25 thoughts on “The Fall and Fall of the ZimDollar

  1. Chi Nguyen

    Their currency has already disappeared from circulation. They had to cancel it because there is nothing to support and hold its value. From what I hear, a 10 trillion Zimbabwe dollar note can’t even buy a loaf of bread.

  2. chanel wan

    the reason as to why the value of the Zimbabwe currency is the utter fact that they are continually printing off more money to make up for the lack of money without thinking of the rapid inflation that comes along with printing new money.

    it is said to be that 37 million Zimbabwe dollars equals to 1 U.S dollar… that is pretty much how worthless and poor the country is

  3. Ali Aenehzodaee

    94% unemployment and hyperinflation comparable (and worse?) to that of post ww1 Germany. Political turmoil has also stopped any chance at recovery. I read somewhere that Mugabe confiscated white planter’s land. This seems to be one cause of the hyperinflation because of the loss of the net exporter of grain. Destitution and food plagues caused widespread hunger and a strong lack of faith in the former economy.

    There wasn’t a market. Very little to trade. Zimbabwe is also lacking in energy; exporting no oil and importing (a very scarce amount) 22000 barrels/day.

  4. Emily Rohrer

    The government began printing large amounts of money without anything to support its value. Word on the web is that, like Ali said, Mugabe ran whites off their farms and distributed the land to blacks. The new farm owners were not as efficient in production, so the increase of money was not supported by growth of output. Zimbabwe’s money lost all value, forcing the country to abandon the currency. However, you can still buy Zimbabwe currency on eBay… What a souvenir.

  5. Sagar Patel

    The reason behind this disaster is hyperinflation. The Zimbabwe government would continue to print off paper money when they were in debt or couldn’t pay the government workers. I’m sure that they would of completely stopped their national currency, but they wanted to maintain their ‘national identity’. Now 1,000,000,000,000 Zimbabwe dollars before the move is worth only 1 Zimbabwe dollar!

  6. Julien Teel

    Zimbabwe has been in the hole for a very long time. The nation has a horrible agricultural production and it’s not getting better any time soon. I believe this past year there was a cholera epidemic that killed 4,000 people and along with the epidemic, there was an acute food shortage (what a surprise). With no food to sell, let alone feed their own people, they have to import or beg for food from other countries and usually the U.N. Obviously that already puts their economy at a huge disadvantage.

    As others have said already, Zimbabwe doesn’t really export anything that could aid their dire economy in any way. If a country doesn’t export, then where do they get money from?

    Well Zimbabwe has a tendency to borrow money from other countries, but due to their corrupt government and policies, that money is always abused and not spent effectively. Many of the leaders, such as Mugabe, had some sort of scandal either involving the farmers or some terrorist organization. Without a strong government and by having variety of scandals for each political leader, Zimbabwe is looking at total devastation (this shouldn’t surprise anyone).

    Aside from the large problems with the nation, there have been small isolated events that have brought down the economy. Such as the strike from last September, where civil servants, such as teachers, doctors, and nurses, demanded higher pay. Well in conclusion to that strike, many schools were shut down and hospitals were not able to function properly.

    All of these strikes, food shortages, and hyperinflation of their currency are due to the corrupt government and all the failed or unsuccessful policies it’s tried to pass, such as the land reform program. The government is split and nothing ever seems so be accomplished over there. No international investors want to put their money in Zimbabwe as there is no rule of law.

    The government tried to combat the lack of economic activity by printing tons of Zimbabwean dollars. A lot of them.

    Supposedly, the hyperinflation index rate hit 89.7 Sextillion Percent in November 2008. Ouch. Zimbabwe kept creating bigger and bigger notes and kept on printing them in large quantities. The only result would be hyperinflation, yet the government honestly thought it would help the economy.

    Now there are probably more detailed political scandals and fail economic reforms I could explain, but I’m sure this makes for a decent general overview of the economy and the country itself.

  7. David Truong

    There was an article in the Dallas Morning News (Sunday, August 23,2009) about Zimbabwe’s currency.

    It talked about how some people still use the currency even though it is dead. Their specific example was a bus driver who still accepted the Zimdollar for bus rides. Around 3 trillion Zimdollars for a ride, which would be worth about 50 cents in US dollars.
    Then it mentions how there are those who don’t take it and they just resorted to a bartering way of trade. As long as it works, right?

