Black (Real) Market to the Rescue in Zimbabwe
ZIMBABWE--With inflation estimated at 200,000% - easily the highest in the world - Zimbabwe's currency is barely worth the paper it's printed on (see chart above). (The largest Zimbabwean note, 10 million dollars, can't buy more than a couple of sodas.) Foreign currency runs this economy now, mainly the U.S. dollar and the South African rand, nearly all of it traded on the black market. (MP: Hey, somebody wants the USD!)
Remittances from Zimbabweans living overseas drive the economy, pumping as much as $1 billion in foreign currency into the country each year, nearly all of it coming through the black market. "There is absolutely no way that the economy could function without the inflows of money via the black market," said Tony Hawkins, a leading independent economist in Harare.
Comment: What would 200,000% inflation actually mean? It would translate to an hourly inflation rate of about 23%, and a daily rate of about 550%. An item that costs $10 today would cost $65 tomorrow. Prices would be doubling about every 4 hours. In other words, if you're planning a leisurely dinner at a restaurant, you might want to pay in advance, to avoid a possible doubling of menu prices by the time you're done!
There's also a lesson here about the power, adaptability and resiliency of the market. Regardless of how bad the official economy is in countries like Zimbabwe due to a "government disaster," and no matter how serious any natural disaster is (earthquake, hurricane, etc.), the market always survives and prospers and actually prevents the situation from being even worse! Without Zimbabwe's black market money dealers, and without "price gougers" after a hurricane, things would be a lot worse.
(HT: Ben Cunningham)