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When Money Destroys Nations: How Hyperinflation Ruined Zimbabwe, How Ordinary People Survived, and Warnings for Nations that Print Money
The collapse of the Zimbabwe dollar in 2009 after years of rampant money printing is a frightening example of what lies in store for countries that resort to printing money to pay national debts, bail out banks and oligarchs, and enrich political elites. When Money Destroys Nations tells the gripping story of the disintegration of the once thriving Zimbabwean economy and the inspiring and tragic accounts of how ordinary people survived in turbulent circumstances. Philip Haslam and Russell Lamberti give a straightforward and revealing account of the causes and consequences of Zimbabwe's hyperinflation. Zimbabwe's economic collapse is not an isolated tragedy. It holds lessons for all countries and for all political leaders tempted to take illusory and perilous shortcuts to prosperity. Zimbabwe’s lessons must not be ignored. This is the story of When Money Destroys Nations. "Haslam and Lamberti have produced a fascinating, accessible account of how Zimbabweans actually lived (and died) during the world’s second-highest hyperinflation..." – Professor Steve H. Hanke, Johns Hopkins University
280 pages, Kindle Edition
First published March 20, 2015
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Displaying 1 - 30 of 32 reviews
June 14, 2020
I didn't realize what quantitative easing and hence, hyperinflation can do to a country and its citizens until I read this book. I can not imagine people standing in the queue with suitcases full of notes to buy very simple stuff like Milk, the cashier counting these notes, and the rate of goods increasing while one is waiting in the queue.
It also explains why quantitative easing ( QE) is very dangerous to countries that have weak currencies Many developed nations have done quantitative easing without much impact as their currencies are strong but someday, quantitative easing can hit these countries as well. As the book explains, QE becomes habitual to both - Governments and the public. This really explains why stock markets are rising worldwide with QEs being offered in 2020 to deal with Corona Pandemic.
This book also explains very well how US benefited from the US Dollar as the world currency and what US has done to maintain its currency status.
It also explains why quantitative easing ( QE) is very dangerous to countries that have weak currencies Many developed nations have done quantitative easing without much impact as their currencies are strong but someday, quantitative easing can hit these countries as well. As the book explains, QE becomes habitual to both - Governments and the public. This really explains why stock markets are rising worldwide with QEs being offered in 2020 to deal with Corona Pandemic.
This book also explains very well how US benefited from the US Dollar as the world currency and what US has done to maintain its currency status.
August 13, 2023
This was a very good book covering the theory of money, practical financial systems and the human cost of money production. It also includes some tips about how to prepare for and survive during a hyperinflation.
The story of Zimbabwe is in one sense very well known and yet mysterious. Many Zambians know what happened there but would not be able to explain the chain of events that led to hyperinflation and mass emigration. That is one of the strongest points of this book. It carefully lays out the series of events that almost inevitably led to economic collapse.
The book spends some time to tell personal stories about how ordinary people survived during the worst of the hyperinflation. These stories go a long way in showing a crucial link between money and modern civilization.
The economic theory at both ends of the book makes it more academic than it needed to be. I believe this will put off a lot of people. The book would have been more powerful and readable if it only had the politics and the human stories. Squabbling between Austrian and Keynesian economics is unlikely to keep a lay reader glued to a book about Zimbabwe.
On the whole, this book helped me consolidate ideas that had been floating around in my head. And to make links that I never thought of before. I would recommend it anybody interested in African history, economics and politics.
The story of Zimbabwe is in one sense very well known and yet mysterious. Many Zambians know what happened there but would not be able to explain the chain of events that led to hyperinflation and mass emigration. That is one of the strongest points of this book. It carefully lays out the series of events that almost inevitably led to economic collapse.
The book spends some time to tell personal stories about how ordinary people survived during the worst of the hyperinflation. These stories go a long way in showing a crucial link between money and modern civilization.
The economic theory at both ends of the book makes it more academic than it needed to be. I believe this will put off a lot of people. The book would have been more powerful and readable if it only had the politics and the human stories. Squabbling between Austrian and Keynesian economics is unlikely to keep a lay reader glued to a book about Zimbabwe.
On the whole, this book helped me consolidate ideas that had been floating around in my head. And to make links that I never thought of before. I would recommend it anybody interested in African history, economics and politics.
