Headline of the Day: Zimbabwe’s Million-Percent Inflation

I just love this WSJ headline:

Zimbabwe Can’t Paper Over Its Million-Percent Inflation Anymore
http://online.wsj.com/article/SB121494022693420271.html

Bankno_20080701183344
Giesecke & Devrient — a secretive, family-owned
Bavarian company that once made its money churning out worthless cash
for the doomed Weimar Republic in the 1920s — has been airlifting tons
of blank notes to the Zimbabwean capital Harare. The company, which has
been doing business with the African nation since before Mr. Mugabe
took power in 1980, is one of the few sources in the world for the
specialized paper that is so important in an age when computers and
laser printers have made forgery easy.

Germany’s foreign minister, Frank-Walter Steinmeier,
phoned Karsten Ottenberg, Giesecke & Devrient’s chief executive,
Tuesday to complain about the deliveries, according to a German
diplomat. On Friday, Germany’s development minister denounced the
company’s dealings with Zimbabwe as "terrible" and sent a fax demanding
that they stop.

Classic!

~~~

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What's been said:

Discussions found on the web:
  1. Marcus Aurelius commented on Jul 2

    Special paper? Who is going to forge a $Gazillion ZWD note? What would be the point?

    Welcome to Zimbabwe – where everyone’s a millionaire.

  2. Marcus Aurelius commented on Jul 2

    Special paper? Who is going to forge a $Gazillion ZWD note? What would be the point?

    Welcome to Zimbabwe – where everyone’s a millionaire.

  3. Marcus Aurelius commented on Jul 2

    Special paper? Who is going to forge a $Gazillion ZWD note? What would be the point?

    Welcome to Zimbabwe – where everyone’s a millionaire.

  4. Marcus Aurelius commented on Jul 2

    Special paper? Who is going to forge a $Gazillion ZWD note? What would be the point?

    Welcome to Zimbabwe – where everyone’s a millionaire.

  5. cm commented on Jul 2

    Aside from forgery concerns, banknote paper needs to have a certain degree of physical robustness. Try folding, unfolding, and crumpling your standard printer paper (with something printed on it) a few times, carry it around in your seat pocket for a week, and see what happens.

    And then people are manufacturing counterfeit subway tickets, store discount stamps, etc. Those are not high-value items. A few years ago Subway ran a program where they were issuing a stamp for each sandwich, and you would get a “free” sandwich by turning in a card with about 10 stamps on it. They discontinued it, citing forgery and fraud (at least in the one store where I used to go).

  6. Patrick commented on Jul 2

    I’m curious as to what currency Zimb pays for their currency with.

  7. MR commented on Jul 2

    I lived in Peru during from 87 to 91 and saw the hyperinflationary cycle (primarily the result of Garcia’s monetary policies) and if I recall correctly their stock provider (as well as the printing) was done by an Italian company. (I make no implicit comparison of Mugabe and Garcia- not similar.)

    The parallel makes me wonder if monitoring the activity levels around printing and stock provider companies couldn’t give one an early signal to the precursor conditions of countries on the edge of an hyperinflationary cycle. (makes me wonder a bunch of things)

    As an aside, is that Bavarian company complicit in helping a murderous regime to continue to operate?

  8. Jim Haygood commented on Jul 2

    BUT … BUT … there’s no wage spiral in Zimbabwe! Eighty percent of the population is unemployed; those who are employed are seeing wage declines in real terms. So hyperinflation in Zimbabwe is impossible — according to the ‘wage-price spiral’ theorists.

    Man, I thought we got rid of those dinosaurs back in the Nixon era. Like the poor, the inflation deniers will always be with us. Doubtless Zimbabwe’s core PCE is only up 0.1%. Ex food and fuel, Zimbabwe is a land of stable prices. Thanks to President Mugabe’s “strong Z-dollar policy,” which he copied from Hankster ‘n Zimbenwe.

    I, too, support the strong Z-dollar!

  9. constantnormal commented on Jul 2

    I would think that this would be welcomed by Mugabe, as it removes a drain on whatever hard assets he has remaining. He should open Zimbabwe’s doors to counterfeiters, effectively outsourcing the nation’s currency printing to them! The difference in value of a counterfeit Z$ vs a “real” one can’t be all that much.

  10. Shnaps commented on Jul 2

    Anyone know where I can buy a $50 Billion Dollar ZWD note in the greater Chicago area?

    Or is eBay my only hope?

  11. Fu commented on Jul 2

    It’s odd that newspaper almost always imply that inflation is just something that happens… not that it’s a direct result of government actions. Even in the case of Zimbabwe, newspapers don’t seem to be able to state that inflation is caused directly by the government. To me, that’s even more amazing than the situation in Zimbabwe.

  12. daveNYC commented on Jul 2

    Given the condition of ‘freedom of the press’ in Zimbabwe, it’s not surprising at all.

  13. Andy Tabbo commented on Jul 2

    Well, at least inflation here is contained and inflation expectations are anchored.

    Today, we had fresh highs for crude oil, distillate, soybeans, limit up on corn. The euro is pressing all time highs.

    – AT.

  14. michael schumacher commented on Jul 2

    “sent a fax”

    Gee what next will they actually pick up the phone and scold him???

    Ciao
    MS

  15. RPB commented on Jul 2

    Speaking of price inflation, imagine what oil and RBOB would be at now if homeowners still had equity to burn. . . Now imagine the resulting pressure on Ags and Softs.

  16. Mark W commented on Jul 2

    Hey at least they HAVE wage price spiral inflation! My wages have been stagnant for the past several years, but the price of everything moves out of my reach. Thanks Bernie, thanks George! Mugabe in ’08

  17. jake commented on Jul 2

    coincidence? zimbabwe’s central banker is named buku bernanke

  18. Jim Haygood commented on Jul 2

    ‘Buku’ is just his nickname, jake.

    His full name is Oogaboogah Bernanke. And he’s got dollahs to burn!

    Stable prices … or OOGABOOGAH!

  19. dukeb commented on Jul 2

    michael schumacher | Jul 2, 2008 3:16:45 PM : damn, you beat me to that comment. (Though as a next step I thought messenger pigeon might be more appropriate.)

  20. Patrick commented on Jul 2

    I’m not a fan of MS’s comments usually but that was hilarious.

  21. attila hooper commented on Jul 2

    [quote]”sent a fax”

    Gee what next will they actually pick up the phone and scold him???[/quote]

    no shidblit dude, here in Cramerica we send a nice love note attached to a daisy cutter. What’s in store for Iran me thinks.

  22. Risk Averse Alert commented on Jul 3

    Life sucks when you are in the cross-hairs of tyrants (and I’m not talking Mugabe).

  23. DL commented on Jul 3

    The oil bears say that high prices create demand destruction; that high prices beget lower prices.

    (I don’t think so).

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