"Robert Mugabe has kept his embattled regime in Zimbabwe afloat on a sea of paper money. Now he'll have to try to do it without the paper. ... Mugabe's regime relies on a steady stream of the paper--fortified with watermarks and other antiforgey 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. ... Germany's foreign minister, Frank-Walter Steinmeier, phoned Karten Ottenberg, Giesecke & Devirent's chief executive, Tuesday to complain about the [paper] deliveries, according to a German diplomat. On Friday, Germany's development minister denounced the company's dealings with Zimbabwe as 'terrible' and send a fax demanding that they stop. ... The firm tried to weather the storm. Producing bank notes is lucrative, particularly for countries like Zimbabwe that are ravaged by hyperinflation and need to issue new notes so often. ... A loaf of bread costs 30 billion Zimbabwean dollars. Gideon Gono, the governor of Zimbabwe's central bank, said in a phone interview that the cutoff in deliveries will create hassles but 'there is no need to commit suicide ... We are basically prepared for anything that comes our way' Inflation, he added, is a grave problem, but Zimbabwe will 'survive the onslaught' ... A 500,000 Zimbabwe dollar bill issued late last year is already out of circulation: It is worth just 0.00004 U.S. cents at the official exchange arte--and much less on the black market. ... In place of ordinary bank notes, Zimbabwe's central bank has taken to issuing bearer checks in recent years. These look much the same as bills and use the same German paper, but are valid for only a fixed period. ... Hyperinflation, says Steve H. Hanke, a professor of applied economics at John Hopkins University in Baltimore and an expert on the subject, 'is a very simple equation'--stop printing money and it stops. ... Hanke ... doubts much will change in Zimbabwe unless it gets rid of its central bank and adopts an entirely different monetary system", my emphasis. Marcus Walker & Andrew Higgins (W&H) at the WSJ, 2 July 2008.
"Custodian of a currency in free fall in a country ravaged by hyperinflation, Gideon Gono, Zimbabwe's central-bank governor scoffs at 'traditional economics' and seeks guidance elsewhere. He says he reads the Bible. ... 'Anyone who says the bank governor should violate the head of state is violating a principle that Jesus Christ demanded of his disciples,' says Mr. Gono, a churchgoing Christian and former commerical banker. 'A key element Christ looked for in his disciples was loyalty.' ... Gono 'has to answer to his master,' says Tapiwa Mashakada, an economist and the shadow finance minister of the opposition Movement for Democratic Change. ... Of all the world's central bankers, Zimbabwe's gets the biggest--or at least the longest--salary. Mr. Gono won't say how much he earns as head of the Reserve Bank of Zimbabwe but does claim to have 'more digits' on his pay slip that [sic] of his peers. He earns trillions of Zimbabwe dollars. ... Lamenting in a telephone interview that he has 'the most difficult job' in central banking, Mr. Gono says he would like to tame inflation but his hands are tied. Critics who blame him for the the profilgate printing of money, he says, don't understand that 'traditional economics do not fully apply in this country.' ... Inflation is now so high that officials no longer release figures. ... In June, says John Robertson, an economist in the Zimbabwe capital Harare, prices were roughly eight million percent higher than the same month last year", my emphasis, Andrew Higgins (AH) at the WSJ, 8 July 2008.
I agree with Hanke. The same goes for the US, repeal the Federal Reserve Act! Gono is brilliant, he adopted John Maynard Keynes "stamped money" advocated in Chapter 23 of the General Theory, 1936. Keep that money circulating! Gono for Fed head! Replace our "Zimbabwe Ben" with the real McCoy. Ludwig von Mises once wrote, "Government is the only agency that can take a useful commodity like paper, slap some ink on it and make it totally worthless". Consider the parallels between Zimbabwe and the US. A 50 billion Zimbabwe dollar bearer check is worth $4, so has a 12.5 billion per US$ exchange rate, therefore the 500,000 note is not worth 0.00004 US cents, someone lost two zeros. I checked an on-line currency converter and got 13 billion to one.
Loyalty Gono? See Basil Hart's comments, my 7 February 2008 post. As to following Christ, it is also written "You shall not make for youself an idol. ... You shall not bow down to them or worship them", Ex 20:4 (NIV); even Robert Mugabe? "You shall not steal", Ex 20:15 (NIV) even by counterfeiting? I note Uncle Sam: no longer publishes M3 and publishes a "core inflation" rate, whatever that is. Perhaps we should follow Gono and stop publishing any inflation statistics.
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