[Tonight on eTV news I heard them mention that Zimbabwe’s inflation is now at 1042% (officially). Remember, previously, the unofficial (real) inflation rate was much higher than the official rate. So I assume, the reality could be even worse than the official rate. But even so… the official rate is incredible…

Another white guy from Zimbabwe was telling me at work yesterday that he has seen Zimbabwe currency which has an EXPIRY DATE printed on it! He said it must be the only currency in the world where some of the notes actually have expiry dates.

On eTV they mentioned tonight that the biggest currency is a Z$50,000 bearer cheque, which translates into about R3 (50 American cents!).

Zimbabwe’s economy would have collapsed completely were it not that 1/4 to 1/3rd of the black population left the country and they now work in S.Africa. They work here, and buy food here and it is sent back to Zimbabwe. This lifeline from S.Africa keeps Zimbabwe alive – otherwise, the inflation could easily have been 100 times worse and millions would have died by now.

Another negative effect is that nowadays criminals from Zimbabwe are engaging in violent crime in S.Africa in order to get money.

Economists predict that by the end of this year Zimbabwe’s inflation will be an unbelievable 1800%.

This is much worse than Brazil was I think. I think Brazil at one time had about 300% inflation. They also changed their currency to create stability. But with Zimbabwe … the economic fundamentals are gone… so there is no hope of stopping this. God alone knows where this will end…

I thought I’d put 1000% inflation in perspective. Consider that you start off the year with $100 in your pocket. By year end, it will now only be worth $10. And by the end of the next year it would be worth $1. So in 2 years, your money would have lost 99% of its value!

I think they are going to run into a serious problem in that their money will be completely worthless within a year or two – so worthless that it will be pointless printing it.

The value of the raw paper is probably worth more than the denomination printed on it. Consider that a Z$500 bill is worth 1/2 an American cent. Within a few years, Z$500 will be worth less than the paper itself!

They could invent a new currency, and let’s say they called it “The Mugabe” and 1Mugabe was worth say Z$1 billion. It could keep the Govt afloat for a few years. The problem though is that the Govt struggles to even pay for the ink to print new notes. So to reissue a totally new currency is a waste of time.

I think the next step for Zimbabwe will be to simply leave its currency to become completely worthless. It can then simply use S.African Rands and US Dollars. Zimbabweans already bring in Rands and US Dollars. So they can simply leave their currency to become so utterly worthless that entire truckloads of notes won’t allow you to buy a loaf of bread. Then the currency will die a natural death by itself. Then, the people in Zimbabwe can merely quote all their prices in Rands and US Dollars. Hotels in Zimbabwe have been quoting their prices in US Dollars for years. And since about 1/3rd of the population is already residing in neighbouring states (mostly S.Africa), there will be a steady flow of S.African forex into Zimbabwe.

If the Zim Govt leaves the currency to die by itself, and they don’t replace it with anything new, then it actually won’t cost them a cent. It would be the simplest solution. Jan]