Wednesday, July 02, 2008

Here's One Way To Stop Inflation

Maybe enough for a loaf of bread?

WSJ -- Robert Mugabe's embattled regime in Zimbabwe relies on a steady supply of paper -- fortified with watermarks and other antiforgery features -- to print the bank notes that allow it to pay the soldiers and other loyalists who enable him to stay in power. With an annual inflation rate estimated at well over 1 million percent, new notes with ever more zeros need to be printed every few weeks because the older ones lose their worth so quickly.

The Munich-based company that has supplied Zimbabwe with the special blank sheets to print its increasingly worthless dollar caved in to pressure on Tuesday from the German government for it to stop doing business with the African ruler.

Zimbabwe Inflation Facts:

A 10 million Zimbabwe dollar bank note is worth 0.0008 of a U.S. cent.

It would take 12.5 billion Zimbabwe dollars to equal one U.S. cent, and 1.25 trillion Zimbabwe dollars to equal $1. (Note that the total value of all U.S. currency in circulation is "only" $768 billion.)

Vending machines, which take coins, fell out of service in Zimbabwe years ago. A single soda would require the deposit of billions of coins.

Imported from South Africa and in very short supply, a Coke sells on the black market for around 15 billion Zimbabwean dollars.

Civil servants mostly get paid through direct deposits into bank accounts, which limit withdrawals to 25 billion Zimbabwe dollars a day.

3 Comments:

At 7/03/2008 12:10 PM, Anonymous Anonymous said...

I guess that killing all those white farmers wasn't such a good idea after all ...... even though it didn't result in a loss of standing among african leaders, or a loss of U.S. aid

b

 
At 7/03/2008 1:13 PM, Anonymous GW South said...

"It would take 12.5 billion Zimbabwe dollars to equal one U.S. cent"

"Imported from South Africa and in very short supply, a Coke sells on the black market for around 15 billion Zimbabwean dollars."

A coke for one cent US? Did WSJ get its numbers right? Although with inflation so high, if they got that 15 billion Zimbabwean number just a few days ago that would explain the descrefency.

 
At 7/07/2008 6:11 PM, OpenID Zoli Erdos said...

I suppose they still haven't caught up with Hungary's sad World Record...

On a more serious note, I wonder how serious a setback it is. What if they don't use special security paper for banknotes? Would a currency that's falling apart this fast be worth forging?

 

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