![\"Trillion](\"https:\/\/i0.wp.com\/michelsanti.blog\/wp-content\/uploads\/2018\/10\/Trillion-Dollar-Bill-300x131.png?resize=300%2C131&ssl=1\")
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Zimbabwe is no longer that country where prices would double basically every six hours, nor is it that nation where wheelbarrows were mainly used to transport banknotes in order to buy groceries. Having now vanquished hyperinflation, Zimbabwe is a country where today something else reigns\u2026deflation! Whereas a few years ago its inflation rate had reached the dizzying heights of 80 billion % per year, for a bit less than a year now all it has done is come crashing back down. A great feat for Zimbabwe? A calamity, rather, since now at -3.30% the country is suffering one of the world\u2019s worst deflation crises. This is therefore very bad news since deflation is in fact the most tangible manifestation of its economic liquefaction. Zimbabwe \u2013 having narrowly avoided being blown away by hyperinflation a dozen or so years ago \u2013 is therefore currently going through agony due to a nasty decline in its prices, which reflects the braindead nature of its consumerism and investments.<\/p>\n
However, deflation \u2013 the supreme evil otherwise more insidious than hyperinflation \u2013 isn\u2019t taking its sources there for reasons similar to the implosion of a real estate bubble combined with the demographic decline that has been rampant in Japan for nearly twenty years. Paradoxically, this new crisis affecting Zimbabwe arises from last spring\u2019s abandonment of its own currency in favour of adopting the American dollar as its one and only medium of exchange. Having therefore had to convert every 175 quadrillion (175,000,000,000,000,000) Zimbabwean dollars to 5 US dollars, the population was at first won over by this radical change, whose most concrete manifestations were grocers\u2019 being well stocked once again, stabilised prices and salaries, and cash machines spitting out 20 and 50 American dollar bills. The sad history of their economy vis-\u00e0-vis hyperinflation serves as a case study for all students of economic science since it appears to belong to another time, and came about thanks to unprecedented growth conditions for the nation. <\/p>\n
Until Zimbabweans \u2013 and their leaders \u2013 realise that the dollarisation of their economy necessarily involved a loss of sovereignty since their national central bank was incapable of printing US dollars. Without this privilege of monetary creation allowing it to bail out a still fragile economy, the Mugabe regime therefore had to resign itself to watching \u2013 powerlessly \u2013 businesses lower their prices in order to attract regular customers, and reduce their investments in order to make up for their losses. It is a vicious cycle, induced by a spiral that has been exacerbated following a sudden rise of the Greenback, notably against the South African Rand, Zimbabwe\u2019s main commercial partner. In fact, the Rand\u2019s fall from grace in relation to the US dollar (now the \u201cofficial currency\u201d of Zimbabwe) has finished off what was left of Zimbabwe\u2019s national production, flooded by South African merchants who have been made very competitive by the take-off of the American currency.<\/p>\n
The vulnerability of a dollar national currency\u2019s indexation \u2013 indeed, of the pure and simple disappearance of a national currency to make way for the Greenback \u2013 is therefore very greatly amplified and reinforced when the guiding currency (in this case the US $) is appreciating, as the dollar has been doing relative to almost all the emerging (or developing) nations\u2019 currencies for several months. The room for economic manoeuvre for the largest African economies like Nigeria, Angola, Ethiopia and of course South Africa, has because of this become nearly non-existent since their reserves are visibly melting away from having had to defend the value of their national currencies, recover their economies, or simply because they have aligned their fate with a currency that will only appreciate, such is the case with Zimbabwe. <\/p>\n
The liquefaction of the prices of raw materials and petrol products \u2013 often the country\u2019s only resources \u2013 is also currently inducing a considerable dearth of dollars, which even international companies based locally, like General Electric or Coca Cola, are being confronted with. The rise in American interest rates \u2013 while prices are collapsing and Europe and China stagnate \u2013 therefore prefigures the collapse of multiple economies on the African continent as they now cannot find enough dollars to finance their growth, pay off their debts, or quite simply to pay for their food importations in order to feed their peoples! Already the banking establishments \u2013 including in big countries like Nigeria \u2013 are preventing their clients from withdrawing or spending more than $100 a day, for lack of liquid cash. <\/p>\n
At the moment contained and limited to Africa and Latin America, this shortage of American dollars greatly risks turning into a global massacre if it might one day infect Asia.<\/p>\n","protected":false},"excerpt":{"rendered":"
Zimbabwe is no longer that country where prices would double basically every six hours, nor is it that nation where wheelbarrows were mainly used to transport banknotes in order to buy groceries. Having now vanquished hyperinflation, Zimbabwe is a country where today something else reigns\u2026deflation! Whereas a few years ago its inflation rate had reached…<\/p>\n","protected":false},"author":4,"featured_media":13668,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"give_campaign_id":0,"_crdt_document":"","_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"mc4wp_mailchimp_campaign":[],"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"_wpas_customize_per_network":false,"jetpack_post_was_ever_published":false},"categories":[648941297,648941296,648941295],"tags":[],"class_list":["post-13667","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-africa","category-emerging-markets","category-us-dollar"],"yoast_head":"\n