Dollar Uber Alles

What happened in Zimbabwe?

Zimbabwe had the 30th hyperinflation episode in world history. The first happened during the French Revolution, when inflation topped 50% per month. In late 2008 Zimbabwe’s monthly inflation rate topped out at 79 billion percent.

The government had literally printed money to pay its debts. After Mugabe destroyed his economy through confiscation, they didn’t have the tax receipts to pay the army and other workers, and they couldn’t borrow. So they just printed what they needed. Prices inevitably rose. The currency fell apart when the government issued a 100 trillion Zimbabwe Dollar.

What happened next is unique. The economy spontaneously dollarized. People couldn’t be bothered to read all those zeros—there were 15 on that 100 trillion note—and they started to use dollars instead. Now prices are stable, in dollar terms. The economy is limping along.

What we learn is the economies are incredibly adaptive. And that just having more money doesn’t make you more wealthy.

Douglas R. Tengdin, CFA
Chief Investment Officer
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By | 2014-09-05T13:15:46+00:00 August 4th, 2009|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. –
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