In the department of “what could possibly go wrong?” we have the following headline: “Zimbabwe is planning to print its own ‘U.S. dollars’”
Shockingly, given the great stewardship of President Mugabe, Zimbabwe is once again facing an economic crisis. The article reports that “the government is asking for more than $1 billion to feed millions that are in dire need of food aid.” Things have gotten so bad that the “government is selling wildlife from its national parks to game reserves to scrounge up some cash.” [I know where they could have found at least some of that money without selling wildlife. See here and here.]
Zimbabwe has a checkered history with monetary policy. In 2008, inflation reached 89.7 sextillion percent a year! In response, “the country has officially used nine currencies, including the U.S. dollar, the euro, the South African rand, the Indian rupee, the British pound and the Chinese yuan.”
So what’s the plan with printing US dollars? Perhaps not surprisingly, details are not very forthcoming. The Central Bank governor claims they will be “bond notes” although it’s unclear why anyone would voluntarily buy a bond backed by the Zim government. It’s also not clear if they would be identical to US dollars. If they were, I think Zimbabwe would have an additional problem on its hands!