Is the United States the next Zimbabwe?
A timely story from Zimbabwe today (via BBC) should serve as a reminder to the Plunge Protection Team and their friends in Congress that printing money doesn't solve problems, it just creates new ones:
Zimbabwe's central bank is to introduce new higher-denomination banknotes in an effort to ease the critical shortage of cash in the country.
Zimbabwe has been in economic decline for the past eight years, with annual inflation widely thought to be in excess of 50,000%.
The highest value note that will go into circulation on Friday is worth 10m Zimbabwean dollars.
But that is worth less than US$3.90 (£2; 2.60 euros) on the black market.
Is this a future we can look forward to here? A 10 MILLION DOLLAR BILL which is really worth only US$3.90?
The government's only response is to print more money - and that is seen as the main reason for the hyperinflation.
There have been no official inflation figures published for the past three or four months.
Yes, it may be crazy to compare the USA to ZImbabwe, but after today's stimulus news and the continual bailout news, how much different are we really? And what direction are we headed in?
Zimbabwe's Reserve Bank governor, Gideon Gono, has called on the business community not to increase prices every time new measures are taken to adjust the currency.
Hmmm.... Sounds eerily familiar.
