The Death of the Dollar
HARARE, Zimbabwe – A woman pays her bus fare with 3 trillion in old Zimbabwe dollars — the equivalent of 50 U.S. cents. The collector accepts the brick of neatly folded bundles of a trillion each without bothering to count the notes.
"No one seems to worry, and it works," said the woman, Lucy Denya, a Harare secretary who says she's seen police officers using old notes to board buses.
The Zimbabwe dollar is officially dead. It was killed off in hopes of curbing record world inflation of billions of percentage points, and Zimbabwe has replaced it with the U.S. dollar and the South African rand.
Yet the role of the old Zimdollar, as it is known, remains in flux. It is still used, and has become another point of contention for the divided leadership of the country, now one of the poorest in the world.
President Robert Mugabe has called for the return of the Zimdollar as legal tender, complaining that most Zimbabweans lack the hard currency needed to buy basic goods. The central bank under governor Gideon Gono, a Mugabe loyalist, has acknowledged printing extra local money to fund government spending that fueled inflation.
But Finance Minister Tendai Biti, who joined the government as part of a power-sharing agreement between his Movement for Democratic Change and Mugabe's ZANU-PF party, has declared the local dollar indefinitely obsolete. He has threatened to quit if a return to the local currency is forced upon him.
"We are putting the tombstone on the corpse of the Zimbabwe dollar," Biti told lawmakers in a midyear fiscal policy statement. In a speech to business leaders, he said, "We are no longer printing our own money."
What happens when you simply monetize without tax receipts......sound familiar?