Reply #74: Regarding Zimbabwe

[GliderGuider]

I got an article by email this morning written by a Zimbabean.. It says, in part:

In Zimbabwe, we are also witnessing the collapse of a cash economy. Most people live a life where they do not earn enough even to cover monthly transport to and from their place of employment. We are bombarded by the official line that the economy is booming, that agriculture is about to turn around, that people are happy and healthy, that the official exchange rate is Z$30,000 to 1US$. Yet we live coping with the day-to-day reality that people are starving, that manufacturing and industry have virtually collapsed, that the average life expectancy is now 34 for women and 36 for men, that infant mortality has increased tenfold in the last 5 years, that an estimated 3 million economically-active Zimbabweans (out of an adult population of little over 6 million) live and work outside the country. Our reality is that that even the official exchange rate is 30 million times what it was in 1980 and the unofficial rate, which is the rate at which most trading and business occurs, is currently Z$3 million to 1 US$. This is three billion times what it was in 1980.

I wrote the above paragraph a month ago. The exchange rate now is Z$5.5 million to US$1. A week later, as I finally finish this article, it is 6.5 million. By the time you read this, the rate will have probably reached Z$10 or 12 million to 1US$.

The pressure on the people of Zimbabwe has been relentless over the last few months. Inflation is now estimated at over 150,000%. Almost no figures make sense. We have just printed a $10 million bill that was worth US$2.50 when it was printed a couple of weeks ago and now worth just over $1.50 People have been queuing outside banks since early December to try to withdraw their money. There is simply not enough cash in circulation to go around.

That pretty much has to define the bottom of the financial barrel.