000,000,000,000

Zimbabwe strikes out on its inflation problem. Read it here.

Zimbaweans flush with cash

It's all here.

Even a ZWD 1,000 note or two is a cost effective alternative to a sheet of toilet paper.

40 million percent inflation

The official annualized rate of inflation in Zimbabwe in June was 11.2 million percent.

"The actual figure could be high as 40 million percent in June," said independent economist John Robertson.

"The actual figure for July could be as high as 300 million percent, while for August it could be 600 million percent," he added.

Zimbabweans' solution? Use gas coupons as currency.

Shortages in everything

There's a shortage of large bills in Zimbabwe. The newly introduced $1 billion note will buy 4 oranges.

Maybe they should just print more money. Without withdrawing smaller bills from circulation. Heh.

All of inflation's little parts

Very cool graphic showing the inflation pie. For the U.S., that is. It would be nice if the UAE had inflation data like this.

Via Growthology.

Speaking of inflation, Zimbabwe, you ain't seen nothin' yet. Perhaps the Mugabe's Obesity Tourism Strategy isn't working. (Thanks for that one, Juandos.)

Export bans

When governments ban exports it has the temporary effect -- sometimes vanishingly temporary -- of leaving more on the domestic market and thereby reducing the domestic price. But the long run effect is undercut the incentive of producers to invest in that market, and -- more broadly -- and, because bans harm the government's reputation not to behave opportunistically, to undercut incentives to invest throughout the economy.

Yet governments still do it, and things like it, in an effort to control prices.

Lastest cases in point:

1. India's rice ban. (The story also details the UAE's price ceiling on rice -- another attempt to violate economic laws akin to the law of gravity. For more about UAE concerns see the Gulf News.)

2. Argentina's tax on agricultural exports. (More recent story here.)

India is led by an economist who had been doing a great good job of instituting market-based reforms. Indeed, one of the reasons the price of rice is up is that domestic demand has grown as the Indian economy has expanded. (Likewise, China's economy.) Another reason is that the cost of transporting rice is up due to fuel costs -- which can be traced back to growing demand for oil in reformed economies.

Is India's leader now following the lead of another leader with an economics degree? I'm referring to Robert Mugabe. One of the many things he's done to destroy Zimbawe's economy is to try to control prices.

Mugabe-cide Economics

Some things in life you just can't buy. Like inflation statistics in Zimbabwe.

BBC:

Zimbabwe's chief statistician has said it is impossible to work out the country's latest inflation rate because of the lack of goods in shops.
"There are too many data gaps," the Central Statistical Office's Moffat Nyoni told state media.

Many staple goods are often absent from shop shelves after the government ordered prices to be halved or frozen in a bid to stem galloping inflation.

September's inflation rate was put at almost 8,000%, the world's highest.

Other reports suggest the rate could be at near 15,000% and the International Monetary Fund had warned it could reach 100,000% by the end of the year.

Mugabe-cide economics would be funny if it wasn't so sad. From an earlier BBC report:

People are starving. The evidence is in the hospitals where tiny, wizened babies lie dying in their cots while their mothers look on helplessly.

One mother cradles a child who is losing her hair and her skin, a sign of the most advanced form of Kwashiorkor or vitamin deficiency.

It is certainly the first time I have seen this condition in 20 years of reporting on the developing world.

"Zimbabwe once offered the most comprehensive medical service in Africa," a doctor explains. "It is now becoming a textbook case of medical horror."

Dictators and unintended consequences

When did Mugabe become his most destructive? Did he dig in his heels when he saw what happened to Pinochet?

Perhaps a golden parachute would be a better solution -- a la Charles Taylor or Idi Amin. Or is it their example that Mugabe is following? The crazier I become the bigger the payoff?

An economics degree can be dangerous

15,000%? The forecast rate of inflation for Zimbabwe this year.

Solution? Print more money to keep inflation down.

Expert? President Mugabe, economics degree holder (London University).

Read it at The Times.

The law of demand and supply

It's no different than trying to suspend the law of gravity.

Price controls in Venezuela:

Meat cuts vanished from Venezuelan supermarkets this week, leaving only unsavory bits like chicken feet, while costly artificial sweeteners have increasingly replaced sugar, and many staples sell far above government-fixed prices.

President Hugo Chavez's administration blames the food supply problems on unscrupulous speculators, but industry officials say government price controls that strangle profits are responsible. Authorities on Wednesday raided a warehouse in Caracas and seized seven tons of sugar hoarded by vendors unwilling to market the inventory at the official price.
...
Shortages have sporadically appeared with items from milk to coffee since early 2003, when Chavez began regulating prices for 400 basic products as a way to counter inflation and protect the poor.

Yet inflation has soared to an accumulated 78 percent in the last four years in an economy awash in petrodollars, and food prices have increased particularly swiftly, creating a widening discrepancy between official prices and the true cost of getting goods to market in Venezuela.

"Shortages have increased significantly as well as violations of price controls," Central Bank director Domingo Maza Zavala told the Venezuelan broadcaster Union Radio on Thursday. "The difference between real market prices and controlled prices is very high."
...
Mr. Mugabe, who blames a Western plot against him for Zimbabwe’s problems, has rejected all calls for economic reform. The government refuses to devalue Zimbabwe’s dollar, which fetches only 5 to 10 percent of its official value on the thriving black market. As a result, foreign exchange to buy crucial imported goods like spare parts and fertilizer has effectively dried up.

To discover the root of these problems, Mugabe and Chavez need to take a look in the mirror.

UDATE: Be careful what you wish for. A commenter reports an unintended consequence of the "Dubai's laudable rent cap." Landlords are going condo and selling units out from under the feet of renters. (Giving the renters first option, of course.) I have not seen confirmation of this report in the mainstream. media.