Tuesday, June 21, 2005

Zim Government Fights Inflation...

...With well, paper.

ZANU-PF's economic charltans have concluded the best way to ease the country's inflation woes is to print more money (read: paper). As the economic meltdown in Zimbabwe esclates amidst the government's cleanup excercise (read: eradication of informal market), perennial fuel and foreign currency shortages, drought, bloated government etc, the government is said to be repaying it's current account overdrafts by printing more money instead of money generated on the market. Says The Standard,
"Current statistics show that money supply growth has more than doubled in the past year, yet the economy is shrinking and this is ample evidence that more money is being printed ahead of developments in the productive sector."
Inflation, is (for those who don't remember basic economics) the decline in purchasing power or value of a currency (in this case ZW$). As with all other things an increase in supply leads to a decrease in value of said commodity. Since the Zim dollar is not immune from this maxim, Mugabe's economic policymakers are excaberating inflation! But then again, what else is new?

For more economics ZANU-PF style see this and this.

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