Posting statistics on inflation in the world reminded us of the history of Zimbabwe. It’s a pretty good example of how literally anything can go wrong in the economy – worth reading.
The colonial era in the country ended late – Zimbabwe gained its independence back in 1980. The country had quite a large white population, the descendants of British and Dutch colonialists. This is what President Robert Mugabe began to fight with them in 2000.
Land reform in Zimbabwe was literally the country’s biggest failure in its history. Mugabe simply took plots of land from white farmers and distributed them to the black population. They had no experience in managing a large farm and growing crops on an industrial scale. And some didn’t really want to do anything at all.
The result was a decline in production and the loss of hundreds of thousands of jobs. Accordingly, tax revenues were also reduced. The authorities were afraid to raise taxes – Zimbabwe often spoke out on one occasion or another. But they were not afraid to turn on the printing press.
The problem is that printing money only made the problems worse – hyperinflation came into the country. It caused an unprecedented rise in prices. A textbook example: a can of Zimbabwean beer at 5:00 pm local time on July 4, 2008 cost 100 billion Zimbabwean dollars, an hour later it was 150 billion. The government had to issue a decree forbidding the use of national currency instead of toilet paper – Zimbabwean dollars were cheaper to use inappropriately. In fact, they were cheaper than the paper they were printed on.
In 2009, Zimbabwe gave up its currency. Temporarily, the U.S. dollar began to circulate in the country, while the problems of the economy were being solved. By 2020, the government decided to return to the national currency. However, the timing was bad – the beginning of the pandemic. As a result, the Zimbabwean dollar is depreciating rapidly again. It is very possible that the country will once again return to the “American” – structural problems in Zimbabwe need to be solved.