  8. Kaitlin Foster

    So, I think we can all conclude that major inflation is much to blame for poor Zimbabwe, but the question some people are asking themselves is, “What can they use for currency now?” Well, many people in Zimbabwe are using American dollars, but gold is also being considered as a possible currency. Gold cannot be created and cannot lose value, therefore inflation wouldn’t ever be an issue.

  9. David Truong

    There is also South African currency that is used which is brought over from when they travel (or escape) over there.

  10. Ali Aenehzodaee

    Yes. Bullion would help recover from inflation and also set up an actual paper (or gold coin) currency to stabilize and mature the economy.

  11. Julien Teel

    The easiest transaction would be to the US Dollar. Nobody accepts the Zim dollar anymore, not even simple street vendors. The most common currency right now is the US Dollar, beating the Euro and British Pound. Mostly everything is converted and priced in USD right now, so it would be the easiest to switch over to. However, even the USD has its own problems…I didn’t say it would be the currency that would solve all the problems; I only said it would be the easiest to switch to.

    Personally I believe if they switched to the USD that would at least help the country’s economy. Of course the economy would have to reform itself after the Dollar, otherwise the same problems would continue and nothing would change.

    I like the idea of using gold though…
    I haven’t done much research on it, but I think that gold can cause inflation and the value does change. My only thought that comes to mind is when Spain kept collecting all the gold in Europe, causing massive inflation and collapsing the economy. I don’t know how that would work in our present society though. Using gold sounds pretty good, but I need to do more research.

  12. Matt Wilson

    Gold can cause inflation if a lage enuff of it is amassed in a single area, like Julien pointed out with the example of Spain back durring the colonial ages. Now i do believe another reason inflation occured was that the Spanish also began using silver they imported from latin America as currency as well, with no clear ratio of silver to gold was establish. That same idea of having a silver and gold currency was also popular with the populist party durring the great depression. The poor farmers who made up most of the party wanted silver to be used in the currency because of the recent discovery of silver mines in America. They believed this would allow them to have more money. If the dual currency of silver and gold had been approved, they would indeed have more money, but so would everyone else, and so vendors would sell goods for more money and inflation would occur.
    Now, since Zimbabwe is such a poor country to begin with, and not much commerce occurs their at a national level, a gold coin currency might provide effencient untill the governemt collects enuff money to create a paper curency with the gold backing it.

  13. Harrison Thomas

    I think the adoption of the South African Rand (SAR) is a great idea. While the Rand fluctuates in value in comparison to the U.S. Dollar slightly, it is certainly far more stable than the ZimDollar and easy to obtain as South Africa borders Zimbabwe to the south.

    Also experts believe that the Rand is sue to strengthen over the next year as the 2010 World Cup will bring a enormous flow of money into South Africa.

  14. Matthew Wong

    Currencies are canceled eitheir because of inflation or deflation. If there is too much money going around, it is worth less, and in this case, it is worth nothing

  15. deanwebb Post author

    Gold leads to inflation only when there’s a massive amount of it introduced to an economy. Zimbabwe’s problem may be that if it uses gold as a currency, it may trigger massive DEFLATION, as it will likely have to use its gold reserves to pay for goods. I’ll start a thread on the why and wherefore behind the US’ pulling out of the gold standard to illustrate that point…

  16. Julien Teel

    While nearly any currency is better than the Zimbabwean Dollar, I have to disagree on the issue that the Rand is more suitable than the US Dollar as a replacement.

    First off, you cannot make the assumption that due to the 2010 World Cup, the Rand will strengthen and the currency will become more stable. Nobody knows how strong or weak the Rand will be in 2010, but there is also no evidence stating that the Rand will improve the currency. I understand the logic that due to an increase in tourism, the Rand will strengthen, but chance is that most tourists will use the USD as it is stronger and more popular than a weak currency. Further, the USD is much stronger and has a better value than the Rand (last I checked, One African Rand=.126 USD).

