Zimbabwe Suffering Yet Again

Zimbabwe, where president Robert Mugabe recently resorted (yet again) to violence to thwart a chance at democracy, is now suffering from hyperinflation. The official figure is 2.2 million percent, but others say it is closer to 12.5 million percent.

Here's my favorite line, from a Newsday article.

"The central bank, overwhelmed by stratospheric inflation..."

Hmm, the central bank is "overwhelmed" by inflation. Let's try a simple syllogism.

1. Inflation is caused by too much money chasing too few goods--i.e., a surplus of money in the economy.

2. Central banks determine how much money is in the economy. Therefore,

3. Central banks control inflation (as Paul Volcker demonstrated so painfully, but so necessarily, in the U.S. in the early 1980s).

But the Zimbabwe bank's response? Print more money, in larger denominations. Here's more evidence they didn't take the right economics courses:

The bank attributed black market inflation to shortages of hard currency that pushed the black market exchange rate to at least 90 billion Zimbabwe dollars for a single U.S. dollar, compared to the official bank exchange of 20 billion to dollar.

Since value is based on relative supply and demand, there's no way in hell that a shortage of hard currency could reduce its value so dramatically. USD1=ZD 90,000,000,000?! The quickest way to reverse that imbalance is not to cut zeros off the currency--the classic but useless response of hyperinflating governments--but to dramatically reduce the number of Zimbabwean dollars in circulation.

The real reason goods are flowing to the black market is not because of a shortage of hard currency, but a sufeit of it. By flowing to the black market, sellers can demand payment in U.S. dollars, a far more stable currency more likely to hold its value. It's not rocket science--if you're a seller of goods, would you rather receive payment in a currency that's likely to still be worth as much tomorrow, or in a currency that's likely to be worth half as much--or less--tomorrow?

And of course the people who suffer from their government's ungodly combination of evil and stupidity are the average citizens, who've done nothing to deserve any of this.

But it could be worse, I suppose. Zimbabwean citizens could be at the mercy of a capitalist system in which Wal Mart comes into their communities and relentlessly drives prices down.

Why Wal Mart Makes Millions and I Don't

Shopping at Wal Mart this morning, I noticed the following sign by the checkout counter.

Keep All Your Money! Wal Mart will cash your tax rebate check for free.

Why carry all that cash? Let us put it on a Wal Mart gift card.

Clever clever. And as they say, caveat emptor.

Wal-Mart's Got the (Chicago style) Blues

Here's a good Wal-Mart story from the Chicago Tribune. Seems there's already a Wal-Mart in Chicago, and the bastards want to open up another one! As if 1 Wal-Mart per 3 million people isn't enough. Fortunately the city of Chicago isn't having any of it, and is refusing Wal-Mart permits to open up a new store. Because the empty lot filled with trash is better than the millions in sales taxes they would receive, and there's no good reason to give citizens more opportunity for low-cost shopping.

Oops, did I blow my cover with that last sentence? Seems the whole thing is just the Chicago city government kowtowing to the labor unions. You know, the ones who think economic growth comes from paying more for goods and services. Or, to paraphrase Bastiat, the ones who think that if we blindfolded everyone and tied their right arms behind their backs economic growth would skyrocket, because obviously scarcity and costliness are most desirable. Well, they are, if you're the producers--whether of Gucci handbags or of labor. Just not so much if you're the consumers. But who cares about them anyway? Certainly not Chicago.

Several years ago, a late night hailstorm punched a small hole in my skylight. With water pouring into my house, running down the kitchen wall and into the cheap pressboard cabinets, I needed a tarp to cover things up, until I could see where to fix it, ropes to hold down the tarp, and a ladder to get on the damn roof, none of which I had. Now where, in a town of 20,000, do you get that after midnight?

Ideally, no place, I guess, because my only option was Wal-Mart. The bastards.