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Head Of Zimbabwe Central Bank Explains QE3

Tyler Durden's picture


Via Chris Becker of Mises SA,

Gideon Gono, the governor of the Reserve Bank of Zimbabwe who destroyed the Zim dollar by creating hyperinflation, weighs in on the parallels between QE3 and the policy he followed last decade, in the RBZ’s mid-term 2012 monetary policy statement. Gono writes (my emphasis in bold):

2.14 Within this context, the Government of Zimbabwe failed to meet fiscal obligations from budgetary allocations which were severely eroded by rising inflation. As such, the financing of recurrent and capital expenditures presented serious challenges to Government.


2.15 These negative developments threatened to bring the country’s social service delivery system and the economy at large to a complete halt, thereby further impoverishing the Zimbabwean people.


2.16 It is against this background that Government stepped in to save the situation through various interventions by the Reserve Bank of Zimbabwe.


2.17 These interventions which were exactly in the mould of bail out packages and quantitative easing measures currently instituted in the US and the EU, were geared at evoking a positive supply response and arrest further economic decline.

But even still,

2.20 Despite numerous intervention measures undertaken by Government through the Reserve Bank of Zimbabwe, economic activity continued to decline progressively with inflation peaking at 231 million percent by July 2008. Other challenges that affected the economy include the following:

  • Frequent power outages;
  • Cash shortages;
  • Acute foreign currency shortages;
  • Skills flight;
  • Vibrant parallel market for goods and foreign exchange;
  • Erratic fuel supplies;
  • Endemic speculative and rent seeking behaviour; and
  • Rapid rise in production costs.

2.21 In addition to this compendium of challenges, the value of the local currency declined precipitously as speculative activities intensified. Against this background, transactions were increasingly undertaken in foreign currencies which were more stable and predictable.

Even though Ben Bernanke and Mario Draghi and all other central bankers will try to convince you that what they are doing are really different to what Gideon Gono did, you should really be taking Gideon Gono more seriously, who is basically admitting that the money printing strategy does not work to ‘stimulate’ growth. All it can stimulate are high- and hyperinflation risks.


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Tue, 10/16/2012 - 11:32 | 2894801 slaughterer
slaughterer's picture

"with inflation peaking at 231 million percent by July 2008"


What a "challenge"!!!


Tue, 10/16/2012 - 11:33 | 2894823 Chris Jusset
Chris Jusset's picture

So whom does Ben Bernanke idolize more: Charles Ponzi or Gideon Gono of Zimbabwe?

Tue, 10/16/2012 - 11:37 | 2894851 CvlDobd
CvlDobd's picture


The new Snorg Tees red head with glasses! So hot! Want to touch the heiny!

Wed, 10/17/2012 - 05:49 | 2897484 Half_A_Billion_...
Half_A_Billion_Hollow_Points's picture

I hear he has an enormous Keynesianism.  

Tue, 10/16/2012 - 11:37 | 2894855 bigdumbnugly
bigdumbnugly's picture

i  think gono is taller so though it's a toss up i would go with him.

Tue, 10/16/2012 - 11:42 | 2894880 azzhatter
azzhatter's picture

We are not Uganda................oh wait...never mind.. a different fuckhead

Tue, 10/16/2012 - 14:38 | 2895692 macholatte
macholatte's picture


It must be Gono because he still has a job running the central bank.



Wed, 10/17/2012 - 00:52 | 2897379 tekmike13
tekmike13's picture

What do they use for money now?

Tue, 10/16/2012 - 11:33 | 2894829 crusty curmudgeon
crusty curmudgeon's picture

Yes, we can do better!  We're #1...we're #1!

Coming to a developed country near you:

  • Frequent power outages;
  • Cash shortages;
  • Acute foreign currency shortages;
  • Skills flight;
  • Vibrant parallel market for goods and foreign exchange;
  • Erratic fuel supplies;
  • Endemic speculative and rent seeking behaviour; and
  • Rapid rise in production costs.
Tue, 10/16/2012 - 11:39 | 2894866 darteaus
darteaus's picture

Lets not forget the violent crime:  Murder, looting, rape, etc.

We're still talking about Chicago, right?

Tue, 10/16/2012 - 11:43 | 2894883 LongSoupLine
LongSoupLine's picture

Camden, D.C.?

