Posted on 08/22/2006 5:26:13 PM PDT by blam
Shops run out of money as Zimbabwe changes currency
By Peta Thornycroft in Harare
(Filed: 22/08/2006)
Crowds filled Zimbabwe's banks and shops yesterday as they rushed to meet a deadline to acquire new currency after the government cancelled the old one.
Three noughts have been struck off the new notes in an effort to reduce the huge volume of cash required for the simplest transaction in a land where annual inflation runs at almost 1,000 per cent.
People had to hand in old notes by yesterday's deadline. But the task was complicated by an official regulation banning anyone from possessing more than the equivalent of £80 in cash. Police manned roadblocks to search for illicit money. They had powers to confiscate notes from anyone exceeding this limit.
advertisementAnyone visiting a shop with old currency was supposed to be given change in new notes. In Harare, however, supplies were running dry.
"I must have change," said a housewife on the verge of tears. She had bought three items at a supermarket in the capital, and wanted the equivalent of 12p in the new currency. The checkout assistant was unable to do so.
Other shoppers carted boxes of old money to pay for a few bags of groceries.
Gideon Gono, the Reserve Bank governor, warned people against depositing more than £80 worth of old cash: "If you can't account for it, you may as well plough it into your garden for manure."
Tony Hawkins, a Harare University economist, said the currency switch - designed to combat black marketeering and hyper-inflation in a country mired in economic crisis - would achieve little.
"The government hasn't tackled any of the real problems," he said. "It will make shopping easier as people won't have to carry all that money around, but inflation means the government will have to do this again in two or three years."
Ping.
I'm sure glad they kicked the wicked ol' colonials out. Things are ever so much better there!
Go back to the old ways... "Goods for goods!" sarc//
They tried socialism and it did not work.
If these people are not stuck on stupid they might try those dangerous systems called:
Capitalism and Freedom.
No hand outs from the USA needed to make those two systems work.
Yep, no racial diverstity in Zimbabwe.
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( No more Olmert! No more Kadima! No more Oslo!)
They deserve every bit of suffering that comes their way, unfortunately.
People who own real property using borrowed money can make a fortune in such an environment, though.
They must have really low unemployment and very high economic growth. That's what our government tells us causes inflation.
Maybe they could get North Korea to print some for them.
Idiots.
As a means of solidifying government control over a population, however, it may prove quite effective. The elite and their slaves will eat. The rest will go away somehow, either by death or migration, both of which will be blamed on someone else. If revolt were a concern we'd have seen it by now. Stalin used this plan in the Ukraine. It worked.
Sorry, but in most countries, the government prints too much money, causing inflation. The Zimbabwean government makes all its purchases of goods and labor with money that it simply prints off its money-printing presses. An excess of essentially and increasingly worthless money causes the devaluation of that currency.
If the United States Treasury simply gave each person $1 million tomorrow morning, the cost of goods and services would adjust to circulate that windfall. Let us say hypothetically that you want to buy a house immediately upon receiving that million-dollar package in the mail. A finite supply of homes exists in your county or city, and thousands or even millions of families suddenly got the same idea. Homes generally sell on the free market, and in a situation where multiple potential buyers bid to buy your future house, its current owner generally selects the offer best for said ownership. That offer usually includes the highest price. Within some short relaxation time (a few days or months at most), the market price of housing rises to meet the financial capacity of potential buyers: practically every presentable home in the entire country suddenly requires several hundred thousand dollars or more.
Similar infusions of currency, usually limited to partisan supporters at the (relative) expense of political opponents of the communistic regime, occur so regularly in Zimbabwe that inflation now exceeds 1000%. Although Zimbabwe practices communism, practically every worthwhile good exchanges almost exclusively in the underground "black market" economy because governmental policies have undermined the production of even such essential goods as food.
Several factors considerably complicated inflation in the United States. Unlike Zimbabwe, we maintain a convertible currency that enjoys widespread use among foreigners abroad. We also have significant problems with currency counterfeiting, especially among enemies of the United States. A reasonably well-enforced minimum wage, increased episodically by the Congress and various state and local governments, sets an irregularly rising floor to the cost of certain basic services in the labor market. A considerable amount of transactions now occur electronically without the need to print physical currency. And the Federal Reserve decides to print a quantity of currency based upon the prevailing interest rates that it desires.
No one deserves to suffer at the hands of a dictator. Think about what you're saying.
For an excellent analysis of inflations gross and modest, read "Dying of Money: Lessons of the Great German and American Inflations", Jens O. Parsson. Wellspring Press, Boston, Massachusetts, 1974. ISBN 09146899014. The book is scarce; you may have to search several libraries to find a lendable copy.
Isn't inflation one of the factors that Hitler used to gain control of Germany?
He certainly used the after effects. There were some winners, but savers got screwed and Hitler's political advancement was assisted by their discontents.
hhhmmmm, its tens of thousands in this country before they can take it with no charges... there were a couple of threads yesterday
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