1:35,000,000,000,000,000 – The Tragedy of Zimbabwe’s Currency Inflation
When browsing Twitter for news this morning, I saw a disheartening story flash across my screen: “Zimbabwe offers new exchange rate: $1 for 35,000,000,000,000,000 old dollars.” According to that article from the Guardian, “Zimbabweans will start exchanging ‘quadrillions’ of local dollars for a few US dollars next week as President Robert Mugabe’s government discards its virtually worthless national currency.
“The southern African country started using foreign currencies including the US dollar and South African rand in 2009 after the Zimbabwean dollar was ruined by hyperinflation, which hit 500 billion per cent in 2008.
“At the height of the country’s economic crisis, Zimbabweans had to carry plastic bags bulging with banknotes to buy basic goods. Prices were rising at least twice a day.”
What went so wrong in Zimbabwe? While a multitude of factors can be pointed to, I think two overarching ideas shoulder much of the blame: a belief that a country can violate property rights and tax its way to economic prosperity, and a belief that a country can print its way to economic prosperity.
Property Rights and a Strong Currency Discarded
Back when the Mugabe regime came to power, President Mugabe pursued a policy of taking away white farmers’ lands and redistributing them to native Zimbabweans. These policies continue pretty much to this day, with Mugabe last year telling white farmers to “go away,” and white farmers reporting renewed efforts to deprive them of their land.
What happened as a result of this class warfare and redistribution of wealth? The wealth of the nation evaporated, as government waste and mismanagement, alongside misguided tax policies, ravaged the country. Combine this disrespect of property rights with hugely increased taxes and runaway inflation due to printed money, and you’ve got a recipe for disaster.
Now, there’s NOTHING like that happening here in America, right?
Oh wait, eminent domain allows the government to deprive you of your property without just compensation, and disproportionately harms minorities.
Oh wait, many of our leaders believe in taxing our way to prosperity and “soaking the rich.”
Oh wait, civil asset forfeiture allows the police to take away your property without a conviction.
Oh wait, our tax and welfare codes punishes successful people and keeps the poor locked in a cycle of poverty and what many deride as “inequality.”
Oh wait, the Federal Reserve exercises the power to print trillions of dollars, thus leading some analysts to question whether the dollar will remain the world’s reserve currency.
Oh wait, our government continues to spend like a drunken sailor and is irresponsibly racking up obscene amounts of debt.
These policies here in the United States, and more, are making us head in the wrong direction, and it’s only a matter of time before our economy starts showing symptoms of collapse like Zimbabwe’s did years ago. That is, if we keep on the wrong path.
But if we wake up, get other liberty-loving Americans involved, and spread the message that these policies are not the way to a brighter future, perhaps our country can recover and live out the ideals of our Founders.