Tue, 10/16/2012 - 11:49 | 2894906 icanhasbailout
icanhasbailout's picture

Detroit, where they use the Canadian dollar as no one has American dollars

Tue, 10/16/2012 - 12:32 | 2895075 Matt
Matt's picture

"Vibrant parallel market for goods and foreign exchange;"

So, now we know the politically correct term for black markets. Forget System D, it's all about "parallel markets".

Tue, 10/16/2012 - 13:04 | 2895215 TideFighter
TideFighter's picture

So, a micro black market is a parallelogram? hehe

Tue, 10/16/2012 - 12:23 | 2895034 Offthebeach
Offthebeach's picture

It's here already. We call it California.

Tue, 10/16/2012 - 11:37 | 2894850 slaughterer
slaughterer's picture

I am sorry, I just cannot stop laughing at the Zimbabwe inflation figures here. Somebody do an Excell calculation where Gold, S&P, AAPL WTI will be when that inflation rate hits the USA>  

Start of with market values today:

Inflation: 231,000,000%


Tue, 10/16/2012 - 11:45 | 2894895 Dr. Richard Head
Dr. Richard Head's picture

But Benny said money printing is good for the globalists....I mean global economy.

Tue, 10/16/2012 - 11:49 | 2894903 The Gooch
The Gooch's picture

And SILVER for us working stiffs...

Where IS that snorkel?

Tue, 10/16/2012 - 12:13 | 2894992 seek
seek's picture

$4 billion an ounce for AU, $76 million/oz for AG.


... and for comparison, a loaf of bread: $4.3 million.

Wed, 10/17/2012 - 05:55 | 2897486 Half_A_Billion_...
Half_A_Billion_Hollow_Points's picture

27,428,571.42 for 1 Bitcoin

Wed, 10/17/2012 - 13:44 | 2898470 gold-is-not-dead
gold-is-not-dead's picture

great... how did you get that number, CDS cap / num of btcs?

Tue, 10/16/2012 - 12:09 | 2894986 Randall Cabot
Randall Cabot's picture

Glenn Beck just referenced this article and Zero Hedge a few minutes ago on his radio show in a shameless attempt to sell gold for one of his sponsers!

Tue, 10/16/2012 - 12:43 | 2895120 forwardho
forwardho's picture

Imagine that. Becks been pushing gold since $720.00/oz. He may be an oddball, but he's on the same page as most ZH'rs vis-vie AU and the economy. Not so much with the crying.

Tue, 10/16/2012 - 19:04 | 2896374 Whiner
Whiner's picture

I want to make money off of gold too! Even off gold bugs. I wonder how much Glenbecker has in AU phys!

Thu, 10/18/2012 - 13:25 | 2901653 Astraea
Astraea's picture

Why trust gold?     That makes no sense to me because they - the repulsive bankers - control the price and furthermore, they have it all in theri possession.     It seems to me that that is what they alwyas have done.     They even did it with silver from the Venetian banks when they stripped the silver coinage from Europe - amd sent it all along in fleets of ships.via Egypt, to Ghengis Khan - and then the Black Death came - from China!      Although I do not rust Webster Tarpley completely he is a great hostiran and he has written illuminating stuff about all that - AND the Briths "roayl" family.    They are hardly noble people!

Tue, 10/16/2012 - 12:19 | 2895013 TheCanadianAustrian
TheCanadianAustrian's picture

Just something for people to think about: If you see bread going from $2.00 to $2.10 to $2.21 day-over-day-over-day, you're actually witnessing an annualized inflation rate of over 5 BILLION percent.

This is going to catch people completely off guard.

Tue, 10/16/2012 - 12:52 | 2895156 Poor Grogman
Poor Grogman's picture

Inflation created by the C/Bs also destroys the governments spending power.

Thus requiring even more printing just to maintain current services.

Feedback is a bitch....

Wed, 10/17/2012 - 00:29 | 2897350 SWIFT 760
SWIFT 760's picture

Perhaps similar to boiling frogs. 

Tue, 10/16/2012 - 12:26 | 2895050 Deathrips
Deathrips's picture


Tue, 10/16/2012 - 19:42 | 2896453 cynicalskeptic
cynicalskeptic's picture

Zimbabwe had the world's best performing stock market in terms of share price increases (albeit all due to inflation) while this was going on....

Anyone else seeing parallels in the US?


An ever upward moving stock market is not necessarily a good indicatior of overall economic performance - Benny hasn't realized that yet.

