It takes a mighty big wheelbarrow of money to buy bread in Zimbabwe today. To make things more convenient, Zimbabwe's government has decided to issue a new currency denomination for everyday use - the Z$100 trillion note (yes, that's right, trillion). Now, Zimbabweans need the wheelbarrow for the calculator needed to handle all those extra zeroes.
Zimbabwe is in an economic mess because its totalitarian leader decided the best way to maintain power was to reshape the national economy according to the passions and fads of his people. Complaints arose that large, white-owned farms continued to flourish, so he expropriated them. When the economy shuddered, he tried to make up the loss with government spending. And when he couldn't tax enough, he started printing lots of money.
In some ways, Zimbabwe's errors are being repeated in the U.S. In just four months, the Federal Reserve has more than doubled our nation's monetary base, setting the stage for historically unprecedented inflation. This has been in reaction to a serious economic downturn brought on by government policies that practically bribed us all to bid up house prices.
Our new president would do well to stop the government's financial hemorrhaging and let our economy find a new equilibrium by itself. Our problems have been exacerbated by an overly active government. A closer proximity to capitalism should be prescribed as the cure.
Byron Schlomach, Ph.D, is director of economic policy at the Goldwater Institute.
Reuters: "Zimbabwe to launch 100 trillion dollar note"
The Atlantic: "How to Kill a Country"
St. Louis Federal Reserve: Adjusted Monetary Base
Fortune: "Obama's expensive leap of faith"