• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • Zimbabwe’s $100-Trillion Lesson for America


    Some wonder whether the stock market’s rebound to over 10,000 is a sign not of economic recovery but of inflation. Is the simultaneous rise in gold prices another symptom of dramatic inflation ahead, sparked by big government blunders?

    An article at Smart Money includes Jonathan Hoenig’s warning of government-caused hyperinflation. Rather than pointing to Germany’s Weimar Republic of the 1930’s, he points to Zimbabwe during the last year. That African nation printed a supply of bills valued at $100-trillion apiece—and now worthless already. Hoenig writes:

    From May through October of 2008, Zimbabwean stocks skyrocketed, shooting from 72,000 to almost 400,000 by early November. . . . It would appear to be an attractive return of roughly 5,300%.

    The only problem is that, while investors had indeed earned more Zimbabwe dollars, the value of those dollars over the same period had nearly evaporated amid the country’s hyperinflation, meaning the “return” was actually a catastrophic loss. One Zimbabwe dollar in May of 2008 had lost 99.99% of its purchasing power by November of that same year. Investors made thousands of percent in stocks and were still wiped out.

    Another new article at U.S. News & World Report notes, “Since bottoming out in March, the stock market has soared by about 60 percent, one of the most awesome rallies in market history. . . . While the Dow has been racing upward, however, the unemployment rate has also skyrocketed, from 8.5 percent in March to 9.8 percent now.”

    Making sure politicians don’t use the Federal Reserve as a source of “free money” is key to avoiding inflation. It’s an open question whether the Fed can negotiate the credit market crisis without triggering inflation, a task complicated by actions of the current and past White House and Congresses.

    As the Wall Street Journal’s Steve Moore told a Heritage Foundation audience this week in St. Paul, Minnesota, “For the last year, everything government has done regarding the economy has been exactly wrong.”

    Any efforts to inflate the money supply—such as if the Federal Reserve printed money to supply it to government—could be dangerous steps on a Road to Zimbabwe.

    Posted in Economics [slideshow_deploy]

    16 Responses to Zimbabwe’s $100-Trillion Lesson for America

    1. Freedom of Speech TX says:

      The danger is that far too many people will STILL say "It cannot happen here."

      Well, the we're spending and borrowing – yes it can.

    2. Pingback: Now $100-trillion is not enough - ejistook’s blog - RedState

    3. Linda Carlsbad, CA says:

      Didn't Zimbabwe's problems start with borrowing money they couldn't pay back? Isn't this what this administration is doing? The people didn't see the money, only the corrupt government. Now the people are poor! This is what is happening here, our corrupt government is borrowing money we can't pay back. We don't see any of it. Now they are printing money, and the value of our dollar is going down!

      We have given control of our nation to a corrupt few who are out to destroy us!

    4. Tom, Georgia says:

      Not only can it happen here, the cause of a collapse may have already happened with the effects yet to be felt.

      The status quo has an inertia all its own. It is only when the people of the US and in the rest of the world begin to seriously adjust their future expectations and then act accordingly that the inertia of the status quo will be broken. Then it will be too late by years to prevent a catastrophic collapse. Look out below! And if time was ever on our side, it is no longer.

      The Fed's balance sheet can be infinite because the value of the US dollar can be zero. The Fed would then have an infinitely worthless balance sheet.

    5. Betty Hanicke, Kansa says:

      Zimbabwe used to be called Rodesia. Then it was a thriving ecomoney and an export country. They were on par with the US and South Africa. Now Zimbabwe is an import country and conficating producing property to divide up with the workers who didn't know how to produce. Is US going the way of zimbabwe with excessive spending and printing more money?

    6. Ross writes in Brade says:

      We have a Secretary of Treasury that's a tax-cheat, engineered the bail-out in the final months of the Bush administration, and took over the financial investment and banking industry.

      We have a president who has never governed anything…anything in his life! Now he is dismantling the USA Constitution with the help of his radical left-wing personal staff/Czars .

