Zimbabwe introduces new $50 billion note
HARARE, Zimbabwe (CNN) -- Zimbabwe's central bank will introduce a $50 billion note -- enough to buy just two loaves of bread -- as a way of fighting cash shortages amid spiraling inflation.
Zimbabwe's dollar is virtually worthless with foreign currency now being used to purchase basic items.
The country's acting finance minister, Patrick Chinamasa, made the announcement in a government gazette released Saturday.
While Chinamasa did not give the date on which the $50 billion and new $20 billion notes would come into circulation, an official at the Reserve Bank of Zimbabwe said the notes would be distributed to all banks by the end of Monday.
Zimbabwe is grappling with hyperinflation now officially estimated at 231 million percent and its currency is fast losing its value. As of Friday, one U.S. dollar was trading at around ZW$25 billion.
When the government issued a $10 billion note just three weeks ago, it bought 20 loaves of bread. That note now can purchase less than half of one loaf.
Realizing the worthlessness of the currency, the RBZ has allowed most goods and services to be charged in foreign currency. As a result, grocery purchases, government hospital bills, property sales, rent, vegetables and even mobile phone recharge cards are now paid for in foreign currency, as the worthless Zimbabwe dollar virtually ceases to be legal tender.
Once a regional economic model, Zimbabwe is in the throes of an economic crisis, with unemployment running at more than 80 per cent and many families unable to afford a square meal. President Robert Mugabe's critics blame his policies for the economic meltdown but he in turn says the West is sabotaging his efforts.
In order to attract foreign currency, Zimbabwe's central bank has, since September, licensed at least 1,000 shops to sell goods in foreign currency. All mobile phone service providers are now licensed to accept foreign exchange for airtime and other services.
John Robertson, an economist in Zimbabwe, said he's puzzled by the introduction of the new $50 and $20 billion notes.
"I am not really sure what these notes would be for," he said. "No one now accepts the local currency. It is a waste of resources to print Zimbabwe dollar notes now. Who accepts a currency that loses value by almost 100 percent daily?"
In August last year, the RBZ slashed ten zeros from the currency. But the zeroes have bounced back with more vigor.
It was just December 20th, 2008 that Zimbabwe introduced the $10 billion note: CNN article.
And it wasn't very long ago that the world was shocked when they were producing multi-MILLION dollar notes, now it's multi-billion dollar notes.
Yes, the United States is in far better shape than Zimbabwe… for now. We are currently headed in the opposite direction from a monetary perspective – while Zimbabwe is experiencing massive hyperinflation, we are experiencing deflation… for now.
Throughout the history of the world, no fiat currency has EVER stood the test of time – ALL have failed.
Cause of death?
It is almost always inflation, NOT deflation. Deflation is usually the healing process at work, BUT when never ending STIMULUS is provided to fight deflation it can turn into inflation – later. Please consider that Government Spending Makes Recessions Worse.
Then again, never ending STIMULUS during a credit collapse only makes the math worse when the entire economy is already SATURATED with debt (Death by Numbers). The end result may not be hyper-inflation, it may very well be a monetary RESET of some type. These have happened many times throughout history and, in fact, several times in the history of the United States (My MONEY 'tis to thee...).
It's a confusing issue because people still have the inflationary mind set. They have seen our own budget numbers grow just recently from talking billions to talking TRILLIONS.
Does our country’s leadership understand what’s happening to our own monetary system and economy any more than Zimbabwe’s leadership understands how to fix theirs? When does this type of insanity stop? When WE make it stop, or when the system collapses, the choice is up to US.