He also pledged to end a long-running practice
of the bank issuing more money to finance
government spending.
Do people in Zimbabwe have smartphones?
Could they use a cryptocurrency?
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://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...
See also
* https://www.pragcap.com/understanding-hyperinflation/
* https://www.pragcap.com/inflation-is-not-necessarily-a-diffe...
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.
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.
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:
Gold-backed currency seems suboptimal for a country unless you have enough trust in the government to honor the "backed by gold" guarantee.