Zimbabwe's Currency Crackdown Spurs Wider Use of US Dollars (bloomberg.com) 17
A crackdown by authorities in Zimbabwe to support the local currency and fight inflation has increased the use of US dollars in the economy, according to the country's oldest brokerage. From a report: "Ironically the authorities' clampdown on Zimbabwe dollar payments created such a squeeze that it has had the unintended consequence of driving dollarization at a faster pace," Imara Asset Management Chief Executive Officer John Legat said in the Harare-based company's latest quarterly investment notes to clients. Banks are now offering US dollar loans and listed companies carry out more transactions in the greenback, as they reel from a shortage of Zimbabwe dollars.
"Even government is increasingly using US dollars for their own payments," he said. Authorities adopted a series of measures since May including raising the benchmark interest rate to 200%, introducing gold coins, imposing taxes on capital markets and halting payments to government contractors and suppliers to try reduce money supply. Those actions dried up excess liquidity and succeeded in bringing the official local currency rate in line with the parallel rate. The government of the southern African nation has struggled to successfully reintroduce its own currency into the economy after abandoning its unit for more than a decade because of hyperinflation in the late 2010s.
"Even government is increasingly using US dollars for their own payments," he said. Authorities adopted a series of measures since May including raising the benchmark interest rate to 200%, introducing gold coins, imposing taxes on capital markets and halting payments to government contractors and suppliers to try reduce money supply. Those actions dried up excess liquidity and succeeded in bringing the official local currency rate in line with the parallel rate. The government of the southern African nation has struggled to successfully reintroduce its own currency into the economy after abandoning its unit for more than a decade because of hyperinflation in the late 2010s.
Coming Soon (Score:1, Troll)
Coming soon to the U.S.....
Re: Coming Soon (Score:3)
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What keeps Zimbabwe from using crypto to lure in a bunch of dumb capital that thinks the dollar is in decline?
One, the Zimbabwean government isn't smart enough to do something like that, and couldn't run a crypto system if their lives depended on it.
Two, Crypto isn't about the dollar being in decline. Crypto is about independence from overzealous government regulation of finances worldwide. While that's a two edged sword (you obviously lose some government protections as well as government overreach) and while the market is obviously very Wild West right now, with lots of fly-by-night operators and modern snake-oil
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Two, Crypto isn't about the dollar being in decline. Crypto is about independence from overzealous government regulation of finances worldwide.
I believe that you believe they believed that.
Re: Coming Soon (Score:2)
Simple solution (Score:2)
Sticking to US dollars is the right thing for now (Score:5, Insightful)
Ever since the Mugabe 'lets print more money' era of the mid-2000s, sticking to a currency with a stable, known value has been a god-send for anyone just trying to get by.
I visited in 2017 when the US dollar and the South African Rand were the most accepted currencies and everything worked very smoothly. Locals and visitors alike benefited. There were many grey market and black market exchanges that allowed the country to function. The only problem was a shortage of physical currency which meant that you needed to bring a lot of small bills to make exact change.
In 2019 they tried to reintroduce a Zimbabwean dollar, but that lasted only about a year before they started accepting multiple currencies again on an official level. I think they're missing some critical prerequisites to create and maintain an independent stable currency.
Ironically, hyperinflated zimbabwean dollars from the 2009 era now sell very well as collector's items. Somewhere here I have a 10 billion dollar note. The 100 trillion dollar notes regularly sell for above $45 on Ebay.
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I suppose the question is what alternative do you think is faring better than USD...
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The fall of EUR loosely follows the increase in USD. Which makes sense.
The only group of people that could fuck it up more than us would be the Europeans.
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That was my thinking. Every major currency in the world has seen massive inflation, and the USD is the least impacted.
But none have done quite as poorly as cryptocurrency, which has across the board had nearly Zimbabwe levels of currency crash. Cryptocurrency was the favorite drum to beat for 'invulnerable to things like money supply manipulation, obviously that means its stable'.
I still come across die-hard faithfuls, who claim that the crypto-currency bubble was just this freak anomaly, but the idea is s
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Ever since the Mugabe 'lets print more money' era of the mid-2000s...
Mugabe was just endorsing Modern Monetary Theory with gusto. No one's going to punish Washington DC for Money Printer Goes BRRRR! as long as we have all those Minuteman III's and Trident II's standing by.
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I realize that was a joke, but what Mugabe was doing would not have been endorsed by actual MMT adherents. MMT presumes that a government only borrows in its own currency and does not need to purchase significant goods or services denominated with foreign currency. Also, MMT does not say a government can just print unlimited money with no consequence. MMT theorists would argue that the government should keep printing money until full employment is reached, but not after that point. Once full employment is r
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https://www.banknoteworld.com/... [banknoteworld.com]
Time to dollarize and tax exports (Score:2)
First world economists really don't like export taxes, because the first world really likes cheap raw material imports ... but it's the only thing they really have to tax. Just don't go overboard.