From the Times:
Price inspectors and police, sometimes armed, descended on supermarkets in the Zimbabwean capital to enforce price controls. Their intervention followed the order issued by Mr Mugabe last week in an attempt to get to grips with rampant inflation.
The result was chaos. Bags of sugar burst open in struggles between shoppers who had streamed into supermarkets. Computerised checkouts jammed, unable to cope with the rapid price changes. There was further confusion when officials forced their way into storerooms and declared stock items to be “illegal hoarding,†and ordered all goods to be moved on to supermarket floors.
At one store where the manager tried to restrict sales to two of each item, one worker was seriously injured in the mayhem. Annual inflation reached 4,500 per cent in May, the result of nearly three decades of economic policies devoid of prudence or forethought.
Economists estimate that the real figure is closer to 10,000 per cent. Prices are more than doubling every month as suppliers and retailers struggle to keep up with the decline of the currency, which at lunchtime yesterday traded at Z$260,000 to £1.
With hard currency earnings now almost negligible, the central bank buys foreign currency at black market prices from finance houses and prints mountains of increasingly worthless currency to pay them.
Mr Mugabe, however, asserts that inflation is the fault of “profiteering†by retailers in league with the British Government to oust him.
Last Tuesday the Government published an edict cutting the price of 26 essential items by up to 70 per cent. Two days later another edict imposed price controls on a much wider range of goods. “Reports are that some businesses are resisting this order,†said Obert Mpofu, the Industry Minister. “We will arrest them.â€
Mr Mugabe’s attempt to crush inflation reflects a growing sense that economic collapse will bring about the end of his 27-year rule.
The Government has been enraged by remarks by Chris Dell, the outgoing American Ambassador, who predicted that Mr Mugabe would be out of office within six months. No regime “has survived five-digit inflationâ€, said Mr Dell. The Government was “affecting regime change on itself,†he added.
Mr Mugabe issued a warning that violation of price controls would be dealt with forcefully. “This nonsense of price escalation must come to an end,†he said. “We will never admit to defeat by British tactics.â€
{ 9 comments }
Laws of Economics – 1 Laws of Mugabe – 0
This is easy. Increasing the amount of money and credit IS INFLATION. Increases in the nominal prices of goods is a result of inflation.
One can only hope the Inflationators Ben, George and Congress will come to understand this simple principal.
Sometimes a ruler must challenge the forces of nature so that men are reminded of the true King.
This is what one of my teachers told my class that the Chilean people had to do because merchants wouldn’t “cooperate” with price controls (that is exactly the word she used!). That’s when I figured out there can be very little of the “economist” in the term “political economist.”
I don’t think Mugabe is particularly concerned with the laws of economics. He could understand the cause-and-effect relationship between printing and these riots. The only rational conclusion is that he DOES understand, but just doesn’t care.
The price-raising effect of inflation does not kick in until the cash propagates throughout the economy. The later users of the bills feel the effects of the inflation the most, but the first user of the money gets the full pre-inflation value of it.
Actually, since we cannot measure the price level (you know how inaccurate the CPI is!), Zimbabwe for all we know is not experiencing any inflation at all. How can we really trust any measure of price inflation? Hmmm? I am surprised that no one has mentioned this given the hostility some readers have to price indicies.
Good assertion Tom.
If they are so confused about the prices and rate of inflation it would be imposable to take any of these facts as facts.
The fact you cannot measure the “price level” does not mean that individual prices are not increasing.
Cheers, from a citizen of the next Zimbabwe, Venezuela. We’re running at only 24% annualized price inflation, and accelerating.
Wait, wait!! Let’s export some of those left-over WIN (Whip Inflation Now) buttons in storage in the basement of the White House.
Seriously, this hyper-inflation is truly an evil instrument of stealing, destroying, and killing.
Wishing the best for the citizens of Zimbabwe.
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