Hyperinflation is a monetary phenomenon and Demand is not a factor pushing
up prices. Prices go up because the value of the Fiat paper money is
falling as more and more is created....... In Zimbabwe stores don't even have goods
on the shelves, people are hungry, there is no water, no electricity, no
public transportation, gas is sold on the black market and large quantities of
paper money confiscated...and yet the Stock market keeps soaring...
Posted October 24, 2010 - Zimbabwe had the best
performing Stock Exchange in the world, but the worst paper currency
" The price of the Zimdollar fell from 100 to the US Dollar to 10³¹ or the
price of Gold expressed in Zimdollar rose from with a factor 10³º "
Posted November 23, 2009
Alf Field: In February 2009 Zimbabwe was the only country in the world
without debt. Nobody owed anyone anything. Following the abandonment of the
Zimbabwe Dollar as the local currency all local debt was wiped out and the
country started with a clean slate.
is now a country without a functioning Central Bank and without a
local currency that can be produced at will at the behest of politicians.
Since February 2009 there has been no lender of last resort in Zimbabwe,
causing banks to be ultra cautious in their lending policies. The US Dollar
is the de facto currency in use although the Euro, GB Pound and South
African Rand are accepted in local transactions.
Price controls and foreign exchange regulations have been abandoned.
Zimbabwe literally joined the real world at the stroke of a pen. Money now
flows in and out of the country without restriction. Super market shelves,
bare in January, are now bursting with products...click
here to read the full article.
Posted April 16, 2009
Gresham's Law = "bad money drives out good money" [people will
hoard "good" money while spending the "bad" money]
There is a corollary to Gresham's law that
applies to the modern situation when a country rapidly increases the fiat
currency in circulation. Initially people exchange the local "bad" currency
for foreign "good" currency (or gold) and hoard the good money. Gradually the
locals introduce the use of foreign currency into every day trade and
eventually the local fiat currency is spurned. At some point Gresham's
Law is reversed. The "good" money drives the "bad" out of circulation.
This is exactly what happened in Zimbabwe.
Initially South African Rand and US Dollars were hoarded
by Zimbabweans. Subsequently these currencies emerged in everyday trade
until the Government had to accept the de facto situation that they
could no longer spend Zimbabwe dollars in Zimbabwe. The people would not
accept them. The Government eventually announced that trade in Zimbabwe
could be conducted in any foreign currency. "Good" money had replaced the
History is littered with similar examples.
Virtually all South American, African and East European countries went through
a similar process 30 years ago where the bad money was eventually driven out
by the good money, which at the time was the US dollar. the Euro, the South
African Rand and the German Mark. Similar conditions occur in
Posted February 2, 2009
Apart from a new devaluation, Zimbabweans can
now also legally use foreign bank notes and equities to do business. The Stock
market is still closed. It was since November 21, 2008 after the Central bank
has been blaming traders to buy equities with so said false cheques. This is
how far the authorities went....
To call this action by Mugabe and Gono
premeditated theft, is being nice. Because of the actions of these guys,
each day 7 million people don't have anything to eat...and this used to be one
of the richest countries in Africa.
Mugabe and Gono keep on blaming the British for
what is happening in Zimbabwe. They are partly right for they were educated
the Brits who stole their land. One just needs to look at what is happening today in England (in
what still is a lesser degree).
Posted January 5, 2009
Harare - Zimbabwe's central
bank has introduced a Z$10bn banknote, worth $20 (and less as you
read this) on the black market, to try to ease desperate cash shortages,
state-run media said on Friday.
Prices are doubling every
day and food and fuel are in short supply in Zimbabwe. A cholera
epidemic has killed over 1 100 people and deadlock between Idiot
President Robert Mugabe and the opposition has put hopes of ending the
crisis on hold.
forced the central bank to continue to unveil new banknotes which quickly
become almost worthless. New Z$1bn and Z$5bn notes
were also put into circulation and the monthly cash withdrawal limit was
increased fivefold to Z$10bn. "The increase in cash
withdrawal limits is set to go a long way in improving workers' access to
their money," the Herald said.
