The Economist Magazine Remains Confused On Zimbabwe Inflation

Authored by Steve H. Hanke of the Johns Hopkins University. Follow him on Twitter @Steve_Hanke.

The Economist magazine remains confused. The November 4th issue of The Economist carried reportage on the ever-more acute economic disaster that grips Zimbabwe: “Surviving under Mugabe: Zimbabwe’s Deepening Crisis.” While the broad outlines of this reportage are correct, one reported “fact” in particular is simply wrong -- a real howler that any good fact checker should have flagged as an error to be corrected. The Economist writes: “…hyperinflation that peaked at 500,000,000,000%.” Well, that’s a big number. But, it is way off – way too low. The actual peak of Zimbabwe’s hyperinflation episode generated an annual rate of inflation of 89,700,000,000,000,000,000,000%— a figure I and my team at Johns Hopkins estimated, and one that is widely recognized in the scholarly literature on hyperinflation. The Economist error, which they have repeated again and again, is huge: 89.7 sextillion percent is 179 billion times greater than the figure presented as a “fact” by The Economist

I pointed this out most recently in my Forbes Column of November 14th. In “response,” The Economist had this to say about Zimbabwe’s hyperinflation: “Inflation reached 500 billion percent, according to the IMF, or 89.7 sextillion percent, according to Steve Hanke of Johns Hopkins University. (Measuring hyperinflation is hard.)”

The Economist should receive an “E” for effort, but remains confused and in error; the magazine is comparing apples to oranges. The 500 billion percent figure from the IMF is for the end of September. My 89.7 sextillion percent figure is for the peak, which occurred on November 14th. This November date is a month-and-a-half later than the September date, on which the IMF made its estimate. 

The Economist claims that the IMF estimate and mine are comparable numbers. What nonsense — a simple oranges vs. apples problem. Moreover, The Economist’s claim that “measuring hyperinflation is hard,” is unfounded. After suitable study and preparation, measuring hyperinflation accurately is actually rather straightforward. At present, my team at Johns Hopkins calculates Venezuela’s and Zimbabwe’s annual inflation rates each morning. 


Never One Roach Grandad Grumps Sat, 11/18/2017 - 22:28 Permalink

The Economist, like most far left rags, has turned into a Tabloid for low energy and IQ Challenged people.Hopkins, so far, has remained a rrelatively high quality place not obsessed with ridiculous safe spaces and microagression delusions.However, their hospital has slipped a few notches in recent years esp their general surgery department in my personal opinion. 

In reply to by Grandad Grumps

DevonshireDozer Sat, 11/18/2017 - 12:02 Permalink

I have been a subscriber to 'The Economist' for nearly 40 years. It used to be, generally, in favour of 'free trade' and would normally present a fair degree of balance - either within single articles or by having multiple views on a topic within the same issue.Over the past few years it has changed considerably & not for the better. I do wonder whether this is connected to the change of ownership. Perhaps they have to comply with the new owners' agenda. Or maybe it's just me becoming even more curmudgeonly in my dotage - sans teeth & so on.

dlweld DevonshireDozer Sat, 11/18/2017 - 17:01 Permalink

Yeah, used to like the Economist - now the Economist style guide for its writers simply states "utilize pompous prescriptiveness".You keep getting things like: "The IMF should....", "What the USA should do is....", "we know what's needed to cure..."Gets a bit tiresome - next time you skim the mag. keep the phrase "pompous prescriptiveness" in mind. In itself it's a pompouis phrase meaning "fat-headed advice".   

In reply to by DevonshireDozer

risk.averse DevonshireDozer Sun, 11/19/2017 - 20:56 Permalink

Yep, 'The Economist' has drifted to the Left. However, it's not alone. My local daily morning newspaper here did a complete right-left shift about 30 years ago. Why? Because the owners recognised that there was a more profitable future in tapping into the Yuppie market. This was pre-Internet. In an increasingly busy world in which older people were too busy (with families, usually) to sit around sipping lattes, reading daily morning newspapers.The Economist may have recognised the same trend. Yuppies have the time and disposable income to read magazines. After all, how else will they be able to change the world unless they study the "form guide" first? Yuppies, like many youth, tend to be lefties -- at least until they grow up and wake up.At my local uni, The Economist has red-Tshirted folk handing out student subscription forms to the uni students. Says it all really.The current ownership of The Economist is also deeply in-bed with the Deep State. Last time I looked it was Rothschild, Agnelli et al. Is this still the case?