July 16, 2020
I think this is only the second book in the finance category that I give 5 starts. My advice is that anyone should read this book, it's not technical, it's not for specialists, it tells a story and the lessons learned from it in a smooth and easy to understand way.
The book has three parts, in the first one it explains in basic terms of hyperinflation is and in the second part, it tells the stories of individuals living in Zimbabwe and how the life was affected everyday which helped me to relate to it. While the third and last part is about the similarities between that situation and the one that currently resides in the biggest economies in the world.
Remember well that Zimbabwe was once a prosperous country, the agriculture industry was very well established and productive that the country was called the "Bread Basket" of Africa as it was able to feed the whole continent.
The same events and inflation/hyperinflation also happened already in the past 20 years in Argentina, Venezuela, Syria, Greece, Lebanon and many others in almost the same exact manner so I guess it's totally worth reading.
The book has three parts, in the first one it explains in basic terms of hyperinflation is and in the second part, it tells the stories of individuals living in Zimbabwe and how the life was affected everyday which helped me to relate to it. While the third and last part is about the similarities between that situation and the one that currently resides in the biggest economies in the world.
Remember well that Zimbabwe was once a prosperous country, the agriculture industry was very well established and productive that the country was called the "Bread Basket" of Africa as it was able to feed the whole continent.
The same events and inflation/hyperinflation also happened already in the past 20 years in Argentina, Venezuela, Syria, Greece, Lebanon and many others in almost the same exact manner so I guess it's totally worth reading.
June 19, 2020
We all know how Zimbabwe once had trillion-dollar currency notes, but this book gives a more humane perspective to the statistical hyperinflation. Imagine you lived in Zimbabwe, worked all your life and saved 10 million for your retirement, and when you actually needed that money, those 10 million can't even buy a matchstick.
As suggested in the title; the book is divided into three parts. In the first part, the author talks about how bad political and economic decisions ultimately cascaded the downfall of the currency completely paralyzing a resourceful country like Zimbabwe. The second part has anecdotes of Zimbabweans who lived through the crisis; some heart-wrenching stories of poverty and also some hope instilling stories of sheer love and humanity. The third part is more of a warning about how other major countries also indulge in excess money printing, it especially focuses on United States. How if correct reforms are not undertaken a similar situation is just impending.
At the end of each chapter; there is a think about section and I couldn't help but notice the uncanny similarities with India. The language of the book is simple and devoid of any jargon; the author feels the power of language is often used by banks and governments to confuse the general public. he makes an effort so that he doesn't do the same. I also learned some completely new things like the Bretton Woods conference which made dollar the currency of the world and how the USA used the petrodollar system to maintain currency dominance over the world.
As suggested in the title; the book is divided into three parts. In the first part, the author talks about how bad political and economic decisions ultimately cascaded the downfall of the currency completely paralyzing a resourceful country like Zimbabwe. The second part has anecdotes of Zimbabweans who lived through the crisis; some heart-wrenching stories of poverty and also some hope instilling stories of sheer love and humanity. The third part is more of a warning about how other major countries also indulge in excess money printing, it especially focuses on United States. How if correct reforms are not undertaken a similar situation is just impending.
At the end of each chapter; there is a think about section and I couldn't help but notice the uncanny similarities with India. The language of the book is simple and devoid of any jargon; the author feels the power of language is often used by banks and governments to confuse the general public. he makes an effort so that he doesn't do the same. I also learned some completely new things like the Bretton Woods conference which made dollar the currency of the world and how the USA used the petrodollar system to maintain currency dominance over the world.
February 8, 2020
A good title for anyone wanting to look into a factual and contemporary account of how poor economic decisions from the top down can have devastating effects on the lives and basic needs of a country's most ordinary citizens in the 21st century.
The book's first part begins with technical concepts on economics but explained in a way not too puzzling to readers who may not come from such a background, laying out the groundwork for why certain concepts such as inflation, and quantitative easing, among many others, are flawed for an economy's balance.
The second part is more personal and anecdotal, recounting the ways Zimbabweans had to deal with the deprivation from their most basic of goods and how communities can shine in times of scarcity.
All in all a thought-provoking read to people who come from developing countries or may be experiencing the same sociopolitical and economical red flags leading to an impending economic downturn.
