Why Not Just Print More Money?
This Day in History: Zimbabwe officially abandons the Zimbabwean dollar as its official currency on this day (April 12) in 2009. The Zimbabwean dollar was introduced in 1980 to directly replace the Rhodesian dollar (which had been introduced in 1970) at par (1:1), at a similar value to the US dollar. Over time, hyperinflation in Zimbabwe reduced the Zimbabwe dollar to one of the lowest valued currency units in the world.
Zimbabwe is now best remembered as the country that clocked up a jaw-dropping inflation rate of 231 million percent a year. How did it get to this ridiculous inflation rate? The same way it always happens, by rampant money printing.
"Why does the state persist in continuing with such an obviously losing game? There are a number of possible explanations and the answer is some combination of these.
Those in control are shielded from the effects.
Protests are stamped out by a well-paid police and military.
The government dare not admit that it’s not in control of the situation and hopes that things will eventually 'turn around.'
While the above are undoubtedly true, the underlying cause of all inflationary situations throughout history is economic ignorance.
A Los Angeles Times article quotes an anonymous staff member in the Zimbabwe plant that prints the multi-billion dollar bank notes: 'People are aware that printing money is also one of the causes of inflation.' Right there you have the problem. The fact is that printing excess money is not 'one of the causes.' It is inflation, as any dictionary will display to anyone who consults it. Rising prices are then the result." Source
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