Wednesday, July 11, 2007

'Let me run home and get another million'

Some of you may have heard that Zimbabwe has a bit of a problem. Zimbabwe's "leader" of a few decades, Robert Mugabe (known psychopathic murderer, flagrant commie dictator, and all around very very bad guy), has finally screwed the pooch in a major way managing the nations finances.

Mugabe has allowed the nation, probably intentionally, to slip into a Wiemar Germany style hyper inflation mode of some several thousand percent a year. Of course this has always been the problem with fiat money -- its intrinsic value is near zero -- the value of the paper pulp. Its value is "faith based". When people lose faith, you have to pay for stuff with ever increasing poundage of notes.

On the other hand, the notion of fiat money is great when you owe a big debt denominated in that scrip. You simply print up as much as you need to pay the debt and call it a day. You're off the hook, and the guy who just got a truck load of worthless paper gets screwed. Good deal eh? Other than the induced inflation and lack of faith it induces of course...

Sydney Morning Herald
[...]"My sister went to buy some groceries at a shop. They told her that the groceries she had seen the day before at closing time had just gone up, so she said let me just run home and get another million [Zimbabwean dollars].

"When she came back the prices had gone up again and the million she was carrying could not cover that. And that was within the space of two hours

Add to this poisonous fiscal brew a recent decree of price controls (everyone must cut prices in half and keep them down) and heavy penalties for any merchant who violates it, roving gangs of government enforcers, and you have a situation where the store shelves have become empty and will STAY EMPTY. What merchant is going to lose money stocking stuff he's mandated to sell at less than replacement cost? None, so this is what grocery stores in Zimbabwe look like now.


Mr Minority said...

Hmmm, which is more cost effective in Mugabeland:

Buying toilet paper or wiping your ass with $1 Million bills with Mugabe's face on them?

miriam said...

Truly reminiscent of the Weimar Republic.

Ymarsakar said...

Gotta love communism. Torture with legitimacy.