Zimbabwe revalues currency again

I don’t normally quote Al Jazeera news, but the following article is interesting. Here is the first part of it in case you missed it:

Zimbabwe’s central bank has revalued its currency, reducing its dollar by 12 zeros in order to counter hyperinflation and economic degradation.

The move on Monday has turned one trillion dollars into one dollar, and brings with it seven new notes.

The Central Bank unveils yet another programme through the removal of 12 zeros and the introduction of the following new currency denominations with immediate effect,” Gideon Gono, the Reserve Bank governor, said.

The new denominations in the once prosperous nation are one, five, 10, 20, 50, 100 and 500 dollars.

“Yesterday’s trillionaires, I am sorry, will not be able to buy their favourite drink today,” Gono said.

Zimbabwe has an official inflation rate of 231 trillion and severe shortages of food and foreign exchange. The highest note previously was 10 trillion.

So much for price controls and other government intervention. It never works. It is not that far fetched that the US Dollar could be destroyed in a similar fashion. It happened to other industrialized countries in the past, such as Germany and France, and the history of such government tampering stretches back to the Roman empire. I hope our government can take a clue from history and stop the printing presses before the dollar is completely destroyed. I think the odds of winning the lottery are better. If markets had been left alone, in both up and down cycles, and allowed to do their job to correct excesses, the economy would most likely now be on a sound footing. Certainly there would have been some short term pain, but far less pain that what most likely lies ahead.