The book's first part begins with technical concepts on economics but explained in a way not too puzzling to readers who may not come from such a background, laying out the groundwork for why certain concepts such as inflation, and quantitative easing, among many others, are flawed for an economy's balance.
The second part is more personal and anecdotal, recounting the ways Zimbabweans had to deal with the deprivation from their most basic of goods and how communities can shine in times of scarcity.
All in all a thought-provoking read to people who come from developing countries or may be experiencing the same sociopolitical and economical red flags leading to an impending economic downturn.
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August 17, 2023Easy to read. Thought it would be academic but it wasn't. Adding peoples perspectives made it very relatable and close to home. What we see in the news isn't what is actually on the ground. I enjoyed myself (though it saddened me) and it was eye opening.
July 3, 2021
This book has been written in 2015, 5 years before the COVID crisis.
In a dramatic fashion, the author first describes causes for hyperinflation in Zimbabwe and wonders if the same can happen in the developed world. Haslam is worried, as after crisis of 2008, central banks of all economies went into money printing craze, increasing M1 money supply almost 3 times. 3 times until the COVID hit. Since early 2020 the supply of US dollars went up another 4 times (in a year! check this out - https://fred.stlouisfed.org/series/M1). If people were scared after 2008, what can we say now?
Because of the printing, lots of economists and investors see hyperinflation coming to the US. If this is really true, the mother of all crisis is ahead of us. Not all economists believe this will happen, but it is safe to say that we are currently part of one of the biggest economic experiments in history.
Personally, I am more optimistic and believe that the current inflationary period is transitory and emerging technologies will ensure deflation to some extent. It is hard, however, not to admit that what's happening is absolutely crazy.
If you want to know why printers everywhere have gone brrrrrr, check The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy or this debate between Warren Mossler (one of MMT pioneers = you can fucking print as long as you do not run out of paper, if you can borrow in your own currency) and Robert Murphy (Austrian school = you can only spent what you earn, even as a country).
In a dramatic fashion, the author first describes causes for hyperinflation in Zimbabwe and wonders if the same can happen in the developed world. Haslam is worried, as after crisis of 2008, central banks of all economies went into money printing craze, increasing M1 money supply almost 3 times. 3 times until the COVID hit. Since early 2020 the supply of US dollars went up another 4 times (in a year! check this out - https://fred.stlouisfed.org/series/M1). If people were scared after 2008, what can we say now?
Because of the printing, lots of economists and investors see hyperinflation coming to the US. If this is really true, the mother of all crisis is ahead of us. Not all economists believe this will happen, but it is safe to say that we are currently part of one of the biggest economic experiments in history.
Personally, I am more optimistic and believe that the current inflationary period is transitory and emerging technologies will ensure deflation to some extent. It is hard, however, not to admit that what's happening is absolutely crazy.
If you want to know why printers everywhere have gone brrrrrr, check The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy or this debate between Warren Mossler (one of MMT pioneers = you can fucking print as long as you do not run out of paper, if you can borrow in your own currency) and Robert Murphy (Austrian school = you can only spent what you earn, even as a country).
August 19, 2015
“We learn from history that we do not learn from history.” - Georg Wilhelm Friedrich Hegel
This books gives a very practical approach to understanding how the economy operates, specifically hyper-inflation but brings a human element that economics books could never achieve to do. Money printing has and is still happening in many countries. Money printing "relief" happended in Germany in 1920s and later in America,Japan and Europe yet nothing was learned from that. If there were any lessons from history then powers-that-be would have recognised the impending collapse of Zimbabwe's economy and probably prevented it somehow.
Lives of citizens changed when their life savings and pensions eroded in a matter of months. Although it took years for Black friday to build up, it came down like a ton of bricks. Accounting systems couldn't handle the number of Zero's due to run away inflation and basics like bread became a luxury. You know the value of a currency is close to zero when a beggar doesn't bother to pick up a note from the pavement but rather prefers something tangible.
Will this happen to another country? My answer is, YES(crossing fingers it doesn't happen).
This books gives a very practical approach to understanding how the economy operates, specifically hyper-inflation but brings a human element that economics books could never achieve to do. Money printing has and is still happening in many countries. Money printing "relief" happended in Germany in 1920s and later in America,Japan and Europe yet nothing was learned from that. If there were any lessons from history then powers-that-be would have recognised the impending collapse of Zimbabwe's economy and probably prevented it somehow.
