Hyperinflation in Zimbabwe

[bturville]

this is hilarious:

"Britain is increasingly getting desperate to act against Zimbabwe and has announced plans to hunt down assets of senior Zanu-PF and Government officials.

President Mugabe has previously said he has no assets in foreign countries and told the British and the European Union to seize any if they find them."


so.....


"...they are now punishing anyone with the name Mugabe.

A furious Sam Mugabe was left without money when her wages "vanished" in Britain's banking system – because of sanctions against President Mugabe and other senior Government officials.

Her bank HSBC mistook Sam (23) for a relative of President Mugabe and froze her £1 200 pay cheque, The Sun newspaper reported yesterday."

http://mathaba.net/news/?x=598608

[Collin Li]

That is an awful side-effect of an unnecessary interventionist policy.

[costargh]

Could Zimbabwe's situation perhaps be the greatest economic problem caused by government intervention of all time?

There are some statements/quotes in my VCE eco book that I'm sure Coblin and Brendan will love

"The main reason for government regulation is a belief that without some interference, the Australian economy would not perform as well."

To what extent is this true?

"It is generally felt that, on its own, the free operation of the market as the main decision maker would cause problems including severe booms, recessions, stagflation, CADs, exchange rate instability, misallocation of resources, inequality and poverty."

To what extent is this true?

[brendan]

The first proposition or the second?

[costargh]

Edited post. There are now 3 questions. Hope its less ambiguous

[Collin Li]

I don't like either of the quotes. You don't understand our position?

Or did you mean "love" as in quotes that I'd love to rip apart? That would be wrong also, because they say quite valid things, but often unworthy or irrelevant things to justify a great deal of intervention.

[costargh]

The 'love' was sarcastic lol.

So some intervention is good? I am purely asking for VCE Eco reasons where they are contending that the governments role in the economy is vital

[Collin Li]

For fiat currency, the government's role is crucial. This is not the only viable means of monetary policy, however. A free market could possibly produce a viable currency (probably based on a gold standard).

Intervention is justified when there is market failure. Best example would be when the costs are somehow externalised. That is, when you privately transact, you end up costing other people, or benefiting them. To fix this, a government needs to internalise these costs somehow, either by installing taxes or incentives to achieve the socially desirable equilibrium (as opposed to the equilibrium that would be achieved in a private market).

In reality though, with lack of ideal conditions to produce fully efficient markets, there are a whole bunch of minor things that could justify intervention. But it would be short-sighted to ignore the reality that government intervention is never done ideally - political agenda overrides economic rationalism and often the costs far outweigh the benefits - an economic solution is rarely put forward cleanly.

[excal]

For fiat currency, the government's role is crucial. This is not the only viable means of monetary policy, however. A free market could possibly produce a viable currency (probably based on a gold standard).

Intervention is justified when there is market failure. Best example would be when the costs are somehow externalised. That is, when you privately transact, you end up costing other people, or benefiting them. To fix this, a government needs to internalise these costs somehow, either by installing taxes or incentives to achieve the socially desirable equilibrium (as opposed to the equilibrium that would be achieved in a private market).

In reality though, with lack of ideal conditions to produce fully efficient markets, there are a whole bunch of minor things that could justify intervention. But it would be short-sighted to ignore the reality that government intervention is never done ideally - political agenda overrides economic rationalism and often the costs far outweigh the benefits - an economic solution is rarely put forward cleanly.

Something that I agree with.

But then it poses the question - how much of a failure is a failure? This, in turn, would justify or negate the need for intervention.

[costargh]

Zimbabwe issues 100-billion-dollar note

Zimbabwe, grappling with a record 2.2 million per cent inflation, will introduce a new 100-billion-dollar bank note in a bid to tackle rampant cash shortages.

The poverty-stricken African country has already issued about half a dozen new high denomination notes this year.

In January, a 10-million-dollar note was issued, then a 50-million-dollar note in April. In May, notes for 100 million and 250 million dollars were issued, swiftly followed by those for five billion, 25 billion and 50 billion.

Zimbabwe is currently gripped by a post-election crisis as controversial President Robert Mugabe clings to power and has been ravaged by hyperinflation which shot up from 165,000 per cent in February to 2.2 million in June.

Independent economists however believe the official inflation figure is grossly understated, estimating it could be running between 10 million and 15 million per cent.

Zimbabwe's chronic economic crisis has left at least 80 per cent of the population living below the poverty threshold and mass shortages of basic goods in shops.

http://news.ninemsn.com.au/article.aspx?id=600749

This country is a joke

[excal]

Old joke is old.

[Fyrefly]

Not only is their money next to useless due to inflation, but they can't get their hands on foreign currency either. They can't sell their own currency on the foreign exchange market - no-one wants it. The country has nothing to barter with, so it gets left with nothing.

I think they need to start over.
Start by putting an economist in there.

[enwiabe]

Start by removing that raving lunatic Mugabe*

[Daniel08]

Also, burning money because you'd need to burn less money than it would take to buy an equivalent amount of firewood.

(Image removed from quote.)

lol

[Noblesse]

Now we know how Bill Gates heats his house...