Saturday, May 19, 2007
Inflation rises to 3732%(!) in Zimbabwe. What is really amazing about this news story is the complete absence of money supply discussions. In the story, hyper inflation is said to be the result of Mugabe's theft of white farms and other various other policies, while Mugabe is said to blame it on foreign governments. Yet while it is certainly true that the land thefts and the other policies have been contributing to the collapse of the economy, the by far most important cause of extremely high price inflation is of course extremely high money supply growth. And the hyper inflation is of course in itself a contributing factor to negative economic growth.