Lives of citizens changed when their life savings and pensions eroded in a matter of months. Although it took years for Black friday to build up, it came down like a ton of bricks. Accounting systems couldn't handle the number of Zero's due to run away inflation and basics like bread became a luxury. You know the value of a currency is close to zero when a beggar doesn't bother to pick up a note from the pavement but rather prefers something tangible.
Will this happen to another country? My answer is, YES(crossing fingers it doesn't happen).
January 1, 2019
The story of how the Zimbabwean economy essentially disintegrated over a period of 20 or so years, culminating in the hyper-inflationary period of 2008.
The authors do a fantastic job of placing the Zimbabwean situation within a global context - drawing parallels that sound the warning signs for even developed countries. In short, the argument is that governments must be extrememly cautious in how and when they print money.
Definitely one of my favourite books of 2018.
The authors do a fantastic job of placing the Zimbabwean situation within a global context - drawing parallels that sound the warning signs for even developed countries. In short, the argument is that governments must be extrememly cautious in how and when they print money.
Definitely one of my favourite books of 2018.
October 6, 2017
An engaging read about the hyperinflation in Zimbabwe, bringing both facts and figures as well as firsthand accounts and personal perspectives.
Some interesting takeaways: First, people did revert to commodity money, but not necessarily gold and silver. Since gold and foreign currencies were tightly controlled so as to force people to use Z$, fuel receipts with distributors became de facto money. Since fuel controls wouldn't have made sense (because it would bring the economy to an instant halt) it was one of the only commodities that was freely traded and needed widely enough to be used as money in a broad context.
Second, this situation brewed over several decades, but the 75% devaluation on November 14th, 1997 happened all at once. Yet even after such a devastating destruction of wealth, it still took 10+ years for the currency to completely peter out. So this could be described as "gradually, then suddenly", with 11/14/97 being the key signal of what would eventually come to pass, but not signaling that it would be immediate. The downward spiral had been steepened but all was not over yet. The Zimbabwean people would have to sit at the bedside of their dying currency for another 10 years.
Drawing parallels between Zimbabwe and western powers like the U.S. is tempting but I don't think it can be done on an apples-to-apples basis. Objectively, in the long run, yes, the current petrodollar will fall and be replaced by a different system. As the authors point out, the petrodollar arrangement is currently being threatened, which could lead to a substantial weakening of the dollar's reserve status. But I don't foresee from this the high likelihood of a hyperinflation in the U.S.
I foresee another sweeping reform such as the many financial resets that have happened in U.S. history, likely accompanied with a large and sudden devaluation as has happened in the past, further eroding everyone's wealth and purchasing power. Devastating, yes, but not the end of the world. Furthermore, that moment has yet to come, and I think when it does, just like in Zimbabwe, there will still be much time left before a hyperinflation would set in. There is still a lot of life left in the old dollar merry-go-round, and the government thugs will do everything they can to keep it going for as long as possible. That is yet another lesson this book gives the reader.
In the end, are the parallels between Zimbabwe and the west a cause for concern and strategic planning? Yes. A cause for alarm? No.
Some interesting takeaways: First, people did revert to commodity money, but not necessarily gold and silver. Since gold and foreign currencies were tightly controlled so as to force people to use Z$, fuel receipts with distributors became de facto money. Since fuel controls wouldn't have made sense (because it would bring the economy to an instant halt) it was one of the only commodities that was freely traded and needed widely enough to be used as money in a broad context.
Second, this situation brewed over several decades, but the 75% devaluation on November 14th, 1997 happened all at once. Yet even after such a devastating destruction of wealth, it still took 10+ years for the currency to completely peter out. So this could be described as "gradually, then suddenly", with 11/14/97 being the key signal of what would eventually come to pass, but not signaling that it would be immediate. The downward spiral had been steepened but all was not over yet. The Zimbabwean people would have to sit at the bedside of their dying currency for another 10 years.
Drawing parallels between Zimbabwe and western powers like the U.S. is tempting but I don't think it can be done on an apples-to-apples basis. Objectively, in the long run, yes, the current petrodollar will fall and be replaced by a different system. As the authors point out, the petrodollar arrangement is currently being threatened, which could lead to a substantial weakening of the dollar's reserve status. But I don't foresee from this the high likelihood of a hyperinflation in the U.S.