In reply to by DevonshireDozer

VWAndy Sat, 11/18/2017 - 12:14 Permalink

 Selling mental gymnastics is going to be getting exponentially harder real quick. What with so many good people calling these liers out.

Setarcos Sat, 11/18/2017 - 20:58 Permalink

I hate to quote Killery Clingon but,  "What difference does it make?"  It's about as meaningful as medieval scholars debating how many angels can fit on a pin head.Pity that the real story is ignored, which is that Mugabe survived for decades along with most of the rest of the people of Zimbabwe, despite every kind of pressure brought to bear by the former colonial power, the London Empire, and its successor the Washington Empire of Chaos.  The stock in trade of this Empire is causing chaos, mayhem and death in any country which refuses to fall in line, presumably via Africom these days, HQd in Germany!!  Of course there was hyper-inflation.  That's a weapon of the Empire.  What's really quite amazing is that the country has survived and if Mugabe had been half as bad as portrayed, he would have been assassinated yearsago.One thing almost certain is that when the Empire brands someone "an evil dictator", he can't be too bad, maybe even quite good.  Just sayin' (but I well recall when the London Empire had to relinquish control and it was tough on some colonial settlers).

Setarcos Retired Guy Sat, 11/18/2017 - 23:19 Permalink

So pre-WW2 German hyperinflation had nothing to do with economic destruction by the victorious Allies.   What a novel way to look at history.  How intriguing to believe that the Weimer Republic just capriciously printed money to cause inflation.  Like all true believers in Rothschild-inspired "economics", you put the cart before the horse.By your infallible belief system George Soros could not have possibly crashed the British Pound and it's just not possible that the Rothschild & Co financial cartel would take exception to any country seeking independence.  Iraqi, Russian, Libyan, Syrian and Zimbabwe crises never happened ... or were "simply" caused by internal factors.

In reply to by Retired Guy

Benjamin123 Setarcos Sun, 11/19/2017 - 00:46 Permalink

You can find for causes for causes, and then for the causes of the causes that causes the causes, in an endless chain, and stop right at the point you can blame your target of choice. Of course that doesnt explain anything, you just found someone to blame without explaining how hyperinflation works. The act of blaming is not an explanation.

In reply to by Setarcos

Setarcos Benjamin123 Sun, 11/19/2017 - 09:44 Permalink

So what?  Your argument is old and spurious.  For instance:  If you pursue causality far enough you find an infinite regress.  It can be said that a car accident caused a death and leave it at that, or investigate and find that the driver was drunk and blame him (or some mechanical defect as well), but why stop there (though it is good enough for a court of law)?  Why not ask why he was drunk?  Why not trace back to a failing marriage, or fractured childhood, or his parents marrying, or the biological necessity(?) of reproduction, or the origin of species, or the origin of the Universe?  Any sane and reasonable person stops at proximate cause, which in this case would be drunk driving.The proximate cause of both German and Zimbabwe (and Venezuelan) hyper-inflation was/is such external factors as economic sanctions.  Inflation is price increase, either because of external devaluation of the currency via speculation, etc., and/or loss of general confidence which has producers trying to get the most money from sales and/or having to pay interest on loans, which has to be passed on to the consumer.  That is sufficient explanation, but blaming the Rothschild & Co financial system is good enough, because it is a debt-based Ponzi scheme begun about 1780 (though the problems associated with compounding interest go back millenia).  If each country had a sovereign currency and a national bank, then we would not now have the problems we do.  (We might have others, but that's beside the point.)Increasing numbers of people realize this.  Russia, notably, has banned the Rothschild family (and Soros) from entering Russia.  A few months ago all old Soviet debt was paid off and the Russian Central Bank is no longer controlled from the City of London.  Inflation is now genuinely down to about 2%, the runs on and manipulations of the ruble have ceased.  The issuance of currency is no longer tied to foreign reserves.  If you want an embedded practical explanation of hyper-inflation, then get yourself up to speed on what has happened in Russia since the 1991 collapse of the Soviet Union.  Learn about the proximate cause of the Yeltsin years, then what has happened since.  Or learn about how and why Iraq and Libya were destroyed.  Think about why Russia is getting blamed for everything right now.I care not what you fancy pseudo-philosophical arguments are, nor whatever economic theory you might subscribe to.  I like practical examples.