Tue, 10/16/2012 - 20:19 | 2896520 FrozenOut
FrozenOut's picture

231 000 000 % Adding the extra x100 to make it % really adds value.

Tue, 10/16/2012 - 11:32 | 2894804 GetZeeGold
GetZeeGold's picture



This should be good...quick...put a guard at the back door.



Tue, 10/16/2012 - 11:31 | 2894806 RacerX
RacerX's picture

we all know what the Fed and are doing but somehow are powerless to affect change. I'm not sure anything will change until the people get more "greek-like", and even then it'll be table scraps and no real change.

that's what I think at least..

Tue, 10/16/2012 - 11:30 | 2894807 muppet_master
muppet_master's picture

u mean we need an "expert"

to tell us that you can't create "wealth" by priting???? gee i had no idea !! well i wonder if the yes we kenyan has consulted with the zimbabwean??? LOL !!!!

Tue, 10/16/2012 - 11:31 | 2894815 SHEEPFUKKER

You know your banking career has already peaked when the Zim central bank prez is calling you out. 

Tue, 10/16/2012 - 11:32 | 2894817 GetZeeGold
GetZeeGold's picture



It's called getting punked Amigo.


Tue, 10/16/2012 - 11:59 | 2894939 Overfed
Overfed's picture

You know you're in deep shit when yer gittin' punked by Zimbabwe! :-D

Tue, 10/16/2012 - 11:34 | 2894821 RSloane
RSloane's picture

I count six currently in the US of the 2.20s [to varying degrees]. I have full faith in our government that with due dilligence we can hit all of them. 

Tue, 10/16/2012 - 11:33 | 2894824 muppet_master
muppet_master's picture

botox bloated hillary:


If u love me..throw urself under the bus!


OR else QEorganizer will go AFTER the clinton supporters of 2008.....EVILNESS u can believe in !! LOL !!!

Tue, 10/16/2012 - 11:37 | 2894860 piliage
piliage's picture

...and this just in, HR Haldeman resigns...



Tue, 10/16/2012 - 11:49 | 2894904 darteaus
darteaus's picture

Mary Rose Woods demonstrates how she accidently erased 5 minutes of the Watergate tapes:

Tue, 10/16/2012 - 11:44 | 2894886 azzhatter
azzhatter's picture

man that is a hideously ugly woman. I'll bet Bill hasn't hit that in 30 years

Tue, 10/16/2012 - 11:48 | 2894901 ParkAveFlasher
ParkAveFlasher's picture

I don't know about that.  Bill liked 'em crunchy and frumpy.

Tue, 10/16/2012 - 12:51 | 2895145 machineh
machineh's picture

Problem is, so does Hillary.

Tue, 10/16/2012 - 13:22 | 2895279 MachoMan
MachoMan's picture

Not with anything other than a shovel or whiffle ball bat anyway... possibly a bible.

2 types of women typically go to law school: (a) the completely and totally socially inept type with good intentions, but painstakingly awkward involvement; and (b) the type hell bent on being a man and enslaving a male dominated arena.  I'll let you figure out which she is...

PS, I heard that when bill tried the cigar trick on her, it self immolated.

Tue, 10/16/2012 - 15:10 | 2895784 Dick Gazinia
Dick Gazinia's picture

O'le Billy would skull fuck a dead possum.  Remember Monica?  The sight of her makes my nuts crawl up my asshole.

Tue, 10/16/2012 - 11:33 | 2894828 The Shootist
The Shootist's picture

Rhodesia to Zimbawe

U.S. to ...

Tue, 10/16/2012 - 12:07 | 2894977 optimator
optimator's picture

When those city folk can't find food will they give them our farms to keep them happy? 

Tue, 10/16/2012 - 12:19 | 2895020 The Shootist
The Shootist's picture

All we have is our property.

Tue, 10/16/2012 - 13:53 | 2895429 LULZBank
LULZBank's picture

Thats right. Its "our" property... Welcome to Socialism now give us our share.

Tue, 10/16/2012 - 15:29 | 2895883 LMAOLORI
LMAOLORI's picture



I suppose that all depends on if the Kenyan is still in charge :)

Tue, 10/16/2012 - 11:34 | 2894833 Gandalf6900
Gandalf6900's picture

Obama = Mugabe

Obabe or maybe Mugama

Tue, 10/16/2012 - 11:37 | 2894852 muppet_master
muppet_master's picture

i'm glad....

i'm NOT the only one that has come up with that equation..