I foresee another sweeping reform such as the many financial resets that have happened in U.S. history, likely accompanied with a large and sudden devaluation as has happened in the past, further eroding everyone's wealth and purchasing power. Devastating, yes, but not the end of the world. Furthermore, that moment has yet to come, and I think when it does, just like in Zimbabwe, there will still be much time left before a hyperinflation would set in. There is still a lot of life left in the old dollar merry-go-round, and the government thugs will do everything they can to keep it going for as long as possible. That is yet another lesson this book gives the reader.
In the end, are the parallels between Zimbabwe and the west a cause for concern and strategic planning? Yes. A cause for alarm? No.
June 4, 2018
An insightful and terrifying account of Zimbabwe's hyperinflation - covering both the technical side as well as vivid personal stories of how hyperinflation affected people's lives, how a lifetime's savings could be eroded almost overnight into something that could only purchase a few litres of fuel or a loaf of bread. I've always struggled to describe to people what living through hyperinflation was like in a believable, tangible way, but these authors manage to capture it very well. Even though I lived in Zimbabwe through parts of the crisis, I learned a lot from this book - although I knew how my family coped during the crisis, I didn't know of the many other ways that others coped, and seeing this bigger picture was deeply moving. Zimbabweans are so incredibly resilient.
I love that the authors took time to show the human side of the crisis. That despite scarcity, Zimbabweans banded together, formed informal supply networks, and survived because of each other. Although Zimbabwean society has been irreversibly changed as a result of the crisis, much of our strength in community remains, which is rare in cases of such hardship and oppression. In many ways, this book is an ode to the Zimbabwean people and their strength, a documenting of stories that others may learn from.
I love that the authors took time to show the human side of the crisis. That despite scarcity, Zimbabweans banded together, formed informal supply networks, and survived because of each other. Although Zimbabwean society has been irreversibly changed as a result of the crisis, much of our strength in community remains, which is rare in cases of such hardship and oppression. In many ways, this book is an ode to the Zimbabwean people and their strength, a documenting of stories that others may learn from.
May 2, 2022
This is the best book I have read on hyperinflation so far. Easy to read and gives useful history for what happened prior to the hyperinflation, the biggest causes of it, how life looked during hyperinflation, and the response of people to it. While hyperinflation never acts the same way in any two countries, there are many similarities from which to learn.
The authors are from South Africa so write this from a different viewpoint than other books on this topic. They also identify how countries using the 4 strongest currencies (US dollar, Euro, Pound, and Yen) all treat as normal some of the precursors that Zimbabwe had. The book was written in 2015 where the amount of money printing was heavily criticized, and that has only increased significantly since that time.
The part of his book most likely to be criticized is the fairly pessimistic outlook of the last few chapters, and wealth preservation strategies that he talks about. What he is certainly correct about is that if hyperinflation his a country, the currency becomes worthless and people end up using different items, specifically ones that will store their value, as currency.
The authors are from South Africa so write this from a different viewpoint than other books on this topic. They also identify how countries using the 4 strongest currencies (US dollar, Euro, Pound, and Yen) all treat as normal some of the precursors that Zimbabwe had. The book was written in 2015 where the amount of money printing was heavily criticized, and that has only increased significantly since that time.
The part of his book most likely to be criticized is the fairly pessimistic outlook of the last few chapters, and wealth preservation strategies that he talks about. What he is certainly correct about is that if hyperinflation his a country, the currency becomes worthless and people end up using different items, specifically ones that will store their value, as currency.
February 27, 2021
I don't get the hype. The author spends 5 pages talking about the political destruction taking place in Zimbabwe and a 100+ focusing on the money printing, subsequently assigning all of the blame to it and then extrapolating that to QE across the world regardless of history or differences in political realities. As if the money printing was the only problem that led to the collapse of society and if they hadn't done that last bit, they would have been fine. I am sharing a contrarian read here for future readers' reference:
https://clintballinger.wordpress.com/...
QE didn't cause any inflation, neither will the author's claims in this book, if it happens, to paraphrase Niall Ferguson, it will be a political decision to do so in the midst of a collapse in society.
https://clintballinger.wordpress.com/...
