Zimbabwe launches a new currency again | Hacker News Reader

Zimbabwe launches a new currency again

wsj.com

33 pointsimpish920812 comments

Heh, Zimbabwe reminds me of the game Leaf Blower Revolution, I guess they ran the counter up to 1e300 and had to reset their levels.

https://archive.ph/B0NKb

    He also pledged to end a long-running practice
    of the bank issuing more money to finance
    government spending.

Is there any country in the world with a government which manages to withstand the temptation to print money?

Do people in Zimbabwe have smartphones?

Could they use a cryptocurrency?

The US thanks to the Federal Reserve, they were pretty disciplined about it up until 1971.

> In 1971, President Nixon terminated the convertibility of the U.S. dollar to gold.

Gold-backed currency seems suboptimal for a country unless you have enough trust in the government to honor the "backed by gold" guarantee.

Well there isn’t enough gold in the world. Sure that would just lead to an increase in gold prices but it would be ridiculous, astronomical numbers.

France knew this was coming and converted a sizable amount of dollars to gold. The world lost trust we wouldn't abuse the dollar. We did anyway and then held a gun to their heads by making Saudis push OPEC to only sell oil for dollars. Problem solved for America.

> The US thanks to the Federal Reserve, they were pretty disciplined about it up until 1971.

They were quite disciplined in the early 1930s as well, which greatly helped the Great Depression to arrive:

* http://www.nber.org/chapters/c11482

And it's not like the gold standard helps with financial/currency stability either:

* https://archive.today/FWKcL / https://www.theatlantic.com/business/archive/2012/08/why-the...

Further, 1971 isn't some magic year, as inflation was already rising in the mid-1960s:

* https://www.federalreservehistory.org/essays/great-inflation

And if you're trying to make a link to inflation, the spikes that the US (and others) saw in the 1970s had little to do with monetary/fiscal discipline, but with commodity prices:

* https://en.wikipedia.org/wiki/1970s_energy_crisis

* https://en.wikipedia.org/wiki/Cost-push_inflation

Zimbabwe is kind of like Argentina.

New government is attacking fiscal deficit and they have turned off the printers since they took over in December.

For context, Argentina was printing so much money that they had to pay other countries to print money for them.

The problem is that printing money isn't even necessarily a bad thing. It can be used like a carrot on a stick, except you can just pull that stick carrot out of thin air.

When used wisely this leads to a multiplicative effect, where you use one carrot to coax a farmer into growing 10 carrots. This is what most functional economies do, and why the US has been able to continually print money since forever.

The problem is when you forget that those "stick carrots" aren't real carrots until you harvest the real ones from the ground, and treat them as if they are the same. They are not. Stick carrots are regular carrots borrowed from the future, and must be paid back.

> Is there any country in the world with a government which manages to withstand the temptation to print money?

In modern economic systems money is created via private/non-government banks through credit creation, and not through government actions:

* https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/m...

* https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1905625

I've observed that folks often mention "money printing" and inflation (cause of), but rarely ask what caused the money printing, or a collapsed economy, in the first place:

> 2003 Zimbabwe’s economy has collapsed. Up to a quarter of Zimbabwe’s 11 million people have fled the country. 3/4 of the remaining Zimbabweans are living on less than 1 US dollar a day. (Source)

> 2005 An estimated 80% of Zimbabwe’s population is unemployed.

> …by 2008 Only 20% of children in Zimbabwe are in schooling. Cholera outbreak after water supplies and sewage systems have continued to breakdown; by 2009, over 98,000 cholera cases. HIV/AIDS rate for individuals aged between 15 and 49 is 15.3%.

* https://clintballinger.com/2020/04/30/airplane-crashes-arent...