The cause of hyperinflation in Zimbabwe
This is an answer from Arthur Goldstein to a Quora question on 24 Dec 2020:
Q: Why didn’t Zimbabwe stop printing money when the economy was experiencing hyperinflation? Didn’t they realise something had gone awfully wrong when they started printing $100billion notes?
A: You’ve got the story a bit backwards. Owing to laws that were passed which confiscated large, well-run, and productive farms that had been established during the colonial years and were own- ed and operated by white farmers, the food supply of the country disappeared. Zimbabwe had been an exporter of food and, now, with black farmers having no appropriate background in farming and trying to operate with subsistence farming, the economy was ruined.
Supply had failed, demand was great, and the prices of everything hyperinflated. The printing of $100billion notes was a reflection of this inflation, not the cause. The new money fooled no one and the US dollar became the de facto national currency.
For no particular reason the government destroyed the economy, not by printing money, but by eliminating the supply of food.
Yes, the new farmers had been loyal soldiers during the rebellion to Mugabe that created Zimbabwe from Rhodesia and deserved some kind of reward, but that bush war had ended in 1980. The forced redistribution of land began after 2000, didn’t need to be done, and could have been corrected.
Instead, the continued mismanagement and tolerated corruption caused the hyperinflation, not the money printing.Know someone interested? Please share