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Helicopter Ben is considered the great inflator, but he’s no match for Gideon Gono, central bank governor of Zimbabwe. Bernanke is worshiped in the US, but the Zimbabwean people have been angry with Gono. FULL ARTICLE by Doug French
Someone should send this article to Sumner. He actually held up Zimbabwe as an example of the power of the feds to create inflation. Of couse, Sumner thinks price inflation is the answer to every problem, not caring that it makes everyone poorer even as ngdp rises.
“The things that we buy — the groceries at home, the things we get for our two children — we have to buy immediately, as soon as we get the money,” according to one woman. “We know that if we wait a bit, the prices are going to go up again. If we wait another week, we will not be able to afford anything.”
I think this is exactly what stimulus is supposed to do… You see, deflation IS the enemy. If prices are going down, then consumer purchasing will drop. Who will buy things today when they can wait for tomorrow and get goods at a lower price? It’s better if everyone just runs around in a scrambled panic. That’s FAR more productive.
I don’t think this is entirely true. While it may be true of less necessary items, consumables necessary for a certain standard of living will probably be purchased even if it’s expected that at some point in the future prices will drop. For example, consumers continued to buy gasoline after the opening days of the recession, even though the price per gallon decreased by over a fourth in some areas. Furthermore, for less necessary consumables it also has to do with how much the price is expected to decrease, and when the price is expected to decrease.
With that said, monetary deflation is dangerous—and is in a different category than secular price deflation—but in a recession a fall in credit is the natural outcome of the revelation of malinvestment, as entrepreneurs default on their loans and the demand for money increases. It’s not useful to inflate the money supply because that would be tantamount to fueling more malinvestment.
Finally, it should be considered that savings—or capital accumulation—is what drives an economy, not consumption.
Most visitors to this site have probably seen this but, if not, check out this short video titled Gold for Bread which shows some of the results of Gono’s monetary prowess.
I love the hubris of our beloved leaders. Oh, how Ben “saved” us. How Gono “saved” Zimbabwe. Really, all these two destined-for-hell-lackies did was to “save” the ones they serve. At the cost of millions impoverished, but who cares? Really, did Stalin once blink? Did Mao? Why should Ben or Gono? Goldman Sachs and Mugabe made trillions – that’s all that matters. Peasants are cannon fodder.
On another note, only in the effeminate West is it a male ‘bragging right’ to say his wife makes him do dishes. Wow, Ben, you are sooooo awesome for doing the dishes. Does your wife make you file her nails too, sissy?
I like the comparison of the lifestyles of the two central bank heads. Moral of the story: If you want to sell your soul, do it in a third-world country. You get a better price for it.
Prices for computers have dropped steadily for years. Have purchases also declined?
Capitalism requires capital, which requires saving. Spending like mad is insane.
I love the brilliant strokes French has crafted in this piece. The comparisons and laughable concepts of these two omnipotent and ominous banking heads are phenomenal! Almost fell out of my chair when I read the annual inflationary rate of Zimbabwe, sextillion can’t even be fathomed when said aloud. It is truly tragic that an illustrious country like Zimbabwe has been brought to it’s knees by such poor and inane policy; this serves as a prime example of the dangers that come with fiat currency and central banking.
Doesn’t the Fed have to return its profit to the Treasury, above what is it 5% I believe?
Zimbabwe inflation is now -0.7%, and the central bank has now been made defunct- following the demise of the Zimbabwean dollar, a precursor of Gono’s demise. Gono if anything is a hero ( albeit unintentional) in helping to enlighten the Zimbabwean people of the folly of Keynesian economics, indeed a street vendor selling sweets in the streets of harare has a better grasp of monetary inflation than Bernanke. Gono’s folly has resulted in a Misesian paradise, free trade, no exchange controls and no monetary policy. Whether this will last, the jury is still out- but the street vendor/voter does not want to see the Zimbabwean dollar.
The number of legitimate comparisons of the United States with Zimbabwe are growing more numerous every day. Americans would do well to familiarize themselves with Zimbawean history, so as to portend what their future might look like.
A certain irony that Gono used to work for a fertilizer company and now Bernanke does.
That’s kind of… abrupt.
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