Belatedly, Zimbabwe recently declared its currency, the Zimbabwe dollar, worthless. The marketplace recognized the worthlessness of the Z$ in 2009, when the Zimbabwe government adopted the US dollar as its main currency. Account holders with Z$ balances of zero to Z$175 quadrillion will be paid a flat US$5. A “quadrillion” has fifteen zeros.
In the US only a few decades ago, “trillions of dollars” was infrequently used, “billions of dollars” measured our national debt and being a “millionaire” meant being someone of substance. Now you to be a “billionaire” to get another person’s attention. The devaluation of the Z$ and the US$ are the results massive money creation.
Zimbabwe once boasted one of South Africa’s most productive economies, but with the election in 1987 of socialist Robert Mugabe Zimbabwe’s fate was sealed. Mugabe campaigned on a “wealth redistribution” platform. (Think “income inequality gap” presently talked about by American socialists.)
Guaranteeing Zimbabwe’s fate was Mugabe’s land reform program that led to forced-seizure of white-owned farms in 2000, which resulted in the collapse of the crucial agricultural sector. Opposition to Mugabe’s land reform led to human rights abuses, and eventually the West imposed sanctions against Zimbabwe, but to no avail. Zimbabwe was on its way to ruination, led by massive money creation.
In the end, the Reserve Bank of Zimbabwe printed Z$100 trillion notes that became worthless as fast as the ink dried. Sadly, that is the history of paper money: it is printed until it is worthless. It’s only a matter of time for the US dollar.