The Zimbabwean Reserve Bank Governor Gideon Gono does not Approve of Current American Monetary Policy

Posted by PITHOCRATES - December 4th, 2011

Week in Review

For all of you tax/print and spend Keynesians, here’s an example of what can go wrong when you try to print away all your financial worries (see The Dollar Is Dead, Says the World’s Worst Central Banker by Reuters posted 12/2/2011 the Atlantic).

You might not be a fan of Ben Bernanke’s monetary policies. And you might be fed up with the European Central Bank’s dawdling. But whatever their shortcomings might be, at least they’re not responsible for 231,000,000% inflation.

Sadly, the same cannot be said for Zimbabwe Reserve Bank Governor Gideon Gono.

Gono was the man who turned on the printing presses to fund Zimbabwe’s government after dictator Robert Mugabe drove its economy off a cliff. The resulting hyperinflation left the Zimbabwe dollar effectively worthless. But at the very least, everybody got some totally sweet 100-trillion-dollar bills. They even kind of looked like monopoly money.

Nowadays, Zimbabwe uses the American dollar as its main official currency.

Imagine you are a Zimbabwean.  You had your life savings in the bank.  Saved up from working hard and pinching your pennies.  And you won the lottery.  All together let’s say you accumulated one million dollars for your retirement.  The only problem is that you are a Zimbabwean.  And those dollars are now worthless.  So you have nothing.  And can’t retire.

This is what hyperinflation does.  Inflation does the same.  Only at a slower pace.  It makes your money worth less.  And as it shrinks prices soar.  Because that money becomes more worthless with every day.  And it takes more and more of that useless stuff to buy anything.

“With the continuous firming of the Chinese yuan, the US dollar is fast ceasing to be the world’s reserve currency and the Euro-Zone debt crisis has made things even worse,” he said earlier this week, according to New Zimbabwe. “As a country, we still have the opportunity to avoid being caught napping by adopting the Chinese yuan as part of consolidating the country’s look East policy.”

As Zero Hedge pointed out, it’s a bit concerning that the man responsible for the world’s most staggering monetary failure now sees storm clouds gathering around the greenback. On the other hand, it’s the man responsible for the world’s most staggering monetary failure. We may need to take his opinion with a grain of salt.

If that ain’t a kick in the crotch.  An architect of monetary destruction wagging his finger at American monetary policy.  Sure, we should take his opinion with a grain of salt.  But if anyone knows anything about inflation, this guy does.

Of course, Zimbabwe ships about 40% of its exports to China.  So that may be part of it, too.  That may help them gain some better terms with the Chinese.  But still.  If anyone knows what NOT to do it’s this guy.  And it sounds like he’s telling the Americans that they are doing what they should not be doing.  Printing money.  Like he did.

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