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DSquared asks, Zimbabwe listens
Reeling from the highest inflation rate in the world, barred by the government from using U.S. dollars for purchases, Zimbabweans turned to a new money source Wednesday: gasoline coupons.
Here is the full story, thanks to Tony McGovern for the pointer; he cites this blog post as well.
Posted by Tyler Cowen on August 17, 2008 at 02:07 PM in Current Affairs | Permalink
Comments
The first paper that Gordon Tullock published in an economic journal (JEP, around 1950) was about the Chinese hyperinflation of the 1940s. In early 1973, at a time in which Chile was threatened by hyperinflation, I learnt from Gordon's paper that hyperinflation was just a symptom of a serious government's failure--the lack of other sources for funding an extraordinary expenditure, usually for war. The point is that it is irrelevant to discuss hyperinflation--you should discuss how war can be ended or how the government can access some other source of funds.
Posted by: E. Barandiaran at Aug 17, 2008 2:50:45 PM
You can be sure there is a massive black market using foreign currencies as well.
Posted by: Yancey Ward at Aug 17, 2008 8:26:59 PM
How long before it occurs to Mugabe to print a monumental excess of gasoline coupons?
Posted by: happyjuggler0 at Aug 18, 2008 2:39:28 PM
Well, gee, HappyJuggler, let's just hope Mugabe isn't reading this.
Posted by: Keith at Aug 18, 2008 4:05:22 PM
It is a similar effect to what has for the last few years until the most recent month been going on in global markets: a move from fiat currencies into commodity-backed instruments in reaction to rising surprise inflation or inflation expectations in the dominant fiat currencies. In the case of globally traded commodity derivatives and the dollar, both the feared inflation and the transaction costs are far lower than in Zimbabwe, but this result is similar, namely the rise of commodity-backed instruments as hedges or substitutes for one or more of the monetary functions of fiat currencies. For commodity derivatives this has mainly involved being substituted for dollar-denominated bonds as a store of value in investment funds, or used to hedge said bonds, whereas the monetary substitution in Zimbabwe is probably far more comprehensive (i.e. it is also being used as a medium of exchange).
Posted by: Nick at Aug 19, 2008 3:42:37 PM
If you have to buy some maple mesos, please come to our company.
Posted by: maple mesos at Jan 2, 2009 1:52:19 AM