      The Congress is controlled by the radical Democrats. Now only the Judical Branch is not radicalized…yet.

      I don't think this Administration or the Congress leadership is concern about saving our economy, do you? At least it looks like it more and more every day. It seems that we have a much more dangerous enemy within…our own national leaders.

    7. James A. Glasscock, says:

      We are living in hard days. The truth is harder days are to come. We have a President who cares nothing for the U.S. and for the military who is fighting a desperate war in Afganistan.

      He is surrounded by the faculty or graduates from Harvard, whose total knowledge is limited to what they learned in their narrow disciples and in 3-hour graduate seminars.

      None of them has every leader a successful business, including Harvard University by Larry Summers, who stumbled and was thrown out the door.

      These days remind me of reading Rowse's book on the failed British leadership leading to the 1939 start of WWII. Ignorance of history, ignorance of language and customs. General ignorance and unwilling to be challenged. Unfortunately, the rest of us who read history and have knowledge of language and culture recognize the fact we are lead by a Coven of Fool!

    8. Ham Lake MN says:

      I fear that my fellow Americans are not ready for what is approaching. We seem to have grown soft and are unable to deal with the reality of the dangers we face.

      FACT: Marxism has murdered over 100 million souls since the 1917 Red Revolution. Bloging about this may ease your stress level, but it will not change the facts of what we face.

      The Second Amendment to the Constitution was put in for a reason. Have we grown "guttless"?

    9. Jerry from Chicago says:

      It's all George Bush's fault. If you don't believe it, you're a racist.

    10. Louis L Cesar F Levy says:


    11. duelles, Santa Fe, N says:

      Having read a bit on the FDR years, I'm convinced that we can overcome the Obamaism of the 21st century. Do not give up.

      It is possible that we will still attract foreign investment of which China has 7% and Japan 6% . My retirement fund, Social Security accounts for almost 40% of that debt. It is possible that the rest of the world will be worse off then the US and thus we will be an attractive place to invest.

      Don't be gamed by this marauding Marxist. Vote his cronies out. Call each representative you have. Those on the state level are going to be hammered with new costs for programs such as MediCaid and could become our allies.

    12. John, Colorado says:

      We should arrest all the owners of the Fed, put them in jail and throw away the key, and seize all of their assets, and use them to pay off the debt, then go back to a gold and silver backed currency.

    13. The voice of reason says:

      We hear much talk about the loss of American jobs and how the government is searching for ways of creating new ones.

      My question to them Is this! Why Are we outsourcing are jobs to other countries still at an alarming rate and looking the other way? The banks and credit card companies the studios and everyone are sending our jobs overseas still! How can we bail out institutions that practice this and where are the incentives to keep our jobs in America? Over hear In America our dollar Is under attack Russia,China and the middle east have no concern for us we are simply A means to an end! History teaches us what happens when we print

      money without the means to back It up! Our jobs are the only national treasure we have left and we had better protect them! God bless America

    14. Jacque, New Jersey says:

      Sadly, after hearing the speech by Lord Monckton last week, all of the pieces fell into place.

      I had wondered why Obama was campaigning in Germany and Africa last year..

      The Copenhagen Climate Treaty is to be signed in Copenhagen this December…Yes, the same Copenhagen who recently gave Obama the peace prize for things that "he would do in the future."

      The Treaty is nothing more than a worldwide welfare program.

      Once we have signed on, we cannot get out of it unless all of the other signing Countries also sign us out..

    15. jay says:

      zimbawvay is a different story. usa will hang for years and it will come down to a russian style economy. this will let india and china take over the world ecconomy . but new problem is we have two lost power siting with lots of nukes. for sure russians like to aggrassive and americans are paranoid. this will lead real seen of cold war . perhaps nasty politics and lots show offs . does not really mean world war.

    16. Audrey says:

      I am a Zimbabwean living here in the USA. Everything you read about the country is true it is a modern day example of a seriously failed State with a very corrupt government. It was once the bread basket of Africa. I hope American's will wake up and see the light before it is too late! May God Bless and keep America.

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.