The Nightmare of Hyperinflation: Tales From Zimbabwe

For over eight years, Cathy Buckle has been courageously blogging from inside Zimbabwe as it has descended into a lawless state run by murderous gangsters calling themselves a government.

Her poignant posts are urgent reading; they teach us what horrific things human beings can do to other human beings; they remind us of how despots keep power and show us the terrible consequences to a nation that chooses hyperinflation.

There is no immediate danger of hyperinflation in the United States; a deflationary depression is the most likely scenario in front of us. Although government here is doing everything it can to prevent the transfer of assets from the reckless and imprudent to more prudent conservators of capital, to date, market forces have been far stronger than government intervention. Eventually though, if we continue down our current path of destabilizing the market process through massive injections of money, the terrible consequences of hyperinflation will visit us too. Many Americans see themselves as special, but no nation is exempt from the laws of economics.

Zimbabwe is in the southern hemisphere, and it is currently spring, Cathy writes:

It seems absurd to be writing about the weather and birds when we’ve got no food, fuel, or government and inflation’s hit 231 MILLION percent, but its these routines of nature that help take our minds off the insanity of life in Zimbabwe. It’s the time of year when there should be a frenzy of activity in preparation for the rains and food growing. Seed and fertilizer should be stacked up in sheds waiting to go out to the lands. Tractors should be ploughing and the lands readied but without the inputs it’s not happening.

Goods and services are non-existent and people are desperate, Cathy writes:

People are queuing outside banks from as early as 2 am in the morning in order to draw out their daily limit which is not even enough to buy a single packet of soup. No shops or businesses are accepting cheques anymore. Electronic transfers – known as RTGS’s – have been stopped by the Reserve bank in the last few days and so with no cash, no cheques and no transfers, we are grinding to a halt. For all the people who simply cannot fight their way to the front of bank queues, which are literally thousands strong , there is real hunger, suffering and despair. For others, there are vast fortunes being made in a frenzy of illegal deals.

This week I’ve met pensioners, hungry because they can’t pay for what little food there is by cheque and can’t get cash out of the bank. I’ve met middle aged men desperate because they can’t get enough money out the bank to buy food for their families. I’ve met people from rural areas who say that despite the propaganda being peddled every day in the State media, no food, seed or fertilizer has arrived in their villages yet. I’ve met nurses who say that despite news reports they still have no drugs for their patients. I’ve met shop owners whose businesses are collapsing as their employees are in queues at the banks, and so are their customers. I’ve met parents in total despair as their children are still not in school a month into the term because teachers are on strike.

But yet, as Cathy writes, the elite and their connected cronies continue to prosper:

This week Gideon Gono, the Governor of the Reserve Bank, swept into an underground car park in a dark limousine. A line of well dressed men clamoured forward to greet him and followed him to the waiting camera and microphone of ZBC TV. Speaking as if he was doing us some huge favour and with an ingratiating smile, Mr Gono announced that the maximum bank withdrawal limit for individuals was about to increase from one thousand to twenty thousand dollars a day. In real terms, as I write, this new limit is worth about 20 British pence. It’s impossible to believe that Mr Gono or any of Zimbabwe’s political elite are living on 20 pence a day and yet they offer no suggestion as to how ordinary people should survive.

For weeks we’ve been stuck in a living hell, queuing at banks for hours at a time day after day, to draw out enough of our own money to buy just one single loaf of bread – if we can find it. Riot police and dogs outside banks have become commonplace and so too have men selling money. They strut around brazenly, openly carrying huge bags of local coins that they are selling in exchange for US dollars or South African rand. Police don’t seem to be able to see them or the lines of black market currency dealers sitting on pavements everywhere and so the economic collapse continues to gallop ahead. Less than two months ago Mr Gono removed 10 zeroes from our currency and 7 of them are back already.

The nightmare that Zimbabwe is going through has been building for many years. Robert Mugabe has been a murderous thug since he became president of the country in 1980. His regime for many years was aided and abetted by western governments, including being honored by Queen Elizabeth in 1994 with the title of Knight Grand Cross. Life expectancy in Zimbabwe has fallen to 37 years for women and 34 years for men.

Throughout his murderous reign, Mugabe and his cronies have enriched themselves and partied on. In 2005, Cathy wrote of a birthday party for Mugabe:

An enormous white tent has been erected on the local football field and all week the town has been filling up with government dignitaries, entertainers, scores of police, security officials, youth brigade members and men in dark glasses and big hats. As I write this letter the birthday celebrations are underway and being broadcast live on television. Many thousands of people are in the tent: children in school uniform holding little flags, ministers and government dignitaries wearing red sashes and the usual large number of people who find it appropriate to wear clothes with President Mugabe’s face printed on the fabric. Lines of teenage girls, in youth brigade uniforms and with shaven heads started the day off with displays of karate kicks and punches and were later followed by speaker after speaker who came forward to praise the President and condemn anyone and everyone who is seen as an enemy. As a Marondera resident I couldn’t help but smile as I watched all the VIP’s and even local Marondera government officials, drinking bottled water. I guess they must have heard that our water has been very off for the last couple of weeks, often being distinctly discoloured and almost every day smelling and tasting foul.

