Wednesday, August 01, 2007

Zimbabwe inflation

The BBC reports that Zimbabwe have issued a 200,000 Zimbabwe dollar note - The new note is worth US$13 at the official exchange rate or $1 on the black market and can buy 1kg (2.2lb) of sugar. The article goes on to explain that food and fuel shortages have become common as the government relies more heavily on imports, pushing prices to new heights.
This is of course wrong , and it s the over -issue of money that is causing the hyper-inflation - The official annual rate of inflation in Zimbabwe is nearing 5,000% but some experts believe it is even twice that .

The Washington Post carries the story which reveals the real cause of the inflation . President Mugabe has promised to print more money to fund municipal projects, a government newspaper reported Saturday.

"Where money for projects has not been found, we will print it," Mugabe was quoted as saying.

The Marxian theory of inflation can be found here

Zimbabwe is in the grips of its worst crisis since independence . Power, water, health and communications systems are collapsing, and there are acute shortages of staple foods and gasoline. Unemployment is around 80 percent.

The biggest government hospital group acknowledged Friday that 10 of its 18 kidney dialysis machines were awaiting repair and imported spare parts that require scarce hard currency. A senior government official said kidney patients were dying for lack of dialysis machines.

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