Monday, April 13, 2009

Zimbabwe Dollar Is No More

What has been a de facto reality for some time now has become official: The Zimbabwe dollar has been completely destroyed and annihilated.

This is hardly something to shed tears over. The interesting question is how the Zimbabwean government will finance itself now that it can't print money anymore. Well, I guess we'll find out soon enough....

Given the current economic orthodoxy that inflation is impossible as long as unemployment is high and capacity utilization is low, it is worth noticing that capacity utilization in Zimbabwe was only 20% when it suffered from the hyperinflation that destroyed the Zimbabwe dollar.

1 Comments:

Blogger Reginald said...

Zimbabwe, like all countries that destroy fiat money, will or already has resorted to stealing tangible assets (e.g. timber, mines, crops). Any taxes will be paid in foreign currencies, or acceptable tangible assets. Sooner or later, they'll try to impose another fiat money. It might succeed as it did in Germany, but the Germans are still very wary decades later of inflating the money supply.

2:38 AM  

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