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Sunday, October 30, 2016

The Return of Monetary Mischief to Zimbabwe?

Bloomberg is reporting that Zimbabwe might be up to some monetary mischief again. The government has started printing currency and, as first noted by JP Koning, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 way cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y are doing it seems dubious. So, as a reminder to cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 government of Zimbabwe, it might be wise to revisit how bad cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 monetary mischief got back in 2008. You do not want to repeat that experience.

Steve Hanke found cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 monthly inflation rate hit 79.6 billion percent in November 2008 (89.7 sextillion percent on a year-on-year basis). That is how bad it got. This bout of hyperinflation began in early 2007 and ended in late 2008. At that point cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 government shut down cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 printing presses and allowed its citizens to freely use foreign currency. The country quickly dollarized and cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 country once again had a stable medium of exchange.

One way to visualize this hyperinflation is to look at cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 progression of currency printed by cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 government. Below are some slides I put togecá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r that shows this development. It is interesting to observe that in early 2007 Zimbabwe had similarly sized dollar notes to those in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 United States. That quickly changed as prices began exploding.



So take note Zimbabwe. Let's not repeat cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 painful experience of 2007-2008.

P.S. What would happen to places like Zimbabwe if Ken Rogoff's proposal to eliminate U.S. gained traction?

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