Dr. Gideon Gono Yields! Zimbabwe Dump Domestic Currency

In the realization of the futility of maintaining transactions based on unlimited issuance of the domestic currency from the printing presses of the Mugabe-Gono regime, the Zimbabwe government has now relented to use alternative currencies as medium of exchange for its economy…

Click on this BBC video link.

According to the BBC (bold highlight mine),

``Zimbabweans will be allowed to conduct business in other currencies, alongside the Zimbabwe dollar, in an effort to stem the country's runaway inflation.

``The announcement was made by acting Finance Minister Patrick Chinamasa…

``BBC southern Africa correspondent Peter Biles says the Zimbabwean dollar has become a laughing stock. A Z$100 trillion note was recently introduced…

``Before the announcement, shops in Zimbabwe were increasingly demanding payment in US dollars - a reality acknowledged by Mr Chinamasa.

``"In the hyper-inflationary environment characterising the economy, our people are now using multiple currencies alongside the Zimbabwean dollar. These include the [South African] rand, US dollar, Botswana pula, euro and British pound among others."

``A Harare resident said even street vendors were refusing to accept Zimbabwean notes.

``Last year, the Central Bank was forced to slash 10 zeros from the local unit in an effort to make the currency more manageable.

In effect, Zimbabwe had been forced by the marketplace (and the economy) to junk its currency regime.

This demonstrates how markets are more powerful than governments. While the latter can manipulate the marketplace up to a certain extent, ultimately unsustainable trends will compel for a market based response or adjustment. Thus Zimbabwe's hyperinflation will be followed by deflation (different from debt deflation).

(HT: Charleston Voice)