Hyperinflation: 1.1 million percent!

The other day I came across the information that our inflation rate has crossed into double digit. Considering the vicious price hike one can easily surmise that inflationary pressure on our economy is rising. For a nation of over 150 million people the statistics is vital. While we have millions in population Robert Mugabe's Zimbabwe has it in economic plight, with hyperinflation crossing the million mark. It is now 1.1 million percent!

Why should it happen to Zimbabwe, a country nearly thrice the size of Bangladesh, with an area of 390,580 sq. km., and with a much smaller population of 12 million people? The country is rich in mineral resources, with coal, chromium, asbestos, gold, nickel and copper.
Zimbabwe, once Southern Rhodesia and a British colony, came to international spotlight with the unilateral declaration of independence (UDI) by its white minority ruler Ian Smith in 1965. Mr. Smith defiantly carried on for over 14 years, beating international sanctions till a negotiated settlement returned power to the black majority in 1979.
Zimbabwe African National Union-Patriotic Front (ZANU-PF) leader Robert Mugabe was installed as the first prime minister of the new nation Zimbabwe. With a vibrant and diversified economy Zimbabwe started as a bright promise in Africa. But the leader blighted the prospect. Right from the beginning he showed an unrelenting trait of bullying the opposition. The first to submit was Joshua Nkomo of Zimbabwe African People's Union (ZAPU). He became the president in 1987, and since then he has trashed many a poll.
The latest being the one from which he scared his opponent Morgan Tsvangirai of MDC into quitting the polls. In his characteristic hauteur Robert Mugabe disparaged the power of ballot by saying: "We are not going to give up our country for a mere X on a ballot. How can a ballpoint pen fight with a gun?" His ranting pales into insignificance in comparison to the devastation he has wrought on the Zimbabwean economy.
During the last five years Zimbabwe has experienced a catastrophic collapse of its economy, presided over by the authoritarian and inept rule of its president. The rate of inflation was 32% in 1998, which kept going up and up and at the end of June it stood at staggering 1.1 million percent. The short list of ills that set the rot includes reckless spending, thuggish land seizures, disruption of farm output and flight of foreign capital.
As a result of the misrule the economy started contracting, stagnation set in, and economic growth and national income fell. The Zimbabwean government resorted to printing money to finance mounting national debt. The currency started losing its value, causing prices to rise. The cost of production was more than the prices the goods fetched. Shortage of supply was the natural outcome.
Government price controls further compounded the crisis. Suppliers lost the incentive to supply at government rate. Shortage became even worse. The Zimbabwean government's answer to the crisis was to print more and more money. The inflation became uncontrollable and soon it reached 1.1 million.
The economy contracted to the level of 1953. Maize production fell by three-quarters. A country which was an exporter of food was surviving on food aid. Half the country faces food shortage. One quarter of the population has fled Zimbabwe. A national hero that Mugabe is responds by predictably finding foreign hands behind the crisis.
Another hyperinflation in a different time and in a different country produced a national leader who plunged the world into a conflict that took millions of lives. Germany surprisingly surrendered when the war was deadlocked in the Maginot Line. It brought the end of World War I. Many Germans saw a Zionist hand behind it. A feeling of national betrayal kept on simmering till it found voice in incandescent haranguing by Adolph Hitler.
Much to the woe of Germany, the armistice signed placed a heavy load of reparation payment on it. The post-war German government was reluctant to pass on the burden to the German people. Germany faltered with reparation payment and France retaliated by seizing the industrial area of Ruhr.
The German economy fell into crisis, and was forced to pay more for its imported goods. The government, hit by shortage of funds, started printing money. There was a time when Germans had to buy a loaf of bread with a sack-load of money. The inflation stood at 3.25 million percent during the worst time of the crisis. German angst was looking for a leader to fulminate against national betrayal and the foreign bullies. Adolph Hitler became the Fuehrer!
Hyperinflation is the offspring of misrule. Profligate and tyrannical rulers subordinate economy to political will. It is the vehicle they ride to perpetuate their personal rule. They live desperately. And desperation knows no discretion. The end should always serve them. If that means driving the country to the brink, let it be. But the economy has many tongues. They speak of the woes of misrule.