MUGABE = is a fast n furiously stupid odummer-RAPIST-666

Tue, 10/16/2012 - 11:49 | 2894905 InconvenientCou...
InconvenientCounterParty's picture

rest easy. Many like you have tried and failed to master rudimentry math and logic. Stay with it.

Tue, 10/16/2012 - 12:34 | 2895081 alangreedspank
alangreedspank's picture


Tue, 10/16/2012 - 11:36 | 2894843 PUD
PUD's picture

Could have all been fixed if they just marked the expiration dates on the dairy products a little longer...geesh..don't they know anything?

Tue, 10/16/2012 - 11:36 | 2894844 Dr. Engali
Dr. Engali's picture

Don't worry Ben can get rid of inflation in 15 minutes.

Tue, 10/16/2012 - 11:40 | 2894873 yogibear
yogibear's picture

He can't and won't. Because a rise in rates would make borrowing for the US government difficult. 

Much of the same for now, keep rates low, and deny/minimize inflation numbers.

Tue, 10/16/2012 - 11:44 | 2894890 Dr. Engali
Dr. Engali's picture

Uhmmmm...that was sarcasm.

Tue, 10/16/2012 - 11:47 | 2894898 darteaus
darteaus's picture

Never explain a joke...

Wed, 10/17/2012 - 03:56 | 2897461 StychoKiller
StychoKiller's picture

Guess you don't wanna hear the odds of successfully navigating through an asteroid field, then.  :>D

Tue, 10/16/2012 - 11:52 | 2894910 Antifederalist
Antifederalist's picture

Right, when asked he said he is "100% confident" this policy will work.

Hell, i am not 100% confident the sun will rise tomorrow.  This man is a fraud.


Tue, 10/16/2012 - 11:35 | 2894847 yogibear
yogibear's picture

"Reserve Bank of Zimbabwe who destroyed the Zim dollar by creating hyperinflation, weighs in on the parallels between QE3 and the policy"

Good to know Bernanke, Evans, Dudley and Yellen are all following the Zimbabwe economic plan. When all else fails they print and devalue the money.

Tue, 10/16/2012 - 12:45 | 2895128 Ludwig Van
Ludwig Van's picture



I've been thinking since Sept. 13 that Ben was telling the truth, that his new QE announcement marked the end of Fed jawbonerality. Now I'm wondering: Could Ben have lied?


Tue, 10/16/2012 - 11:36 | 2894848 ziggy59
ziggy59's picture

INKFlation to Infinity!

Tue, 10/16/2012 - 11:37 | 2894853 walküre
walküre's picture

Gideon Gono still lives to see another day ..

Must not have been all that bad then.

Tue, 10/16/2012 - 11:37 | 2894854 darteaus
darteaus's picture

So what?  The public is not going to grab torches and pitchforks to storm Washington DC.

It stimulates wealth confiscation and reelection, and that's all that counts.

Tue, 10/16/2012 - 11:38 | 2894856 The big unzip
The big unzip's picture

But if prices go up we will all be rich, rich dam it!  Can you print faster, full speed ahead boys!  (Over heard at the last Fed meeting)

Tue, 10/16/2012 - 11:38 | 2894858 El
El's picture

Ben Bernanke says inflation is not a problem. Even if that were true, Zimbabwe, Weimar, none of these economies reached hyperinflation overnight. If Mr. Bernanke and the Federal Reserve keep doing what they are doing, how can it possibly end differenly? The economy doesn't start and stop on a dime...what are they thinking?!!

Tue, 10/16/2012 - 11:56 | 2894927 Zap Powerz
Zap Powerz's picture

It is being done intentionally.  This is no accident and these arent stupid people making bad decisions.

This planned collapse is designed to cull the human race down to manageable numbers.  Those that believe this is their planet and the rest of us are just consuming their resources have decided that there are too many of us and are going to do something about it.

The plan is to collapse societies and kill you and your family through violence, starvation, disease etc while they sit back unaffected.

That, my friend, is what they are thinking.

You have been warned.  Plan accordingly.

Tue, 10/16/2012 - 12:46 | 2895127 walküre
walküre's picture

Just how does one plan for this event "accordingly"?

