Horse 904 - No Longer a Billionaire

XE.com tells me this morning that:
1.00 AUD = 11.0121 ZWD
What's going on here? I thought I was a billionaire...

http://www.rbz.co.zw/pdfs/2008Julymps/mps.pdf
Notice: The Zimbabwe government redenominated the ZWD on August 1, 2008 at a rate of 10,000,000,000 old ZWD to 1 new ZWD. No new currency code has been issued, but the old ZWD currency remains legal tender until December 31, 2008.

The Reserve Bank of Zimbabwe has announced that it is going to fire Dr. Evil as its chief currency controller. No longer will it be possible to announce that you're a multi-billionaire when buying the local newspaper - how much is it? ONE HUNDRED BILLION DOLLARS



Inflation was running so rampant that it got as high as 2,200,000% (2.2 million percent), in fact it got so bad that the physical supply of cash just couldn't keep up with the cost of goods. Whilst it may sound appealing to have a net worth of $100 billion dollars, in Zimbabwe the amount was not enough to even buy a single loaf of bread!

The Zimbabwean central bank, the Reserve Bank of Zimbabwe (RBZ), has mismanaged this hyper-inflation and has ignored advice from the International Monetary fund (IMF), instead choosing to print money as if it were toilet paper (which went for $417 ZWD per sheet, not per roll, in March of 2006, according to a New York Times article). As more money is added to the supply, the value of each individual unit of currency falls, until the currency becomes worthless.

Sothen, what is the solution? Generally inflation can be caused by too much money chasing too few goods, and one possible solution would be to increase the number and amount of goods produced. The other, more obvious solution would be to decrease (or at least stabilize) the supply of money. Unfortunately, this is easier said than done. This is especially true when your leader is President Robert Mugabe, who has ruled the country for 28 years and was recently condemned by the international community for waging a campaign of violence against his political opponents. Mugabe is now threatening to loot businesses owned by foreigners, especially from the U.K., blaming them for his country's economic woes, all the while printing cash like there's no tommorrow.