What a tragedy Zimbabwe has been. And a monetary laughingstock for the ages.
Now Zimbabwe wants to do it all over again.
Like so many of the African countries that fell under the control of native Marxists-Leninists and other indistinguishable leftist totalitarians in the post-colonial period – Nyerere, Mobuto, Kaunda, Lumumba – it was Zimbabwe’s bad fortune to be home to a madman named Robert Mugabe.
Zimbabwe, of course, is the former Rhodesia. As Rhodesia, it was a food exporting nation. But not long after it became Zimbabwe in 1980, and under the rule of Mugabe, it soon couldn’t produce enough food to feed its own population.
Such stories of economic train wrecks are all too familiar in sub-Saharan Africa. But what made Zimbabwe the butt of the economic jokes was its hyper-inflationary monetary policies.
Gideon Gono, the head of Zimbabwe’s central bank (sort of the Ben Bernanke of Africa) was eventually printing Zimbabwe dollars at a frenzied pace. Annual inflation was reported to have hit 11,200,000 percent in 2008!
Somewhere around the office, I have a 100 trillion Zimbabwe dollar bill. Worthless, except as an artifact of one of the worst inflations in recent history. Afterall, at the end of the money-printing experiment, it took 35 quadrillion Zimbabwe dollars to buy one US dollar.
It was literally not worth the paper it was printed on.
Eventually, Zimbabweans dumped their dollar and began using the US dollar instead. That helped for a while, but now they are back to their old ways. Zimbabwe has banned the use of foreign currencies, including the US dollar, and issued a new Zimbabwe dollar. Predictably, it put the force of law behind it, designating it the new legal tender.
Prices are surging, People are taking to the streets. It is a human tragedy, one enacted again and again. One must feel sorry for the people of the land victimized by their government’s policies. But don’t laugh out loud, because failure is the certain fate of unbacked, irredeemable paper money everywhere. That includes the US dollar.
We can only wonder how many times the lesson needs to be relearned.