You can hoard and convert all you want but you're just planning to survive until the provisions run out. The root cause of the problem is corruption, fraud and manipulation. Unless those responsible for the demise get what they truly deserve, then their system will just continue even when everyone else is dying. You know what I'm talking about. Their fraud is international and across all borders. They have no place to call home. They don't have one nation state, they have all nation states. This group needs to disappear from the levers for good. All who benefited in the wake of their corruption, fraud and manipulation can chose to either live like the rest of us or will end up like their mentors.

Millions and billions and trillions from thin air with creative almost magical accounting. Back and forth and back and forth and one bonus bigger than the last. Does anyone else here think that this shyte stinks to high heaven and it is about time the shit show ends?

Tue, 10/16/2012 - 13:04 | 2895214 Zap Powerz
Zap Powerz's picture

It will never end.  If you rounded up all the bad guys and put a bullet in their heads they would be replaced by other bad guys.  Its human nature.

This scenario, in one for or another, has played itself out mulitple times in human history.  It is evident in neighborhoods, cities, states, and nations.

That is why I have no doubt a collapse will occur.  Human nature hasnt changed so why would the outcome of human behavior change?  It wont.

Planning accordingly depends on individual circumstances.  Some people simply will never be prepared for a collapse and they will die.  Even those that feel like they are prepared for Armageddon could just get a disease and die and all that food, ammo, and preparation will have been for naught.  You cant prepare for disease.  Disease will be the biggest killer of them all.  It always has been.

So, do your best, prepare for the worst and hope for the best and realize that you might fail anyway and in 1000 years none of this will have ever of mattered.

Have a nice day!

Tue, 10/16/2012 - 13:23 | 2895281 walküre
walküre's picture

I wouldn't even go that far. It won't have mattered in a few hundred years. Trace back family history even for a hundred years and you realize how irrelevant it all is. Wars and revolutions came and went. In my case many of my ancestors were wiped out by not only one but two massive wars in short order. My history has been rewritten again and again to suit the current narrative. Most of it bullshit.

Collapse from the top we're on right now is inevitable. BUT I refuse to believe that our civilisation is collectively just as dumb and unsophisticated as the last. We need strong leadership with ambition and a tolerance to endure hardship and allow for sacrifice in standard of living. There is no reason why some have 90% of the pie and the majority has little to absolutely zilch. Some afford themselves not one but a dozen or more mansions, not one or two vehicles but a fleet of vehicles for every mansion, not one yacht but a fleet of yachts, planes and so on. How does that make any sense? In order to afford this grotesque display of wealth, they create themselves financial leverage in multiple billions from a $800 trillion Dollar derivative gorilla which they have setup. Forget the one time bailouts and the fraud that is the US federal balance sheet. That was just a drop in the bucket of what they're doing on top of that.

Just wait until the start raising rates because their casinos have been closed down and they think they're entitled to "earn" more on their "deposits" (a.k.a. loot). Then all of us have to work harder to pay them more.

Just wait until people realize that they are all slaving day in and day out to afford them their lavish lifestyles. Versailles was a walk in the park compared to what is going on today.

As you point out human history is full of examples like this and we don't seem to learn. Then those in control and at the levers of abuse will also know their rightful place at the hands of the public executioner.

Tue, 10/16/2012 - 13:38 | 2895348 Zap Powerz
Zap Powerz's picture

How is their greed any worse than your's or mine?

Tue, 10/16/2012 - 14:02 | 2895473 LULZBank
LULZBank's picture

Mine does not involve starving and enslaving other humans.

Tue, 10/16/2012 - 12:53 | 2895161 forwardho
forwardho's picture

1.5 Billion rounds of 40/cal/HP (for domestic agencies) does tend to give one a moments pause.

Tue, 10/16/2012 - 13:06 | 2895223 Zap Powerz
Zap Powerz's picture

They (TPTB) will be grossly outnumbered and grossly outgunned.

Tue, 10/16/2012 - 11:42 | 2894868 francis_sawyer
francis_sawyer's picture

Gideon Gono clearly didn't surround himself with enough Heeb central planners... Where he failed ~ we're sure to succeed...

Tue, 10/16/2012 - 11:41 | 2894876 bigkahuna
bigkahuna's picture

Well duh!

Tue, 10/16/2012 - 11:44 | 2894891 3FrenchHens
3FrenchHens's picture

yeah, but it can't happen here..


