We all know that for the past one decade Zimbabwe's currency has inflated to such an extent that the country had to freeze them and start using USD and ZAR. Analyzing what has happened, did we learn our morals here? or did we leave it unassuming, as this trouble didn't reach our shores? Well, I would say that we as a community (All countries included) are negligent of the seriousness of this issue. If it can happen to one of them, it can happen to us. Let us start with the basic question that how did it ever get to a stage that Zimbabwe had to print millions, billions and trillions?
Countries like USA and its aids (including my own country that I love the most) kept lending despite knowing that the country was in no state of returning the debts, after which also started to pressurize and lead them to squeeze themselves to return a high interest rate. Whereby, with no alternatives, the bank of Zimbabwe had to print, manufacture, churn out (however we call that stuff!!) millions, billions and trillions to meet their debts. When the market is inflated by too much currency, the value of the currency automatically flips down (basic economics - supply and demand).
If we say it is the countries that lent money to Zimbabwe that were responsible for their hyper-inflation (I call it super-inflation), we are missing the other part of the story. Let us be fair here and also look at the other side of the story. Zimbabwe's governance has been very poor for decades now and is one of the badly managed economies of the world.
With un-employment at its peak and with zero plans for their debt management, the bank of Zimbabwe decided to meet its debt with one of the worst decisions ever expected of them. yes, guess what? they decided to print millions in new currency to meet their debts and the consequence? we know what has happened now.
It is a wake up call for the country itself (Zimbabwe) and every other country that was watching them and doing nothing to stop it. To those countries (including USA) who think the cleverest way to meet international debts and trade deficits is to churn out more money from the machines, "for god sake do learn from this case" and hopefully should never happen again.
Countries like USA and its aids (including my own country that I love the most) kept lending despite knowing that the country was in no state of returning the debts, after which also started to pressurize and lead them to squeeze themselves to return a high interest rate. Whereby, with no alternatives, the bank of Zimbabwe had to print, manufacture, churn out (however we call that stuff!!) millions, billions and trillions to meet their debts. When the market is inflated by too much currency, the value of the currency automatically flips down (basic economics - supply and demand).
If we say it is the countries that lent money to Zimbabwe that were responsible for their hyper-inflation (I call it super-inflation), we are missing the other part of the story. Let us be fair here and also look at the other side of the story. Zimbabwe's governance has been very poor for decades now and is one of the badly managed economies of the world.
With un-employment at its peak and with zero plans for their debt management, the bank of Zimbabwe decided to meet its debt with one of the worst decisions ever expected of them. yes, guess what? they decided to print millions in new currency to meet their debts and the consequence? we know what has happened now.
It is a wake up call for the country itself (Zimbabwe) and every other country that was watching them and doing nothing to stop it. To those countries (including USA) who think the cleverest way to meet international debts and trade deficits is to churn out more money from the machines, "for god sake do learn from this case" and hopefully should never happen again.
No comments:
Post a Comment