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June 28, 2007

9000% inflation?!?!

Can you imagine the money in your pocket today being worth 10% less tomorrow? That's Zimbabwe.

I am not exaggerating—check it out:
two weeks ago US$1 = Z$60,000
five days later US$1 = Z$90,000
four days later US$1 = Z$110,000.
a few days later US$1 = Z$160,000.

That means, in about THE ZIM DOLLAR IS LOSING HALF ITS VALUE EACH WEEK (or something like that).

There are so many problems that stem from this inflation, on personal and professional levels. Beyond the obvious devastating loss of personal savings, there are so many complications… Prices change literally multiple times a day – but salaries don’t. No one will accept checks, since it takes days for them to clear (and that means losing money). People are not allowed to take more than $1.5 million out of the bank at one time – that’s less than $10!! You should see the ATM lines, block long, all the time. (both photos here are of the lines... shots taken quickly because I didn't want to be seen with a camera). And the largest note in print is $100,000, about 70 cents—so people carry literally stacks of bills. It’s really wild, really horrible. You get the point.

Now the crazy thing is that with the hyperhyper inflation happening now, they already had to print brand new bills worth (the new) $100,000... but these are already worth only about US$.75, which means people are still carrying STACKS around with them. The stack pictured here was food shopping money for one community meal at Kufunda.

I should also mention that the OFFICIAL exchange rate is US$1 = Z$250, while the black market rate (which everyone uses) is now US$1 = Z$160,000. If I paid the official rate for an average bus ride, it would cost US$120.

And what is causing this? I haven't completely figured this one out (no one has), but it probably has something to do with the fact that the government keeps printing money with no backup. There's also a some relationship to the price of fuel, imports and foreign exchange... but mostly it all relates to a few (personal) policies of key people in this country. Umm, do some internet browsing to learn more about Zimbabwe politics today.

One more point: less than a year ago, the government decided that it was time to DROP THREE ZEROs from the dollar bills. This meant that the $10,000 bill in your hand was then replaced with a $10 bill. Yes, the government reprinted a whole new set of money to tyr to hide (or something) the hyper inflation. Old dollar bills now make good compost.

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