But previous issues of new
banknotes have done little to curb the cash crunch faced by Zimbabweans, who
often line up for hours outside banks to withdraw barely enough to buy a
loaf of bread.
Critics blame the economic
meltdown on mismanagement by Mugabe's government, including the seizure and
redistribution of thousands of white-owned farms. The once thriving
agricultural sector has fallen into ruin.
The veteran Zimbabwean
leader, in power since independence from Britain in 1980, says Western
sanctions are the main cause of the economic crisis. As usual political
leaders blame others for the problems they create...
Posted October 20 and updated November
The good news: Everybody is a billionaire!
Because there are few options, the local population
is keeping its purchasing power in stocks and not in fiat Paper Money. The
result was and is an exponential rising stock market defying the enormous
local depression. Shares have become almost the only viable investment option.
2008 the Zimbabwe stock market index has soared to over 5,000,000 !
December 4, 2002: Zimbabwe stocks defy crisis
Zimbabwe's key stock market index
has risen almost 15% so far this week, defying the country's wider
political and economic chaos.
The Zimbabwe Industrial Index has been defying
gravity this year, rising more than 100% between May$ and November.
Below a chart from 2005 to 2007. In the end it
becomes extremely hard to keep track of the Industrial index as each
time Old Zimdollars are exchanged for new ones and "zero's" taken away.
October 22, 2008
Zimbabwe Stock Exchange soars as
others crash. (but only in nominal terms)
JOHANNESBURG, South Africa
- While markets across the world swoon, the Zimbabwe Stock Exchange has
being seeing record gains as citizens turn to equities in a desperate
attempt to protect their money from the country's stratospheric
hyperinflation. The benchmark Industrial Index soared 257 percent on
Tuesday up from a previous one day record of 241 percent on Monday with some
companies seeing share prices increase by up to 3,500 percent. But
before Wall Street traders start packing their bags and heading south, they
should bear in mind that these figures are just another representation of
Zimbabwe's collapsing economy and are almost meaningless in real terms.
The bad news:
Inflation rate in 1980: 7% ----------------
500 million dollar bill, just printed in May
2008......everybody can have
it.... just enough for breakfast/lunch (equal to about USD 2)
To buy tidbits in a plastic packet......you have
to spend at least 10
To buy vegetables.....5 million; To buy eggs........6000 million
To buy chicken.....how many million ?
If you want to eat in a restaurant, please
prepare the money.........
For a beer after office hours..............
Your monthly salary..........you need to hire a
taxi or lorry to bring the
Young kid - already a millionaire......
If you don't want to carry a lot of
money.....change it to USD
Nobody wants to count the money, just weigh
Otherwise, this is what you have to do every time
you go to shop, market, bus
The first well known site of early
urbanization in Africa must be the ruins known as Great Zimbabwe. This
site stands as a symbol for indigenous realization of state level social
organization and as such it is a source of African pride illustrated by the
way in which its name has been adopted for the modern nation of this region.
It is also typical of African urbanization in that much about the society that
built Great Zimbabwe is mysterious while it has been seen as something of an
Europeans have found it difficult to believe
that it could be of genuinely African origin and this has spawned all sorts of
theories involving the lost tribe of Israel and the like. The view that there
were no indigenous movements towards urbanization and state formation is as
misguided in its application to Great Zimbabwe as it is to Africa in general.
Thus, the site of Great Zimbabwe was entirely a local African development and
was occupied from the end of the first millennium AD. The stone buildings
which are left today were constructed over the period 1250 to 1450 with the
time of greatest prosperity in the middle of these dates.
Its wealth was drawn in part from a central
position in the GOLD TRADE of the region. It had a population of 18,000
justifying its designation as a city and there is evidence for a state with an
administration and social hierarchy. Towards the end of the fifteenth century
the gold trade seems to have declined and Great Zimbabwe came to a rather
abrupt end. It had already been abandoned and was in ruins by the time that
the Portuguese came to hear of it in the early sixteenth century.