Tue, 10/16/2012 - 11:51 | 2894909 Winston Churchill
Winston Churchill's picture


I never went to bed with an ugly woman either.

Woke up with a few though.

Tue, 10/16/2012 - 11:53 | 2894918 yogibear
yogibear's picture

The US Federal Reserve wants controlled US dollar devaluation. To devalue all the debt they want/need plenty of it.

More CPI number cooking ahead. They don't want panic.


Tue, 10/16/2012 - 11:56 | 2894929 The Shootist
The Shootist's picture

You give Banana Ben too much credit. He doesn't know his head from his arse.

Tue, 10/16/2012 - 13:08 | 2895228 Zap Powerz
Zap Powerz's picture

IMO it is naive to think Bernake isnt doing exactly what he is supposed to be doing exactly when he is supposed to be doing it with a predetermined outcome.

Tue, 10/16/2012 - 11:55 | 2894925 Jason T
Jason T's picture

  • Frequent power outages;
  • Cash shortages;
  • Acute foreign currency shortages;
  • Skills flight;
  • Vibrant parallel market for goods and foreign exchange;
  • Erratic fuel supplies;
  • Endemic speculative and rent seeking behaviour; and
  • Rapid rise in production costs.

Ben Bernanke:  Why are you reciting my credits??

Tue, 10/16/2012 - 12:03 | 2894960 Overfed
Overfed's picture

I have one of those Zim $100 trillion notes. That stack of rocks looks like a dick.

Tue, 10/16/2012 - 13:32 | 2895321 Bam_Man
Bam_Man's picture

No, it looks like a stack of rocks. And that is exactly what the $100 trillion ZD's are worth.

Wed, 10/17/2012 - 12:19 | 2898216 Overfed
Overfed's picture

Ever price a load of rock? The rocks are worth more.

Tue, 10/16/2012 - 12:04 | 2894963 williambanzai7
williambanzai7's picture


Tue, 10/16/2012 - 12:10 | 2894985 onebir
onebir's picture

Man, how could you forget ze zeeeerooooooooooooos....

Zeeeeroooos eez free monieeeez 4 evry1...

Tue, 10/16/2012 - 12:09 | 2894989 francis_sawyer
francis_sawyer's picture

Are those the ones that were stolen off the Fed plane in Philly last week?... Look people ~ we've found the culprit!... It was WB7!... (& he would have gotten away with it too if it weren't for you medding kids)...

Tue, 10/16/2012 - 12:15 | 2895000 yogibear
yogibear's picture

How long can the US hide the US Federal Reserve's monetizing to infinity effects?

Tue, 10/16/2012 - 12:20 | 2894971 onebir
onebir's picture

Calling in WB7 for a Ben Slomo Gono precision strike.

Tue, 10/16/2012 - 12:21 | 2895029 Plymster
Plymster's picture

US and Zimbabwe.  Apples and Oranges.

World-class tech producer, top global military power, top global economy, reserve currency of the world


3rd world shithole, trapped in the bronze age, GDP equivalent of a small town in the US.

When Zimbabwe prints, they're fucked.  When the US prints, the globe is fucked.

Tue, 10/16/2012 - 13:09 | 2895233 Zap Powerz
Zap Powerz's picture

"When the US prints, the globe is fucked."

Thats the plan.


Tue, 10/16/2012 - 14:38 | 2895694 Winston Churchill
Winston Churchill's picture

I had business interests in Rhodesia.

Detroit is a shithole,that country wasn't then.

Note the similarities between the two now.

Tue, 10/16/2012 - 12:46 | 2895130 EscapingProgress
EscapingProgress's picture

Gideon Gono shouldn't have included food or energy in his inflation calculations. Rookie mistake.

Tue, 10/16/2012 - 13:25 | 2895289 CrabGrassKila
CrabGrassKila's picture

Forgive me Papa, for I have sinned,

Please Resurrect Me, So I can do so Agin......

Plenty of Americans to tell me Benji is a wanka

Go back to sleep.....


Tue, 10/16/2012 - 14:22 | 2895608 Traveler
Traveler's picture

I spent a week in Zimbabwe in July 2008, at Victoria Falls, while the inflation was so high, and had a great time. Nobody was really using the zim dollars. I had vouchers for pre-paid meals, bought in Capetown, South Africa, accepted at several hotels, which were almost empty. So I was treated like a king, upgraded to the best room at Victoria Falls Hotel, followed by the hotel security guard everywhere, negociated in US dollars for art work.

