Wednesday, May 10, 2006

Mugabe: Your day is coming.

The great liberal economist Ludwig von Mises once said that only government can take two valuable commodities like paper and ink and combine them into something totally worthless. Having lived through the Weimar inflation he knew what he was talking about. The corrupt dictatorship of Zimbabwe is now repeating the disaster.

The New York Times reports that a roll of toilet paper in Zim dollars costs $147,750. Last time I was in Zimbabwe you could buy a house for that. Now it only buys one roll of toilet paper. The country is destroyed. No surprise. Mugabe is a vicious tyrant who has ruined a beautiful country. I still remember the cruise I took on the Zambezi at sunset with some fondness. But now people are starving. Socialism at work.

Mugabe started the printing presses going a few years ago. So what we are seeing is the same intentional inflationary trend projected out a few years. Now if you don't understand the process of inflation read this from the Times.

Inflation, about 400 percent per year last November, edged over 600 percent in January, but began to soar after the government revealed that it had paid the International Monetary Fund $221 million to cover an arrears that threatened Zimbabwe's membership in the organization.

In February, the government admitted that it had printed at least $21 trillion in currency — and probably much more, critics say — to buy the American dollars with which the debt was paid.

By March, inflation had touched 914 percent a year, at which rate prices would rise more than tenfold in 12 months. Experts agree that quadruple-digit inflation is now a certainty.

I know it is old fashioned but inflation is a monetary phenomena caused when government prints paper money with no value. Speed up the printing presses and you speed up inflation. It is a government imposed con game where the government inflates the supply of money by print more and then spends the extra money before if drives down the value of the money already in circulation. It is a means by which government confiscate wealth without resorting to taxation. The paper does note: "Critics say that Zimbabwe's rulers are oblivious to such suffering — last year, Mr. Mugabe completed his own 25-bedroom mansion in a gated suburb north of town, close by the mansions of top ministers and military allies."

The day will come, hopefully soon, when Mr. Mugabe will get what he deserves. Like Mussolini hanging from a lamppost his end is coming -- if he doesn't destroy the entire country first.