Friday, October 30, 2009

Government Failure: Game Over for the Zimbabwe Dollar

I once wrote a post on Zimbabwe's amazing hyperinflation. So incredible it was that it led Gono, the governor of Zimbabwe's central bank, to receive an Ig Nobel Prize in Mathematics.

Well, it's finally game over for their poor excuse for a currency. As it happens in all economies that fail to contain hyperinflation, the Zimbabwe dollar died off out of its own irrelevance. Here's Cato's Steve Hank on this new feat achieved by the Reserve Bank of Zimbabwe (HT Marginal Revolution's Tabarrok):
Ashes are all that is left of the Zimbabwe dollar — a remnant of paper money. During Zimbabwe’s hyperinflation, foreign currencies replaced the Zimbabwe dollar in a rapid and spontaneous manner. This “dollarization” process was legalized in late January 2009. Even though the Zimbabwe paper money remnant circulates alongside foreign currencies, its real value is tiny, its use is limited, and its value against the U.S. dollar is cut in half every two days.

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