QE didn't cause any inflation, neither will the author's claims in this book, if it happens, to paraphrase Niall Ferguson, it will be a political decision to do so in the midst of a collapse in society.
April 3, 2022
I really enjoyed this book. The funny thing is is I was in Zimbabwe from 2006 to 2008 and I experienced a lot of the turmoil that the Zimbabweans went through. The food shortages were the worst. I can also attest that The Zimbabwean people were very very generous and we all live like a community we were all in it together. I still have a lot of the Zimbabwe in notes that are presented on the pages. What I fear is the nations that the book talked about that are on our printing their money since 2018 in the western world. I hope we may be able to find some figure something out before the stuff happens like this.
July 10, 2018
A concise, useful study of how hyperinflation works and what caused it to happen, by using the case in Zimbabwe, that manmade catastrophe of a country. What interest me the most would be despite the bleak situation, Zimbabweans, with all their tenacity and ingenuity managed to carry on, with the strengthening of their sense of community. By using the case of Zimbabwe, and USA, the authors warn about the dangers of printing money irresponsibly and also the total transaction control enacted by countries, preferring competitions between currencies.
March 11, 2021
Interesting and suspenseful read about hyperinflation in Zimbabwe, with a few excursions to similar economic situations in history and the world.
The story is slanted towards the Austrian School of economics and does not go deep into economics or macroeconomics. I didn't see that as a disadvantage -the practical discussions make it read like an Dystopian thriller and it's fun to ponder the questions raised at the end of each chapter. Certainly will add to the fire of the discussions with my Keynesian econmics and MMT friends.
The story is slanted towards the Austrian School of economics and does not go deep into economics or macroeconomics. I didn't see that as a disadvantage -the practical discussions make it read like an Dystopian thriller and it's fun to ponder the questions raised at the end of each chapter. Certainly will add to the fire of the discussions with my Keynesian econmics and MMT friends.
August 30, 2024
Harbinger of things to come?
The author explains how hyperinflation impacted the daily lives of the people of Zimbabwe, how their personal finances were impacted, how they had to adapt. He explains that we me may be on a similar trajectory with our countries overspending and debt buildup. It gives some, but limited insight into what measures one might personally make to prepare for financial calamity.
The author explains how hyperinflation impacted the daily lives of the people of Zimbabwe, how their personal finances were impacted, how they had to adapt. He explains that we me may be on a similar trajectory with our countries overspending and debt buildup. It gives some, but limited insight into what measures one might personally make to prepare for financial calamity.
May 2, 2020
I grew up in Zimbabwe but I’m glad I left before the madness started. But my father lived through the hyperinflationary years and every time we meet he has something to say about it. The authors have done a good job in detailing the devastation that took place in Zimbabwe and how us in the diaspora played an important part in it too.
February 13, 2022
Excellent book. Provides a simple explanation and understanding of hyperinflation and the steps that lead to hyperinflation. Also provides some basic examples of how others have dealt with hyperinflation and the steps citizens need to take to help prevent their country from going into a hyperinflationary period.
June 6, 2022
This book was an easy read.
I think this book is useful for those looking to learn more about the Zimbabwe hyperinflation case study, but also for people interested in learning about the overall impacts of high inflation.
The audience for this book is likely relatively narrow, but probably good for those interested in economics and investing.
I think this book is useful for those looking to learn more about the Zimbabwe hyperinflation case study, but also for people interested in learning about the overall impacts of high inflation.
The audience for this book is likely relatively narrow, but probably good for those interested in economics and investing.
July 4, 2023
A terrific account of what already happened in a particular county and straightforward guide nowadays' perilous economic system creating value out of thin air. Also, writer's style is absolutely hooking, making the book an page turner while at the same time peppering the reader with some serious economic knowledge.
August 31, 2025
Sobering and to the point. Not the most detailed on technicalities of debt and inflation, but conceptually valid and good edge case study on impacts of excessive debt, money printing, and the vicious cycle that ensues. What i liked is there were real stories from real people, and gives one a glimpse of how reliant we’ve become on each other and devastating impacts of a collapse.
November 12, 2018
One of the most eye-opening books I read - intervened with very personal and tragic experiences!
Zimbabwe could not manage its obligations and printed money to pay it all - And the world is just following suit!
