflation. Extremely rapid growth in the supply of paper money is the classic trigger, explains Michael K. Salem, an economics professor at the University of North Carolina at Chapel Hill.
Hyperinflation occurs when "the monetary and fiscal authorities of a nation regularly issue large quantities of money to pay for a large stream of government expenditures. In effect, inflation is a form of taxation where the government gains at the expense of those who hold money whose value is declining."
It is stopped only when the authorities halt the rapid growth in the amount of money in circulation, usually by introducing a new currency, or slash spending.
The record for hyperinflation is held by Hungary after the Second World War, where the annual rate reached 41.9 quadrillion per cent (15 zeros) or more than 19,000% a month. The country also claims the largest denomination banknote ever officially issued for circulation, the 100-quintillion pengo.
Germany during the Weimar Republic achieved a rate of 322% a month at its peak as the government increased the money supply in order to pay the reparations demanded after the First World War.
Workers were paid twice daily so they could shop at midday and lock in some of the value of their earnings.
An anecdote from that period tells of a worker carrying his papiermarks home in a wheelbarrow. Intrigued by the lineup that has formed outside a bakery, he goes over to investigate. When he returns, the money has been left in a heap on the ground, but the wheelbarrow has disappeared.
More recently, high inflation has occurred in Latin American nations such as Argentina, Brazil and Chile.
In Bolivia prices increased by 12,000% in 1985.
In a characteristically 21st-century development, the Z$100-billion note has more value as a novelty item than on the streets of Harare. A recent posting on the auction site eBay is offering one of the banknotes at US$80.
Other uses are as toilet paper and kindling.
National Post, with files from news services
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which has reached an official rate of more than 2.2 million per cent. Economists estimate it is actually closer to 12.5 million per cent.
Yup... anything over a million percent is out of control.
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus
At this point, the only viable economy is barter — but only if you have something to barter.
I’m surprised someone somewhere in that country hasn’t flipped out and killed (or at least attempt to kill) a top-ranking government member out of anger/desperation.
That is true even when the level of inflation is less than "hyper".
No, no,no. The 1,5,10,50 billion dollar notes are going for big bucks on eBay. I'd like to have a few for the coffee table conversation stirrers.
Journalists are such dolts. Large bills are not issued to "keep up with" inflation, but to cause it.
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus
Leftist "Justices" on the US Supreme Court have already handed down the Kelo decision, which is right out of Robert Mugabe's system of jurisprudence, and they openly admit that they study foreign law to apply it to their decisions.
Imagine what Barack Obama, as President of the United States, in collusion with a Democrat majority in both houses of Congress (filibuster-proof in the Senate) would place on the Supreme Court!
Imagine this, and then work to elect Republicans to the Presidency and Congress this November! Work as though the future of your children depended upon it! It does!
I remember reading somewhere that Zim has the 2nd largest deposits of platinum in the world, that’s where Bobby gets his wealth.
The same is true of the Leftists, whose fiscal recklessness has made a mess of California and threatens to do the same to the entire United States.
Obviously fear of government overpowers the anger and desperation of the people--
And the people of Zimbabwe are very angry and very desperate. How great must be their fear!
Leftists, including Marxists, employ the same tactic. Big Government enforces its oppression through violence and threat of violence. The fear that it instills in the people whom it subjugates overpowers their anger and desperation.
The bigger the government, the more ruthless the subjugation and the greater the fear.
Even in the USA, where the power of the Left and Big Government is still constrained, the people fear the "jackbooted thugs" of government agencies and the draconian laws designed to control the people through fear.
Imagine what it would be like if the constraints were removed! How angry and desperate the people would become, and how enormous the fear that Big Government and its thugs would instill to keep the people subjugated!
This is the Leftist Dream--an overpowering oligarchy, composed of themselves, of course--ruling over the people and controlling them with fear.
Note how Leftists love brutal dictatorships! Note how they love Big Government and draconian laws!
The Leftist Dream is not democracy or government by the people.
The Leftist Dream is Big Government, controlled by themselves, suppressing, controlling, and exploiting the common people through fear, intimidation, threat of violence, and violence!
The Leftist Dream is Joe Stalin, Big Brother, and Napoleon the Pig.
There is nothing new about the Leftist Dream.
China is driving much of this with the support of Mbeki in S. Africa. China wants to pick Zimm clean!
Kimberly-Clark and Scott Paper Co. have teamed up to provide Zim's newest paper currency.
In fact, if some smoker's emporioum was savvy, it would buy a bunch of thme, just for this purpose.
At the offical rate, of course.
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