Locals avoided the zim dollars, for many reasons, like capital controls, where if they put money in a bank, the government took 1/3, with an artificial exchange rate. So nobody wanted to deal with Zim dollars, it wasn't so much they lost faith in the Zim dollar, as they wanted to avoid the government, and by using a different currency, avoiding the Zim dollar, they could be free of government silliness.

Generally speaking, Zimbabwe was being punished for kicking out white farmers, which was the platform that elected Mugabe and still keeps him in power. much like California Democratic platform, of turning off the water to central Valley Farmers to bring back Salmon.

I see simularities to US in that people want to avoid our government controls here too. Such as using illegal workers to avoid payroll taxes and fines for messing up tax returns. Objections to Obamacare's mandates, makes us not want to use our workers, pushing down the cost of our labor. California, where I am, is losing its wealthy people to Texas, as though they were white farmers in Zimbabwe.

We are on the same road as Zimbabwe, as to just turning people off, wanting to avoid playing Obama and Pelosi's game.

Tue, 10/16/2012 - 14:40 | 2895700 SilverMoneyBags
SilverMoneyBags's picture

Bernanke isn't trying to uphold the integrity of the financial markets. He is helping to orchestrate one of the largest thefts in history. This entire crisis was manufactured and artificial. At this point I even wonder if America is controlled by Americans.

Tue, 10/16/2012 - 15:09 | 2895771 drivenZ
drivenZ's picture

third world currency vs world reserve currency. apples and oranges. 


let me know when the Euro gets it's act together and China transitions to a consumption based economy. Then I might be worried.  I won't hold my breath though.

Tue, 10/16/2012 - 15:38 | 2895919 e_goldstein
e_goldstein's picture

Gono still hasn't been awarded the Nobel prize for economics? 

WTF is the institute waiting for?

Tue, 10/16/2012 - 15:56 | 2895973 Oldrepublic
Oldrepublic's picture

Gono has a PhD from Atlantic International University, a well known diploma mill

Tue, 10/16/2012 - 17:58 | 2896126 dscott8186
dscott8186's picture

There is a critical difference between Zimbabwe and the US.  The US Federal Reserve in printing money was merely replacing the wealth destruction caused by the hike in oil prices which started the unemployment rising and which then precipitated the mortgage meltdown.  We can argue about the failed government policies that made oil prices rise and what made mortgages so risky of an investment.  

However, one thing is certain, when the Fed injected some $16 trillion in electronic ones and zeros by loaning counterfeit dollars to failing banks over a 3 year period, they de facto bought the world's banks.  Every bank that accepted the electronic ones and zeros wired to them by the Fed is counting that loan as an asset on their balance sheets.  What occurred was the greatest swindle of all time, the US government via its GSE, the Federal Reserve replaced lost dollars from defaulted mortgage backed tranches, failed banks and brokerage houses and thus nationalized them or more importantly substituted government ownership for private ownership.

Tue, 10/16/2012 - 17:14 | 2896164 cranky-old-geezer
cranky-old-geezer's picture



USD won't ever see that kind of inflation, it's world reserve currency after all.

But 100% / yr inflation would likely kill its WRC status.

We're running 15% - 20% / yr now. 

Starting QE back up will push it up to 20% - 25% / yr.

By comparison your paycheck is inflating 0% / yr.

Tue, 10/16/2012 - 17:41 | 2896230 Tango in the Blight
Tango in the Blight's picture

I have the 100 trillion zim dollars banknote. You can easily find it on eBay.

Tue, 10/16/2012 - 18:11 | 2896290 dscott8186
dscott8186's picture

I propose that the reason hyper inflation has not yet occurred is due to the massive wealth destruction.  The Fed by printing money or making fake loans merely replaced what was lost in an ownership substitution swap.  I like to venture a guess as to how much the Fed can counterfeit before hyper inflation starts.

Financial crisis cost households $17 trillion, Treasury official says

Financial Crisis Cost Moves Toward $25 Trillion

Maybe Zero Hedge has their own estimate of the wealth destruction?

So somewhere between $17 and $25 trillion was destroyed during the meltdown which means that the Fed theoretically could steal/counterfeit anywhere from $1 to $9 trillion more before we hit the tipping point of hyper inflation.  

