How ya gonna hyperinflate with no fancy paper, Mugabe?

15 July 2008 by Mike Gogulski
Posted in economics | 2 Comments »

From the LA Times:

Lack of bank note paper threatens Zimbabwe economy

The country, already suffering hyperinflation, is on the brink of financial collapse, analysts say.

HARARE, ZIMBABWE — It has come to this: Zimbabwe is about to run out of the paper to print money on.

Fidelity Printers & Refiners, the state-owned company that tirelessly churns out bank notes for the Robert Mugabe regime, was thrown into a crisis early this month after a German company stopped supplying bank note paper because of concerns over Zimbabwe’s recent violent presidential election, widely seen as fraudulent by international observers.

The printing operation drastically slowed. Two-thirds of the 1,000-strong workforce was ordered to go on leave, and two of the three money-printing shifts were canceled.

The result on the streets was an immediate cash crunch.

“If you think this currency shortage is bad, wait two weeks. By then it will be a disaster,” said a senior Fidelity staffer, who spoke to The Times on condition of anonymity because he would face dismissal and possible violence for talking to a Western journalist. The paper will run out in two weeks, he said.

The Zimbabwe dollar (Z$) has the dubious honor of being the world’s current Least Valued Currency Unit, currently over Z$200 billion per weakened, flailing US$, and with an exchange rate rising at billions per day.

Folks must be looking back fondly to just a few months ago when a beer went for a very reasonable Z$95.6 million

As usual in the tame media, the timid approach to the cause of the phenomenon is buried at the end:

Everyone at Fidelity Printers knows the money printing is propping up Mugabe, the staffer said.

People read this, and think that inflation is some sort of natural disaster, like a tornado or earthquake, something that just “happens” to an economy. It is not. The money isn’t “propping up” Mugabe, it’s a symptom of Mugabe and his cronies stealing as much of the economy as they can get their hands on.

I could go on, but I don’t really expect anything more from the LA Times.

  1. 2 Responses to “How ya gonna hyperinflate with no fancy paper, Mugabe?”

  2. By Aaron Kinney on 16 July 2008

    I love the article’s title. They have it soooo wrong. Lack of paper threatens Zimb. Economy?!?!? WTF?!?!?!

    Its the existence of EXCESSIVE banknote paper that already destroyed their economy. What THREAT? The “threat” phase ended a long time ago. The threat was carried out a long time ago. And now its run its course.

    The lack of banknote paper is the aftermath; the first step towards recovery – towards sobering up.

  3. By Pedestrian Observer GB on 17 July 2008

    He will have a hard time fixing this one. Mugabe is in a bind and his goons are of no use here. The question here is not how long can he hang on but when will he be driven out……

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