    And many other things affect a currency, not just one event that is in the near future. You have to take into account the political corruption in South Africa, which also affects the value of the Rand. The World Market is another factor that determines the value. If the economy continues to suffer, then investors begin to pull out their funds from developing countries and move them to already economically developed ones. The US also plays an important role in the world economy, as all of the violence and conflict in the Middle East, the price of crude oil, and the stability of the United States own economy affect world currencies daily.

    In conclusion to the Rand, it’s clear that a country shouldn’t base their new currency off some hopes that a World Cup will strengthen the currency. It is not clear how the Rand will develop in the future, as it is only beginning to rise (just a little) and many events worldwide could occur before the World Cup or any other event that hopes to generate more revenue.

    Instead, we should look at why the USD is a better choice for Zimbabwe. First off, 65% of the people survive on the USD in Zimbabwe. Second, of all the foreign currencies being used, the USD is the most favored. And third, the USD has a much better value (despite the current economic downturn) than any of the African currencies.

  17. Harrison Thomas

    First, the World Cup was not my reasoning on the usefulness of the Rand. As you said it is just a single event. The point I was making was that South Africa is due to recieve an influx of foreign capital seeing that the tournament is nearly sold out.

    Second, the Rand has a tendancy to fluctuate. It is currently at a low but is starting to rise.

    Third, If you are picking a currency based on “strength” and “value”, both the Euro and the British Pound are worth well more than a dollar.

    I do see the usefulness of the US Dollar as a de facto currency, I was just exploring the other possibilities and did not intend to suggest that the SAR is the single solution to the Zimbabwe problem.

  18. Julien Teel

    I understand why you suggested the Rand, as even I looked into the benefits and downfalls of using it. The benefits of the World Cup are not being ignored; however, I was trying to point out that many other events could occur that would harm the economy, such as the election that’s occurring in 2009 and the corruption that usually comes with it. With any losses in the economy, the impact of attaining all that foreign capital won’t be a large. I do agree that the World Cup will generate some sort of capital, but I can’t agree that it will be effective enough to strengthen the Rand and economy to a point that most are hoping for.

    All currencies have flaws and fluctuate, as is shown by the Rand. Personally, I believe the SAR was lucky this past year as the price of crude oil dropped, making oil in South Africa much cheaper and saving expense costs of transportation. As well as the drop of oil prices, the Rand was already strengthening somewhat, so with all the economic situations, the Rand was able to become much stronger and support the economy better. Though some economists predict it will rise in the near future, I personally believe that it will fall…but only time will tell what happens.

    I fully understand that the Euro and British Pound are worth more than the dollar, but my earlier statement explained how a very small percentage actually uses those currencies, and instead they revert to the US Dollar. There are many factors in choosing a currency, not just strength and value. Sorry if it seemed that was all I was basing my facts off of.

    And lastly, I wouldn’t want to implement in Zimbabwe based solely on a single currency. I would say that a somewhat mixed system that is in place now would work a little better than a single currency. If you look back when the Zim Dollar was in place, most stores had nothing on their selves to sell. When the Zim Dollar was “banned”, those stores had selves that were full of food and supplies due to the foreign currencies. The only problem was that no currency was set in place, so nobody could be officially paid in a currency that would allow them to buy those supplies and food. Though many street vendors and businesses accept only USD or Rands, it would benefit the people more if the government created a more organize form of the “Dollarization” system that is occurring currently.

  19. Harrison Thomas

    Yeah i misunderstood where you were going with the strength and value thing. My bad.

    Agreed on the “only time will tell”

  20. Hugo Espiritu

    A barter system would be inefficient even with an established market because there has to be a double coincidence of wants. A medium like gold is hard to use because then Zimbabwe would be obsessed with it’s gold supply rather than focusing on it’s business environment. An established currency would be the best bet.

  21. David Liou

    I agree with Hugo. Zimbabwe should just focus on making another currency, and not making the same mistakes again.

  22. Hugo Espiritu

    I don’t understand why someone would want to continue running a nation in their old age. President Mugabe is 85 years old and still trying to run Zimbabwe.

  23. David Liou

    Mugabe wants to continue running the nation, because of all the power he has. If he stepped down, he would just be an ordinary old man, and he would never get accustomed to that after almost 3 decades with essentially absolute power.

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