Zimbabwe introduces $50 billion note

[fccool]

HARARE, Zimbabwe (CNN) -- Zimbabwe's central bank will introduce a $50 billion note -- enough to buy just two loaves of bread -- as a way of fighting cash shortages amid spiraling inflation.

Zimbabwe's dollar is virtually worthless, with foreign currency now being used to purchase basic items.

The country's acting finance minister, Patrick Chinamasa, made the announcement in a government gazette released Saturday.

Although Chinamasa did not give the date on which the $50 billion and new $20 billion notes would come into circulation, an official at the Reserve Bank of Zimbabwe said the notes would be distributed to all banks by the end of Monday.

Zimbabwe is grappling with hyperinflation now officially estimated at 231 million percent, and its currency is fast losing its value. As of Friday, one U.S. dollar was trading at around ZW$25 billion.

When the government issued a $10 billion note just three weeks ago, it bought 20 loaves of bread. That note now can purchase less than half of one loaf.

Realizing the worthlessness of the currency, the RBZ has allowed most goods and services to be charged in foreign currency. As a result, grocery purchases, government hospital bills, property sales, rent, vegetables and even mobile phone recharge cards are now paid for in foreign currency, as the worthless Zimbabwe dollar virtually ceases to be legal tender.

http://www.cnn.com/2009/WORLD/africa/01/10/zimbawe.currency/index.html

[Gerr]

I have become acquainted with a physician from Zimbabwe. Everything you have said above is true.

I wonder how long before we are in the same predicament, now that our gov't has started printing

money by the trillions to finance our trillion dollar deficit plus the trillion bailouts, plus

the nearly half a trillion interest on the outstanding debt?

[fccool]

Time will tell, but I doubt it will last long. Our monetary system is designed with exponential growth in mind. I.E. in order for people to keep up with interest payments and not default... new money has to be created and landed. If you study exponential nature of our monetary system.. . right now we are at the point when the rate of increase may be the same... but the value increasing is large enough to make some real damage.

Just by comparison, it took merely a year to double the entire US money supply. We don't see the effects yet, but I believe it's coming.

http://www.ft.com/cms/s/0/16c7ceba-dcbe-11dd-a2a9-000077b07658.html?nclick_check=1

As trust in government bonds fades, as we see it beginning to, the governments around the world will have a choice between raising taxes, or printing money. So far, we've seen both of these being done in the US. Methinks more to come.