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Location: Georgia, on the Florida line, right above Tallahassee
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Inflation in Zimbabwe is the highest in the world, with prices having risen over two million percent in the past 12 months.
VOA News - Zimbabwe Central Bank Overhaul Seen as Answer to Hyper-inflation (http://voanews.com/english/2008-08-12-voa73.cfm - broken link)
I don't get it. Eventually, no one can afford anything...except the super rich. And the super rich don't get super rich by buying over-inflated goods.
So, what happens? I assume (ass-u-me) that the poor can't afford anything...and that they (the poor) resort to theft. And the rich watch the poor kill themselves while they eat crumpets. Am I missing something here?
Just curious how things can turn to crap so fast...and there's nothing anyone can do to stop it? I figured people would stand up and say "This ain't right!" and get to work on solving the issues. It's been 12 months (at least) and the issues haven't been resolved.
SO, do you blame leadership? Or the people? Or just "Meh, it's Africa."
I wonder if this could happen in North America. And just the thought of that...scares me. It scares me badly. Can you imagine having to man-to-a-man battle for gas? I mean, literally beating the living $hit out of someone so you can fill your tank? Can you imagine your wife batttling to have some tomatoes? I've heard of this in Russia. Women were actually fighting for a place in line for bread.
[quote=70Ford;4889504]Inflation in Zimbabwe is the highest in the world, with prices having risen over two million percent in the past 12 months.
I don't get it. Eventually, no one can afford anything...except the super rich. And the super rich don't get super rich by buying over-inflated goods.[/qutoe]
Sure they can. With hyper-inflation is Currency Inflation to the max, prices and wages rise together. That isn't true with Cost Inflation.
Wage Inflation often drives hyper-Currency Inflation. With Wage Inflation, rising wages result in rising prices. That was the case in post-WW I Germany, with many dead, and 5 times as many injured, there was a shortage of workers, which drove up wages (which are based on supply and demand of laborers) and then the government starting printing too much currency, which drove prices and wages up even further.
A loaf of bread went from about 6 pfennings to 3 Million Marks in about 6 years.
Quote:
Originally Posted by 70Ford
So, what happens? I assume (ass-u-me) that the poor can't afford anything...and that they (the poor) resort to theft. And the rich watch the poor kill themselves while they eat crumpets. Am I missing something here?
You might have seen the photo with a guy pushing a wheelbarrow filled with marks to go buy some bread. Everyone marvels, but no one stops to ask where he got 3 Million marks in the first place. He was probably getting paid 300 Million Marks a day.
If you're making 300 Million Marks every day, you can afford a measly 3 Million Marks for a loaf of bread.
Quote:
Originally Posted by 70Ford
Just curious how things can turn to crap so fast
It's real easy.
Quote:
Originally Posted by 70Ford
...and there's nothing anyone can do to stop it?
Sure. A competent government and/or central bank can stop it.
Quote:
Originally Posted by 70Ford
I've heard of this in Russia. Women were actually fighting for a place in line for bread.
Russia does not have inflation on the level of Zimbabwe, or the US for that matter. In fact, the Ruble has appreciated 100 points in the last 2 years.
I doubt the story is true, and even if it would be, it's probably some dink town in the "stans" like Dagestan (which is not representative of Russia as a whole), and the story is probably misconstrued.
Zimbabwe got into the habit of printing money like there was no tomorrow a few years ago... really that place is a case study for how not to govern a country.
Just curious how things can turn to crap so fast...and there's nothing anyone can do to stop it? I figured people would stand up and say "This ain't right!" and get to work on solving the issues...SO, do you blame leadership? Or the people?
First of all, things didn't "turn to crap" that fast. President Robert Mugabe has been in office since 1980. Just when he took over, it was the British colony of Rhodesia, and large farms were owned by whites, who raised tremendous quantities of food. Zimbabwe was an exporter of food then; now they are a net importer of food.
Mugabe replaced white minority rule with a dictatorial Marxist regime. The white farm owners were forced off the land, often tortured or killed. The land was to be given to black peasants, but was instead given to the ruling elite, and the peasants lived in cardboard shacks.
In order to pay off soldiers, police, and his civil servants, Mugabe had to resort to over-printing the currency, as there was no longer any income from food exports. Mugabe pays his military leaders and political cronies with gold and platinum from Zimbabwean mines. He needs protection to maintain power, as he was defeated in the March 2008 elections.
The Zimbabwean people are unable to "stand up and solve the issues" as they are dying of malnutrition and must maintain a low profile in order not to be killed by Mugabe thugs. However, the situation will not go on too much longer. Mugabe is getting old and reportedly has heart problems. Any weakness on his part, and his rivals will move right in.
Zimbabwe got into the habit of printing money like there was no tomorrow a few years ago... really that place is a case study for how not to govern a country.
Zimbabwe is a classic case of turning a properous country (Rhodesia) into a basket case just by changing management.
In order to pay off soldiers, police, and his civil servants, Mugabe had to resort to over-printing the currency, as there was no longer any income...
Sounds like the USA to me. Defecits of nearly $1 Trillion per year, printing money to bailout Bear Stearns, a "blank check" to the treasury for the inevitable bailout of Fannie and Freddie, and the Federal Reserve now accepting worthless mortgage-backed securities as collatoral for its "loans".
It could happen anywhere. Keep these same idiot politicians in charge and one day it could happen here too.
All you need understand is that the government in question jettisons sound fiscal and monetary policies in favor of legions of printing presses running 24/7.
Sounds like the USA to me. Defecits of nearly $1 Trillion per year, printing money to bailout Bear Stearns, a "blank check" to the treasury for the inevitable bailout of Fannie and Freddie, and the Federal Reserve now accepting worthless mortgage-backed securities as collatoral for its "loans".
It's nothing like the US. In January 1921 it costs 0.30 Marks to buy a copy of the Duetsche Allegemeinde, a daily newspaper. By November 1922, ti cost 70,000,000 Marks to buy a copy.
Who could buy a copy? Well, you could. In 1921 workers in Europe were paid daily and you would have been making about 900,000,000 Marks per day as wages.
It takes an extraordinary effort to induce hyper-inflation to that extreme. The Treasury Department would have to quadruple the amount of money currently in circulation, and the Federal Reserve would have to inject $Trillions in credit, not mere $Billions into the economy.
Location: Georgia, on the Florida line, right above Tallahassee
10,471 posts, read 15,829,266 times
Reputation: 6438
Quote:
Originally Posted by Mircea
It's nothing like the US. In January 1921 it costs 0.30 Marks to buy a copy of the Duetsche Allegemeinde, a daily newspaper. By November 1922, ti cost 70,000,000 Marks to buy a copy.
Who could buy a copy? Well, you could. In 1921 workers in Europe were paid daily and you would have been making about 900,000,000 Marks per day as wages.
It takes an extraordinary effort to induce hyper-inflation to that extreme. The Treasury Department would have to quadruple the amount of money currently in circulation, and the Federal Reserve would have to inject $Trillions in credit, not mere $Billions into the economy.
Ah, I get it. Prices go up...but local worker's pay does not increase along with said prices.
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