In reply to by Benjamin123

Benjamin123 Setarcos Sun, 11/19/2017 - 13:32 Permalink

I dont care about who is causing inflation, but how. To tell me whos responsible is not enough, its just a name. Lets say its The Jews, fine? So The Jews did it, but how? I want to know the actual mechanism, not just some target to blame, be it at fault or not.I want the full chain of events that ends up with prices going up in supermarkets. This is never provided without some logical jump. The narrative always goes like "so there was a loss of confidence and speculators speculated and POF! the currency was destroyed. Oh and the speculators are the Rothschilds so you know whom to string up". I want to remind you that you dont have an obligation to educate me, but i can still call you out on your own ignorance if you cant present a self-coherent narrative.Throwing buzzwords like Ponzi, compounded interest and such are not an explanation. The reader is usually encouraged to do his own research and tie the knots by himself, so yeah, i get it Rothschild+Ponzi+CIA=Hyperinflation. But how tho?BTW, im being facetious here, i know you dont know how inflation works. You are just parroting the internet memes of jewish speculators. They might actually be correct, but you dont actually know the hows or whys. 

In reply to by Setarcos

Obscene FRN Call Benjamin123 Sun, 11/19/2017 - 19:27 Permalink

Just a guess, but there was probably 'inflation' at least regionally during the gold and silver boom of the 1850s. A market exists only when the exchange of goods and services is a mutual agreement, whether the exchange is wives for camels, shovels for gold nuggets, or bread for cartel bank promissory paper/digits. Hyperinflation is merely the erosion in confidence as to what constitutes an equitable exchange as measured in the 'medium'. Many seem to be seeking to realign the value of their currency to gold, but if there's a million-ton deposit discovered, or mined extraterrestrially, or created in a fusion lab the perceived preciousness will diminish just as predictably.The more (governments) intervene in the theft of labor through inflating the money supply, the faster your economy hits the center of the drain.Cause, as you ask, is the power of myth, the strength of the collective hallucination to believe that anything but wisdom and skill/labor have genuine value in the service of others.When the coup of America was complete in 1913, the exchange was 24 paper banknotes for the ounce of gold. Now, in a desperately manipulated 'market' the exchange is still 1800 paper banknotes to the ounce. If you wish to use USD/GLD as a measure of hyperinflation, all you have to do is decide at what number of paper banknotes to the ounce satisfies your criteria. If you have a suspicion that in order to extend and pretend the USD reserve status that the number per ounce as advertised is false, how might that place our condition swirling around the drain?

In reply to by Benjamin123

Benjamin123 Setarcos Mon, 11/20/2017 - 01:16 Permalink

No man, i can still recognize what a self-coherent mechanism is. Even if it isnt what actually goes on in the real world. But thats what is usually missing in these Rothschild stories. They always go with "The external international bankers pulled strings and destroyed because of their greed". Of course these are just figures of speech, everybody knows no physical "strings" or "cord" are pulled to create inflation, and when you ask for the actual mechanics its all silence, just like you did "BRO IDK WHY DONT YOU TELL ME INSTEAD"

In reply to by Setarcos

SoDamnMad Setarcos Sun, 11/19/2017 - 02:20 Permalink

Please remember that under the white farmers, Zimbabwe was an exporter of food especially grains. When the white farmers got murdered and their land given to Mugabe's thugs, agriculture collapsed.  A large number of Africa countries are food recipients of the UN World Food program.