- Inflation has
a level of 11,200,000 %.
- The latest
exchange rate is Zim$ 8 bn = $ 1 us
(previous figure was 4 bn)
Went to the supermarket yesterday
and filled a trolley. The bill came to $1.2 trillion, for which I had to write
3 cheques as we are only allowed to write cheques up to $500bn!!
"I was in Zimbabwe last May. Whilst
there I bought a Chinese take-away for 3 people. It cost me a million bucks.
About £8 at the time. When ##### was in the UK two weeks ago, he gave me a
$50,000,000 bill, valued at the time at £0.10!
"Written of the face of that bill is the
following. "Fifty Million Dollars on or before 30th June 2008 for the Reserve
Bank of Zimbabwe. Issue date 2nd April 2008. BEARER CHECK.
Zimbabwe is a country where
hyperinflation is a reality as opposed to a theoretical possibility. I takes
almost a wheelbarrow to pay for the lunch for eight people in that country. A
meal – consisting of fillet steaks and beers – cost six million Zimbabwean
dollars. Restaurants has no menu. Patrons wanting to eat are not offered a
choice. They ask “what’s left?” Still, they are able to smile. Such is the
indomitability of the human spirit.
Of course, the above is an extreme
case. However, hyperinflation is a real possibility within the USA if the Fed
screws up big time. Add currency regulations to the game and the Dow may very
well enter an exponential blow-off. This action will be countered by a
exponential drop of the Dollar…the equation being negative!
Assuming I am correct, the next
objective for the Dow could well be 30,000. If incorrect we could see 300,000!
People always are inventive.
Because of currency exchange and export regulations they found a method
that would more or less safeguard the purchasing power of the Fiat paper
Zim-dollar. We all know Stock certificates represent ACTIVES. The
citizens of Zimbabwe also knew this. Instead of dangerous Bank Deposits, and
to minimize the loss in purchasing value their money, they learned to convert
their money into stocks.
Jun 8 2008 2:03PM – Reuters
- Zimbabwe's fast depreciating currency is increasingly being rejected by
traders as they battle a severe economic crisis, the head of the country's
main industry body said on Friday.
Zimbabwe's currency hit new lows this week, trading at Z$1.2bn against the US
dollar on Friday amid political uncertainty over a presidential run-off
election set for June 27.
The poll pits
President Robert Mugabe against opposition leader Morgan Tsvangirai.
president of the Confederation of Zimbabwe Industries (CZI) accused Mugabe's
government of printing money, driving inflation and undermining the currency.
"We need to act as
a matter of extreme urgency to reduce money supply growth. If we continue with
the current policy of injecting massive amounts of liquidity into the economy,
we will continue to see a continuous depreciation of the local currency,"
"This will make
doing business more and more difficult and we will reach a point where we risk
the local currency becoming unusable."
In May, Zimbabwe
introduced special high-value "agro-cheques" which the central bank said were
meant for convenient payments to farmers during the current agricultural
These notes, in 5
billion, 25 billion and 50 billion denominations, are now largely used across
the economy, effectively becoming regular banknotes in the inflation-ravaged
But the CZI said
the moves had failed to stop the declining confidence in the currency.
'Number one enemy'
"Already, we are
seeing in both urban and rural areas a phenomenon where small traders,
landlords and individuals are refusing payment in local currency and insisting
on either barter deals, for example payment in cooking oil or foreign
currency," Jokonya said.
"Our number one
enemy is the excess of the Zimbabwe dollar on the market."
State media reports
on Friday said the central bank could soon slash some zeros off the currency
to help consumers cope with the effects of inflation, officially at over
1 657nbsp;000% and the highest in the world.
inflation to be considerably higher.
Mugabe's policies, such as the seizure of farms from whites to resettle
blacks, for the economic crisis, which is also shown by 80% unemployment and
shortages of food, fuel and foreign currency.
But the veteran
ruler denies ruining one of Africa's most promising economies and blames
Western sanctions for the crisis.
Robert Mugabe's Zimbabwe, where
baked beans cost $30 billion....