When the party had been going on for four hours and after all the speeches had been made, the birthday cake emerged. Slices were cut and handed out to members of the family and then the television commentator made the most amazing statement. She said: “As you can see, Robert junior is actually eating the cake now whilst I am still hungry but it looks very delicious.” The words of the commentator would undoubtedly have been echoed by many of the thousands of people in the tent. There had been no sign of any refreshments being available for the spectators or children during the long hot morning and by this time it was obviously very hot as scores of people were fanning themselves with their little Zimbabwean flags.

According to the government media, donations to the value of one billion dollars were raised for the Marondera birthday party. I needed a dictionary to check how many zeros there are in a billion dollars and then my twelve year old son to show me how to use the calculator in my computer as a normal calculator cannot accommodate all those zeroes. We worked out that the money spent on the Presidential birthday party could have bought 285 thousand loaves of bread which would have been enough to give 6 slices of bread to every man, woman and child in Marondera. Oh well I guess we’ll just have to dream of delicious birthday cake.

What happened during the German hyperinflation in the 1920s is just so much textbook history to many people—and textbook history is something that many people ignore. To those who do not understand why hyperinflation must be avoided in America, please read Cathy Buckle. And make no mistake, no nation is a victim of hyperinflation; it is a calculated choice that the nation makes.

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5 Responses to The Nightmare of Hyperinflation: Tales From Zimbabwe

  1. frush60 says:

    Barry, this is a story that needs to be told to Americans but unfortunately they will not listen right now. I thought your mention of hyperinflation in Germany interesting because when the Crash hit Germany in 1929 and 1930, many Germans blamed the Weimar government for all of their failings. As a result, a powerfully persuasive orator came along who expressed the people’s outrage and promised them work, security, and a return to the glories of their past. We know where this story ends and in an irony of history, Americans have now focused their rage at the Republican Party and George Bush, deservedly so, for all of their problems especially for the economic meltdown we are currently feeling. When people believe or perceive that one entity has destroyed their lives they will look to the person who promises them they have the answers to bring about change. America is about to enter some very dangerous weeks and months because its people unknowingly will elect a radical socialist government for the first time in their history. They are being promised much when so little will be delivered except the power of the state to control their lives more than ever before. I have heard many people say that we need change and Obama will give it to us because it couldn’t possibly get any worse than it is now. I can only respond to them by warning them to remember 1976. For those of us old enough to remember the significance of this we will remember but many Americans won’t and that is a tragedy. Anyways, keep up the good work informing people of Cathy’s warnings. If this could happen in a nation that was once very prosperous like Zimbabwe or even in a highly advanced and educated nation like Germany, then so can it happen here.

  2. E says:

    I don’t know why you keep harping about this subject; it’s very negative, deflating, and certainly not as uplifting as the words of the Great Communist Leader George W Bush — “We will prevail.” I mean, I don’t know about you, but I like Abraham Lincoln Five Dollar wallpaper. I like Frush60’s response because he’s damn right; instead of a radical socialist, we should elect a guy who wants to have the government buy everybody’s mortgage, add three hundred Billion to the printing presses. Yah! Then we could set Five Year Plans to “stabilize the economy” and introduce government controls on the marketplace. I don’t know who is worse, the liberal or the maverick who wants socialist policies to stabilize the marketplace so his buddies can run off to the bank.

  3. Frush,

    Indeed, too few are listening. Funny that you should mention at the end “it can happen here.” That is the title of an upcoming post I’m writing. The mood of the public is becoming increasingly negative and as you point out those national moods have consequences.

    E,

    “Abraham Lincoln Five Dollar wallpaper”–now that’s real gallows humor.

    You’re on the money–both candidates are so far from the guiding principles of America as to make it hard to tell who would be worse.

  4. E says:

    Gallows humor is all I have left after last week’s collapse of my 401k. However, I will laugh — HAHAHAHAHAHAHAHAHA — that Bush has out-Europeaned the Europeans. He’s out-socialized the socialists. HAHAHAHA. Buying Nine banks? Holy Suez Canal Batman! They call it “Partial Nationalization”. There’s nothing partial about it. Forget the Bank of Scotland; Call it Bank of US 1, 2, 3, 4, 5, 6, 7, 8, and 9. And “temporary?” That’s even funnier. There’s no way banks are going to buy back their shares once they get healthy… they want the US Gov’t as partners, because as the partner with unlimited resources, it’ll never let them fail. We’ve just become France.

  5. James D. says:

    So long as the gov’t continues to print money to solve its self created problems (which its been doing for a long time), our 401k’s will remain little more than glimmers of hope, no matter how well invested. And we can look to Weimar Germany and Mugabe’s Zimbabwe as examples as to what will happen. God help us.

    I find it really funny that the Communists (the Chinese), have changed their interest rate for the first time in 6 years, while we look for quarterly changes. And they don’t permit the creation of the complex and essentially opaque derivatives that built the collapsing card house of our economy. They are now the creditor nation that made us the most powerful economy on earth. Sounds like (at least part) of their government gets it. Communists out capitalizing the Capitalists. Sad.

    The sad part is we know more trouble is coming because we watch the actions of President Hoover and Congress in 1928 mirror those of today. And frush60 is right, the only net result will be more gov’t interference in our lives.

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