Tue, 10/16/2012 - 20:43 | 2896553 cranky-old-geezer
cranky-old-geezer's picture



I propose that the reason hyper inflation has not yet occurred is due to the massive wealth destruction.

Wealth destruction isn't currency destruction nor money supply destruction.

If your home loses 100k market value, some of your wealth disappears but no currency ("money") disappears.

If you sell that home in a short sale and the bank writes off 50k of the original mortgage as a loss, still no currency ("money") disappears.

If the real estate market as a whole drops $10 trillion in value, STILL no currency ("money") disappears.

So no, QE is NOT merely offsetting wealth destruction from collapsing home values, because no "money" is destroyed, money supply doesn't shrink one bit.

So yes we have 20% / yr inflation because of all the currency ("money") created ("printed") in QE.

Is 20% / yr inflation cosidered hyperinflation?  I think so.

We should have no inflation.  Money supply grows along with GDP, no faster.  That's 0% inflation.   Prices are stable.

But we have shrinking GDP (negative GDP growth), while Bennie is running the presses expanding the money supply like crazy, hence high inflation, hyperinflation in my opinion.

If you think hyperinflation hasn't hit, you haven't been to the grocery store or bought gas lately.

Bennie's argument that QE is merely offsetting wealth destruction is bullshit.  QE expands the money supply, but "wealth destruction" doesn't shrink it.

I raked Hugh Smith over the coals on this very point.  One of his articles made the same nonsense claim, QE is offsetting wealth destruction.   Bullshit.  There's no connection between the two.

Wed, 10/17/2012 - 15:24 | 2898760 dscott8186
dscott8186's picture

I respectfully disagree.

If you lose $100k on the value of your house, while technically true that cash hasn't been lost UNTIL you attempt to sell said house.  You sell the house at a $100k loss at that point the loss occurs and the net value of the national assets which include the value of your house decreases $100k. This is exactly the same premise as losing stock value in a down market.  The losses are realized at the time of sale NOT simply because someone at some given moment in time values the stock at a lesser price than you bought it.

The problem here is the forced sales, foreclosures, defaults, bankruptcies and margin calls forcing stock sales in a down market did IN FACT cause the national asset base to drop.  I.E. cash value was lost.  Those realized losses amounted to some $17+ trillion in net worth to the national asset base.  The Fed by printing $16 trillion replaced that loss and de facto stole that value and gave it to the government.  That is my premise.

Your definition and my definition of hyper inflation are clearly different. Mine refers to what was experienced in Zimbabwe, Argentina and Germany. The article here is regarding the actions of a man who engineered/rationalized Zimbabwe's hyper inflation.  Yours refers to the Carter style inflation of the 1970s, 20% over a period of years, even 4 years does not IMO constitute hyper inflation.

Now we can agree I think that some of this 20% is due to excess printing but you also have to acknowledge government malpractice concerning domestic drilling for oil created an artificial shortage driving up prices worldwide as oil is a fungible commodity.  The oil the US uses has to come from somewhere and if not here then from the world's supply thus effectively constraining supply. The price of oil affects most if not all products produced, which is inflationary.  Government incompetence in the Ethanol mandate also contributed to the 20% by diverting crop land to fuel production hence the food riots in third world countries and the so called Arab Spring.

Wed, 10/17/2012 - 17:49 | 2899415 cranky-old-geezer
cranky-old-geezer's picture



Those realized losses amounted to some $17+ trillion in net worth to the national asset base.  The Fed by printing $16 trillion replaced that loss and de facto stole that value and gave it to the government.  That is my premise.

Your premise is wrong.

$17 trillion loss of value in the "national asset base" doesn't cause a single dollar of loss from the money supply.   The money supply remains the same during this loss of asset value.

So now you have the same money supply chasing a smaller asset base, the text-book definition of inflation.

Add Bennie's massive QE printing to the money supply and you get more inflation.

Yours refers to the Carter style inflation of the 1970s, 20% over a period of years, even 4 years does not IMO constitute hyper inflation.

Wiemar, Zimbabwe, and Carter inflation are the same thing, just different degree.  Expansion of the money supply way beyond GDP.  Weimar and Zimbabwe were thousands of percent, Carter was 20%, but it's the same phenomenon.

I happen to think 20% is hyperinflation, as well as 10,000% or 10,000,000%, it's all hyperinflation in my view.


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