In reply to by Setarcos

sarz Sun, 11/19/2017 - 06:05 Permalink

The Economist says blah blah, but I say bleh bleh every day, so I must be right.What the fuck has happened to ZeroHedge?  

tr123 Sun, 11/19/2017 - 12:04 Permalink

I'm not old enough to remember what the Economist was like a dozen years ago, but I've also unsubscribed after 5 last year b/c it became obvious something was very wrong with their publications.They started eschewing common sense to fit what was obviously a political agenda. I found that I couldn't even rely on their articles on economics b/c those too were flawed. The only thing they're good at is reporting the news this week and any upcoming meetings for business and politics around the globe.They're now basic fact reporters, not insightful writers, and there's no need to pay for that when I can get it on the internet for free. 

Richard Whitney tr123 Sun, 11/19/2017 - 16:19 Permalink

I think this decline in standards is the result of an insidious process.Pressure is exerted by the elite on the spots where expression can start: publications, web sites, search engines.The 'pressured' know how to read the signals, and they reward employees not for discovery or veracity but for spinning correctly and adhering to the narrative.Journalism schools turn out unread, inexperienced and undereducated students who couldn't matriculate in math or science or the classics.They aren't even reporters of fact. They pass along press releases as news, press releases written by those with an agenda. The 'reporters' don't have enough basic information to ask questions or do follow-up. Those reporters are discouraged from questioning the narrative, and, what the heck, they just want to keep their jobs. They are no Sharon Atkissons. 

In reply to by tr123

jin187 Richard Whitney Mon, 11/20/2017 - 10:18 Permalink

This is how you can tell what side the MSM is on. When they read a press release from one side or the other, you can actually see their expression and tone of voice change. They pretty much report all of it as news, but the conservative and libertarian stuff is read with a tone filled with derision and disbelief. They screw up with their adjectives as well. Whenever they quote something from a Democrat, they state whatever it is as fact, such as "Today, President Obama took steps to help millions of uninsured Americans", usually followed by a lengthy clip of him or other Democrats making their claims. When they get to the Republican response, it's always a bunch of words like "allege", "claim", "say", making sure you realize what they're reading is just someone's opinion. They usually don't even play a clip either. Just recite a one-liner from McConnell or Ryan, usually with a mocking tone of voice, and it's time to move on.

In reply to by Richard Whitney

MoreFreedom Dragon HAwk Sun, 11/19/2017 - 21:50 Permalink

A better way to explain how much inflation this is, is to calculate how much value your cash loses every day, or how many days for it to lose half it's value.   If I did my math correctly, the money loses about 15% of it's value every day, or it loses half it's value in 4 days. For the Economist's value, it loses 6.3% of it's value each day, or half it's value in 10 days. No one would want to hold onto cash there, and instead convert it into something of value, which means trading goods/services for other goods.  I expect they'd be using cigarettes, gold, silver or other commodities as a means of exchange.  

In reply to by Dragon HAwk

rf80412 MoreFreedom Mon, 11/20/2017 - 14:00 Permalink

In a way, Mugabe's succeeded in transforming money into purely a medium of exchange.Both savings and debt cease to be assets since the former depreciates in value so rapidly, while the latter is paid back with the depreciated currency.  Meanwhile, as the currency hyperinflates, the velocity of money tends to a maximum since people want to spend it on goods and services as quickly as they make it.

In reply to by MoreFreedom

jin187 Mon, 11/20/2017 - 09:55 Permalink

Robert Mugabe is a great man. How many other world leaders can claim they've turned every poor young black person in their country into a trillionaire?

I just wish things were going as well here. In Zimbabwe, people roll down the street with dollies and wheelbarrows filled with trillions of dollars. No one even tries to steal any of it, because they're all so rich. Hell, I don't think anyone has killed or committed a single act of violence over money since Mugabe took over. Where's HIS Nobel Peace Prize?!

Looks like the Democrats are right. If you just give everyone the same pile of money, we'll all be rich, and want for nothing. Well, my vote is decided now. Bernie Sanders 2020!

gerryscat Mon, 11/20/2017 - 12:41 Permalink

Every once and a while I like to pick up a copy of the (over-priced) Economist and play a game of "spot the propaganda". Doesn't usually take long.