The Zimbabwe Hyperinflation Case Study

”Why can't we print loads of notes and make everyone rich?” Let’s understand it through the Zimbabwae Case.

Hyperinflation happens when prices shoot up fast, usually more than 50% every month and continues for a period of time.

Government failed to manage the economy when the agriculture was struggling and Banks were collapsing. Instead of curbing Military and food imports, they decided to “Print Notes”.

What they did?  The Zimbabwe government printed excessive amounts of money to fund military actions and food purchases, leading to hyperinflation. The government said inflation was against the law and changed the money into bigger bills, like Z$100,000,000 and Z$200,000,000.

Consequences   In November 2008, the estimated inflation rate reached a staggering 79,600,000,000%. People started to starve for basic necessities.  Banks started to close down, credit facilities got a dent and businesses started shifting to dollars.  Zimbabwean currency started to perish.

Reforms that were taken   The Dollar and Euro were accepted as their official currencies. The printing of any new notes was stopped. As a result of this, the inflation rate started to drop considerably in the coming years, hitting 4.3% in July 2018.

Lessons The importance of a central financial body with immense strength and power, even over the government, regarding monetary and financial decisions. Corruption must be removed and capable governance must be established that can make educated decisions. .