Great news from the most prosperous nation on earth
Great news from the most prosperous nation on earth by Simon Black for Sovereign Man
By the mid-1990s, the economy of Zimbabwe was in serious trouble.
The national government under its dictator Robert Mugabe had spent years confiscating private property– real estate, businesses, factories, bank deposits, etc.
And unsurprisingly, this had a disastrous effect on the economy.
Productive citizens and talented entrepreneurs left Zimbabwe in droves– after all, who would want to keep operating under such awful conditions?
So within a few years, everything from food production to mining output to manufacturing had plummeted.
The banking sector collapsed. Unemployment soared. Tax revenue dried up.
So Mugabe did what most politicians would do in that position: he started printing money.
This is an old trick that governments have relied on for thousands of years.
The ‘denarius’ coin of ancient Rome, for example, contained 93.5% silver in the early 100s AD under Emperor Trajan. By the time Aurelian became emperor the following century, the coin contained only 5% silver.
And as the denarius became less and less valuable, prices across the empire soared. Merchants had to keep increasing their prices in order to receive the same amount of silver that they used to… so inflation was rampant.
This is precisely what happened in Zimbabwe.
The government conjured absurd quantities of money out of thin air in order to make ends meet… but the new money had no value.
It’s not like the central bank was able to create new mining production or agricultural output. They just created a bunch of paper.
And with trillions upon trillions of new Zimbabwe dollars flooding into an economy that was suffering an extreme depression, prices started to skyrocket.
By 2000, Zimbabwe’s annual inflation rate was a whopping 55%.
The following year more than 110%. By 2003 inflation was nearly 600%… and nearly 1300% by 2006.
But the government continued printing money.
By 2008 the inflation rate in Zimbabwe was so extreme that no one could even calculate it anymore. Economists estimated that it was as high as 800 TRILLION percent.
In April 2009, the government finally threw in the towel… and the country’s economic planning minister announced that the Zimbabwe dollar would be taken out of circulation “because there is nothing to support and hold its value.”
Frankly, this is the case whenever any country simply conjures new money out of thin air: there’s nothing to support or hold its value.
So for the next ten years, Zimbabwe did not have its own currency; people used dollars, euros, renminbi, South African rand… any other currency they could get their hands on.