Hyperinflation in Zimbabwe

There are two ways the economy can be assisted in growing and sustaining itself. First through fiscal policy from the national governments help of changing taxes and spending, then Monetary policy, the managing of money. The two are supposed to work together to help create a better economy but, at times fall short. Leaders in the government for the most part have a top priority to stay in their position, with that in mind they tend to give the people the immediate satisfaction they want which is increased spending and reduced taxes. With this approach fiscal policy is considered expansionary, restrictive monetary policy is what is needed to stop inflation to counteract this.

The political and economical issues spread beyond the government and to the community in Zimbabwe. For 15 years prior, the economy is Zimbabwe had been slowly fading but after the recent election the unemployment rate rose to eighty percent (“Govt” 1, 2). The number for jobless people increased to a massive number of nearly 200,000 making the eleventh year high up to 3.33 million (“Bankruptcies” 1, 2). This made it extremely challenging for families to afford things like education, health care, and even housing. As a result, this forced people to turn to crime and corruption just to try and make a living. While the citizens were turning to crime, the government was wasting all it’s money for personal needs. It was also discovered that the government had been paying more than 40,000 to what was referred to as “ghost workers” appearing on their payroll (“Govt” 1, 2). As a result of this, Zimbabwe was part of a huge fraud situation with the Nigerian Deposit Insurance. They were accounted for seventy-four cents for all fraud counts (“Our” 1). Soon after this scandal, Zimbabwe had no choice but to declare bankruptcy making the country record, 1082 bankruptcies as of 2008 (“Bankruptcies” 1, 2). After the fraud situation the government tried to cover up by creating an Anti-Corruption Commission (ACC). The government was interested in fixing

Zimbabwe is corrupted in many different ways, bribery, military, prostitution, and even their Prime Minister. Since Mugabe's election in 1980 he has ruled his people with violence and intimidation. Mugabe has since been the only leader in Zimbabwe. Gold and Diamonds, Zimbabwe’s best natural resources, fueled Mugabe’s candidacy with money (Robert Mugabe Biography). Mugabe wanted to rule “his” country and have people live like he wanted them too, but most of all he hated the British colony and all whites in “his” country. He made it his life goal to threaten all intruders and whites, an all out genocide.

Hyperinflation as the word suggests is a situation where inflation is excessively high. This phenomenon has many consequences in an economy. Through history, there has been numerous cases of hyperinflation that have had negative repercussions in the economy of these countries and the international market. In the actuality, Venezuela has the highest inflation rate in the world. Due to various political and economic problems, Venezuela’s inflation rate for the year of 2015 was of 180.9% ("Venezuela | Economic Indicators") which is extremely high compared to other countries. The South American country is living a stage of political division, social problems and alarming economic rates. Many attribute these problems to the political decisions of the current and former presidents, Nicolás Maduro and Hugo Chávez respectively, who have been involved in various rumors for corruption. For instance, Maduro achieved the approval of a law that permits him to legislate above the Venezuelan National Assembly, who is the legislative power of the country. This change, allowed him to make decisions over the market, controlling things such as price, profit and exchange rates, while inflation was constantly rising. The president argued that this decisions were made to ensure freedom and economic rights. Furthermore, other factors in the international market also affected Venezuela. The decrease in the price of the petrol affects them directly since a high percentage of their economy is based

Devaluation and inflation really affected the low incomes and job satisfaction. The result was brain drain, Zimbabwe lost many doctors and nurses for greener pastures among other professions. Countries like Botswana and South Africa positively benefitted from such

Throughout the years the government has gained complete control over money and its development. The government wanted control because it believes that it is easier to acquire monetary assets if they have the control over all money and, at the same time, eliminate the middle-man of trade. With the ever growing population the government came up with a way to counterfeit money to keep up with the demand of money. This counterfeiting of money created inflation.

Inflation happens in an economy when there is a rise of level of goods and services, due to an increase in the volume of money in an economy over a period of time. It is also referred to as an (erosion) in the value of an economy’s currency. When inflation is high, it affects the entire economy. Consumers are not able to afford the goods and services because of the high prices. Additionally, when the price level of goods and services increase, the value of currency reduces. Meaning, that each unit of currency buys fewer goods and services.

Since the mid 1990s, the amount of Zimbabweans living below poverty line had more than double. In 2006, the World Health Organization reported that people living in Zimbabwe had one of the lowest life expectancy in the world. The average life expectancy for women was 34 years and for men was 37 years. The World Health Organization estimated that some 3,500 Zimbabweans died every week through the deadly combination of HIV/AIDS, poverty and malnutrition. Mugabe government did not aware of his people’s well-being, especially the widely spread of HIV/AIDS. Nonetheless, that government only kept everything to maintain its hold on power and just leaving little money or no money for HIV/AIDS prevention and most of Zimbabwe suffered from malnutrition, so they needed food aid, but the government neglected about the extent of the problem, leaving them to

Hyperinflation is a rare economic phenomenon where inflation becomes out of control. The confidence in the country’s currency reduces significantly leading to a dramatic increase in the prices of goods and services, rising by 50 percent per month. Hyperinflation is often considered to be a manmade disaster. There are several theories explaining the causes of hyperinflation:-

Hyperinflation is a rare economic phenomenon where inflation becomes out of control. The confidence in the country’s currency reduces significantly leading to a dramatic increase in the prices of goods and services, rising by 50 percent per month. Hyperinflation is often considered to be a manmade disaster. There are several theories explaining the causes of hyperinflation:-

In recent years, Zimbabwe has been prone to increasing violence as a result of a corrupt government. There have been many instances reported to “HRWO” (Human rights watch organization) of personal accounts where landowners and workers alike have been subjected to beatings, pillaging, threats, and overall persecution. These acts of terrorism are the products of a military coup that is currently in power called the Zanu-PF and orchestrated by the veterans of the war for Zimbabwe’s Independence.

The monetary base explosion has one very popular criticism; inflation will eventually soar to never seen levels. As more money is printed and circulates the economy, prices rise.

Hyperinflation is not a new phenomenon. In the past century many countries have experienced this phenomenon due to various reasons. Scholars explain that when hyperinflation occurs in a nation, the value of the country?s currency highly depreciates in value to a point that it totally loses its value. This paper seeks to explain the critical role governments have in controlling hyperinflation from occurring. To illustrate this, three countries have been used, namely: Germany, Yugoslavia and Zimbabwe. This paper is divided into three sections: the theories of inflation, the effects of inflation and the example countries and the possible cures of inflation.

In this paper the author shall trace the country’s economic trajectory, starting with Dr Benard Chidzero’s budget presentation of 1986 which he described as “particularly difficult”, and projected a budget deficit of ZW$1 billion. The importance of the huge post-war expectations of the general populace, and the ruling party’s deep desire to retain political power will be tackled in establishing the reason for the consistent worsening of budget deficits and debt since then. The history of the development of Zimbabwe’s economy with a particular emphasis on the impact of Government’s seemingly

Inflation is a burning economic problem in the developing countries like Nepal that brings adverse effects like loss of purchasing power of national currency, leading to the aggravation of social conditions and living standards. This also leads to uncertainty making domestic and foreign investors reluctant to invest in the economy. Additionally, inflation broadens the country’s terms of trade causing domestic goods and services more expensive in the market. That is why; the monetary authority of every economy should have the objective of maintaining stable price.