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What does extreme hyperinflation look like? Consider a pile of currency tall enough to encircle our entire galaxy. That’s how many Zimbabwean dollars you would have needed by the end of the country’s extraordinary inflationary crisis to equal one pre-crisis Zim dollar, according to CGD senior fellow Alan Gelb. Newly returned from a holiday in Zimbabwe with his wife, who was born in Zimbabwe, Alan shared his observations and reflections on the country’s fate in a blog post that provided the starting point for our Wonkcast chat.
“Zimbabwe had the second highest hyper-inflation registered in history,” says Allan. “At the peak of the crisis, prices were increasing many times every day or every hour.” Eventually the government stopped issuing Zimbabwe dollars and legalized several other currencies, including the U.S. dollar, which now circulates freely—though often in a very tattered form. Shops in affluent parts of Harare, the capital, are well stocked, though prices are high, even by U.S. standards, he says. “You really wonder how people are able to make ends meet at all,” he adds.
Not everybody is poor. Rumors abound that the recent discovery of alluvial diamonds is helping to line the pockets of corrupt elites in the ruling ZANU-PF, the violently repressive party of Robert Mugabe.
“Diamonds are being shipped out by air to other countries, but the budget hasn’t received any revenue from this and it’s not exactly clear where the money is going,” says Alan. “In Zimbabwe, there are a great deal of rumors, and many things that nobody really knows.”
I invite Alan to speculate on the future of Zimbabwe in a post-Mugabe world, given that the country’s leader is now in his 80s, and ask him whether events in North Africa may have inspired Mugabe’s opponents in Zimbabwe. Listen to the Wonkcast to hear his views on what might happen. They are less cheery as I might have hoped.
Listen to this week’s Wonkcast for more commentary from Alan on unfolding events in Zimbabwe. If you have iTunes, you cansubscribeto get new episodes delivered straight to your computer every week.My thanks to Will McKitterick for his production assistance on the Wonkcast recording and for assistance in drafting this blog post.