With quantitative easing all the rage around the world, the following quote from the Sovereign man is worth considering:
“In early 2009, the government of Zimbabwe finally capitulated– they realized they simply couldn’t print enough zeros in order to keep up with the hourly price changes in the country… and in the blink of an eye, they did away with their currency.
Today, Zimbabwe no longer has its own currency. The country effectively deals in cash only, in foreign currencies. Merchants take whatever they can get– US dollars, euro, South African rand, etc.
When the government abandoned the currency, though, there was no warning. Anyone holding Zimbabwe dollars was robbed of their savings overnight– there was no national program to convert Zim dollars into something else, the currency simply became unusable.
Quite literally, people in Zimbabwe woke up in the morning and found whatever savings they were holding in cash and bank accounts was no longer a valid medium of exchange… and some folks lost everything.
I think there is an important lesson here: We can all observe the warning signs, and while there’s no need to rush into panicked reactions, measured preparations are critical.”
The Sovereign man also comments on Mugabe having already destroyed agriculture and mining. I couldn’t help thinking about the Australian government’s efforts with agriculture here and here. No need to mention the mining tax.
I guess Gillard’s socialism is manifesting itself in the same way as Mugabe’s. Not surprising given Australia and Zimbabwe were both relatively prosperous mineral and agriculturally well endowed countries. Hopefully Australians will wake up to the Gillard-Green government coalition before we get too much further down the Zimbabwean path. Gillard has no shortage of paving stones.