[1885] Of freer market to save Zimbabwe

After millions of percent of inflation^[0], Zimbabwe finally gets on the path of freer market as well as dollarization to fight inflation:

Jan. 29 (Bloomberg) — Zimbabweans will be able to trade in any currency they choose and the government will abandon price controls with immediate effect, acting finance minister Patrick Chinamasa said today.

Chinamasa, from President Robert Mugabe’s Zimbabwe African National Union-Patriotic Front party, told parliament that price controls would be abandoned because they had ”unintentionally’’ harmed businesses and added to Zimbabwe’s hyperinflation. [Zimbabwe Abandons Price Controls, Promotes Currency Trading. Brian Latham. Bloomberg. January 29 2009]

This is progress, amid horrible set of statist policies practiced by the tyrant Mugabe.

Previously, Zimbabwe passed an idiotic policy making inflation illegal as inflation shot through the roof and upward beyond the sky . That is as stupid as making dying illegal. On top of that, Mugabe administration ordered prices to be reduced, figuring that once inflation was illegal, there would be no more inflation. Right? Wrong.

Even the uneducated traders in Zimbabwe knows this and many violated that ban in the name of practicality. There was risk to that: those who refused to cut prices as sanctioned by the autocratic economic-illiterate government were beaten by pro-Mugabe groups.^[1] Meanwhile, Zimbabwe kept printing money, adding fuel to the inflationary fire.

Needless to say, the policies did not stop inflation from increasing exponentially to make the Zimbabwean dollar more worthless than worthless. When inflation was about 10,000% in 2007, it was the world’s highest at that time.^[2] With inflation at many sextillion (how many zeroes are there in a sextillion?) percent on annual basis now, it is probably the highest in whole history of human kind.^[2a]

In fact, they printed so much money, Zimbabwe ran out of paper to print more money!^[3] It became so bad that selling the money as paper might worth more than having the paper functioning as money.

But Zimbabweans could give a sigh of relief now. With freer policies, they lives are going to get slightly better.

^[0] — The country is in the grip of world-record hyperinflation which has left the Zimbabwean dollar virtually worthless – 231,000,000% in July 2008, the most recent figure released. [Zimbabwe abandons its currency . BBC News. January 29 2009]

^[1] — JOHANNESBURG, July 3 — Zimbabwe’s week-old campaign to quell its rampant inflation by physically forcing merchants to lower prices is edging the nation close to chaos, according to some economists and merchants.

As the police and a pro-government youth militia swept into shops and factories, threatening arrest and worse unless prices were rolled back, staple foods vanished from store shelves and some merchants reported huge losses. News reports stated that some shopkeepers who refused to lower prices were beaten by the youth militia, known as the ”Green Bombers” after the color of their fatigues. [Zimbabwe Price Controls Cause Chaos. Michael Wines. New York Times. July 3 2007]

^[2] —”People are losing millions and millions and millions of dollars,” said one Bulawayo merchant, referring to the Zimbabwean currency, which has been rendered increasingly worthless given the nation’s inflation, the world’s highest. ”Everyone is now running out of stock and not being able to replace it.” [Zimbabwe Price Controls Cause Chaos. Michael Wines. New York Times. July 3 2007]

^[2a] —”People are losing millions and millions and millions of dollars,” said one Bulawayo merchant, referring to the Zimbabwean currency, which has been rendered increasingly worthless given the nation’s inflation, the world’s highest. ”Everyone is now running out of stock and not being able to replace it.” [New Hyperinflation Index (HHIZ) Puts Zimbabwe Inflation at 89.7 Sextillion Percent. Steve H. Hanke. Cato Institute. November 14 2008]

^[3] — Zimbabwe is experiencing a shortage of paper needed to print local currency banknotes, the newspaper said. [Zimbabwe Debates Using Dollar, Rand for Budget, Herald Reports. Brian Latham. Bloomberg. January 27 2009]