Analysis of global economic and financial conditions
Since January use of foreign currency has been allowed, to combat hyper-inflation that had left even top-value Zimbabwe dollar notes worthless.
It WILL be fun to see how they finance themselves!
I did not know that economic orthodoxy believed that inflation was impossible as long as unemployment was high and capacity utilization was low.Where did you get that information?It was not even true in the US of the 1970s.
Hi Spencer,I agree. He got the causality wrong. As you say, look at what happened when the US discovered the fiat system, printing money like little kids in front of a candy bowl in the 1970's.The 1970's situation - stagflation - was caused BECAUSE the government was printing money and inflation was rising, and not the other way around. Price uncertainty caused firms to cut investment, production, and workers; and the economy shrank. That's clearly what happened in Zimbabwe: hyperinflation shut down the economy.Thanks for pointing this out. I have modified the article appropriately.Rebecca
I guess the case of Zimb. would tend to support the opinion according to which when you have bad institutions may as well resort to free banking since no one will trust the central bank.
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