Zimbabwe
Dollars ranging from 10 to 100 billion printed within a one year period.
The magnitude of the currency scalars signifies the extent of the
hyperinflation.
Hyperinflation in Zimbabwe was a period of currency instability that began in the late 1990s, shortly after
the confiscation
of private farms from landowners, towards the end of Zimbabwean involvement in the Second Congo War. During the height of inflation from 2008 to 2009, it
was difficult to measure Zimbabwe's hyperinflation because the government of
Zimbabwe stopped filing official inflation statistics. However, Zimbabwe's peak
month of inflation is estimated at 79.6 billion percent in mid-November 2008.[1]
In 2009,
Zimbabwe stopped printing its currency, with currencies from other countries
being used.[2] By the end of September 2015, Zimbabwe
plans to have completed the switch to the US dollar.[3]
On
18 April 1980, the Republic of Zimbabwe was born from the former British colony
of Southern
Rhodesia. The Rhodesian Dollar was
replaced by the Zimbabwe
dollar at par value. When Zimbabwe
gained independence, the Zimbabwean dollar was more valuable than the US
dollar.[4] In its
early years, Zimbabwe experienced strong growth and development. Wheat
production for non-drought years was proportionally higher than in the past.
The tobacco industry was thriving as well. Economic indicators for the country
were strong.From 1991 to 1996, the Zimbabwean Zanu-PF government of president Robert Mugabe embarked on an Economic Structural Adjustment Programme (ESAP), designed by the IMF and the World Bank, that had serious negative effects on Zimbabwe's economy. In the late 1990s, the government instituted land reforms intended to redistribute land from white landowners to black farmers to correct the 'injustices of colonialism'. However, many of these farmers had no experience or training in farming. From 1999 to 2009, the country experienced a sharp drop in food production and in all other sectors. The banking sector also collapsed, with farmers unable to obtain loans for capital development. Food output capacity fell 45%, manufacturing output 29% in 2005, 26% in 2006 and 28% in 2007, and unemployment rose to 80%.[5] Life expectancy dropped.[6]
The Reserve Bank of Zimbabwe blamed the hyperinflation on economic sanctions imposed by the United States of America, the IMF and the European Union.[7][8] These sanctions affect the government of Zimbabwe,[9] and asset freezes and visa denials targeted at 200 specific Zimbabweans closely tied to the Mugabe regime.[10] There are also restrictions placed on trade with Zimbabwe, by both individual businesses and the US Treasury Department's Office of Foreign Asset Control.[11]
The largest denomination
of a Zimbabwean banknote ($100,000,000,000,000) one hundred trillion dollars.
A monetarist view[12]
is that a general increase in the prices of things is less a commentary on the
worth of those things than on the worth of the money. This has objective and
subjective components:- Objectively, that the money has no firm basis to give it a value.
- Subjectively, that the people holding the money lack confidence in its ability to retain its value.
Another motive for excessive money creation has been self-dealing. Transparency International ranks Zimbabwe's government 157th of 177[14] in terms of institutionalized corruption.[15] The resulting lack of confidence in government undermines confidence in the future and faith in the currency.
Economic mis-steps by government can create shortages and occupy people with workarounds rather than productivity. Though this harms the economy, it does not necessarily undermine the value of the currency, but may harm confidence in the future. Widespread poverty and violence, including government violence to stifle political opposition, also undermines confidence in the future.[16] Land reform lowered agricultural output, especially in tobacco, which accounted for one-third of Zimbabwe's foreign-exchange earnings. Manufacturing and mining also declined. An objective reason was, again, that farms were put in the hands of inexperienced people; and subjectively, that the move undermined the security of property.
Government instability and civic unrest were evident in other areas.[17] Zimbabwean troops, trained by North Korean soldiers, conducted a massacre in the 1980s in the southern provinces of Matabeleland and Midlands, though Mugabe's government cites guerrilla attacks on civilian and state targets. Conflicts between the Ndebele ethnic minority and Mugabe's majority Shona people have led to many clashes,[18] and there is also unrest between blacks and whites, in which the land reform was a factor. An aspect of this reform that seeks to bar whites from business ownership induced many to leave the country.[19]
Self-perpetuation
Lack of confidence in government to practice fiscal restraint feeds on itself. In Zimbabwe, neither the issuance of banknotes of higher denominations nor proclamation of new currency regimes led holders of the currency to expect that the new money would be more stable than the old. Remedies announced by the government never included a believable basis for monetary stability.[20][21] Thus, one reason the currency continued to lose value, causing hyperinflation, is that so many people expected it to.[22]https://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe
Inflation in Zimbabwe ranged from 7% to 19% in the 1980s. But in the 1990s, inflation ranged from 16% to 56.9%. In the 2000s inflation ranged from 55.22% to 231,150,888.87%.
Comments
Government corruption caused Zimbabwe to fail and it is causing the US to fail. Printed money creates the slush funds needed to pay the bribes to allow the corruption to take hold. Waiving the rule of law, violating property rights and wealth redistribution caused crop failures, economic decline, poverty, starvation and death.
Norb Leahy, Dunwoody GA Tea Party Leader
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