10 Zeros Knocked Off Zimbabwean Dollar Amid World Record Inflation

Zimbabwe has revalued its currency in a bid to ease the huge inflationary pressures - the highest in the world - that are causing mass destitution in the country.

The Guardian (UK) is reporting that the move, which amounts to simply knocking ten zeros off the end of its notes, was forced because bank machines could not handle the new Z$100bn note that was issued recently. That note could still not buy a loaf of bread. As an inflationary device the move is close to worthless. With the rate of inflation unaffected these new notes will be devalued as quickly as the old. Economist John Robertson said:

This is attending only to the symptoms of the problem. What cost 50p at the beginning of the month could cost £10 by the end. The real problem is the scarcity of everything driving up the prices. The government has not only caused the scarcities but damaged our ability to fix the problem

The reason inflation is so high in Zimbabwe is that the government lost control of it long ago, and businesses, seeing escalating prices driven by poverty and scarcity all around them, have constantly driven them higher. Mugabe blames these profiteers, along with western sanctions, for Zimbabwe's plight. Most, if not all, global economists blame his land grab from white farmers. This policy of land reform saw political supporters and soldiers with no farming expertise given the land from experienced whites. The result was predictably disastrous, with the former bread basket of Africa quickly becoming a net importer of food. Zimbabwe now has the lowest life expectancy in the world. Since his popular election in 1982, the ex-freedom fighters popularity has gradually diminished as poverty has become the norm. This latest attempt at economic revival seems unlikely to halt that trend. The protracted general election earlier this year shows little sign of reaching a conclusion any time soon. Thabo Mbeki, the South African President, is brokering power sharing talks between Mugabe and Morgan Tsvangirai, the MDC candidate who also claims popular mandate to rule. The two men, who are undoubtedly fearsome enemies, shared a 90 minute dinner as they tried to thrash out a deal recently, but it seems an unlikely partnership to work for long.