Zimbabwe could not manage its obligations and printed money to pay it all - And the world is just following suit!
March 17, 2021
Read this book a couple of years ago and recently re-read my notes and made a quick summary of what I thought was the most interesting parts of the book.
Hyperinflation is not an individual event, it is a collection of critical events – a process. Externally, this is evident through ever-increasing prices, but in the background the process is underway where an established currency loses its usefulness as a means of payment. Hyperinflation has occurred all over the world and during all times – in Germany, Greece and China, as well as in ancient Rome, 17th century France and the 18th century USA. According to Professor Steve Hanke, there have been 52 hyperinflations since 1920.
HYPERINFLATION 101. Hyperinflation is when prices increase uncontrollably and destroy an economy in the process. Hyperinflation is caused by the unrestricted creation of money to finance a government’s spending – either by printing new paper money or by creating digital currency. Sooner or later, this leads to a collapse in confidence in the nation’s currency, which results in the economy collapsing and the currency becoming worthless.
“There has never occurred a hyperinflation in history which was not caused by a huge budget deficit of the state” – Peter Bernholz
HYPERINFLATION – STEP FOR STEP. In the early stages of hyperinflation, public spending increases to a point where the state becomes a large part of the economy. The state builds up large debts over a long period and increasingly uses newly printed money as a source of financing. If the debt continues to increase and is not repaid, there will come a time when lenders lose confidence in the state’s repayment capacity, resulting in financial panic and depreciation of the currency. A weakened currency leads to increased import costs. When the state can no longer use debt financing, higher taxation and a continuous increase in the money supply is all it can do. After a period of high inflation, the value of tax revenues gets erased and the only remaining option is to print money.
GERMANY IN THE 1920S. In 1918, at the end of the First World War, Germany was heavily indebted. In addition to a weakened economy, productive land was lost to neighbouring countries and this, together with the debt burden, led to large trade and tax deficits. The debts were to be repaid in foreign currency. The German state responded with the only remaining weapon: to print new money to buy foreign currency. The inflation carousel would then continue until the dissolution of the currency in 1923.
ZIMBABWE – CIVIL WAR & MUGABE. Zimbabwe was occupied by Britain from the late 1880s to the 1960s. With the independence movement sweeping across Africa in the 1960s, Britain loosened its grip and in 1965 Zimbabwe declared independence. This was followed by 14 years of civil war before Robert Mugabe in 1980 became the country’s first elected president. Thereafter the country had a few good years, and due to the strong agricultural industry the country was called “Africa’s bread basket”. When the civil war ended in 1979, Zimbabwe’s GDP amounted to $5.2bn and three years later had increased to $8.5bn – which would also be the highest level for the next 28 years.
BLACK FRIDAY – CURRENCY CRASH. During the 1980s, annual inflation was around 12% per year. During the 1990s, the yearly inflation increased to 33%. On November 14, 1997, the Zimbabwean dollar crashed and lost 75% of its value in one day. This was a definite turning point in Zimbabwe’s hyperinflationary history. The currency would never reach previous levels again. This was followed by economic crises in 2000, 2003 and 2008 – all of which the state tried to curb by printing money. From 2000 to 2005, annual inflation was 300–400%, after which in 2006 it was 1,281%, in 2007 as much as 66,212% and in 2008 before the crash a stunning 231,150,888%.
THE STATE RUNS OUT OF ALTERNATIVES. During the years of hyperinflation, the state took over pension funds, raised and introduced new taxes, nationalized real estate and land, introduced price controls and banned the use of foreign currency. Companies went bankrupt because the cost of repurchasing goods far exceeded the sales price. The banks stopped lending money despite the fact that interest rates were 8,000% and deals began to be made in fuel coupons (which corresponded to x number of liters of petrol). In 2009, the country underwent “dollarization” and usd, gbp and zar were introduced as currencies. Zimbabwe’s economy was not destroyed by war or natural disasters – it was destroyed by a state with a banknote press.
NOT BETTER WITH MNANGAGWA. After almost 40 years of control, Robert Mugabe (94 years) in 2017 handed over control to Emmerson Mnangagwa (76 years). In 2018, hyperinflation in Zimbabwe was reported again and inflation reached 20% in November. The state has introduced a 2% tax on electronic transactions and money in Zimbabwe banks is valued at 20 cents on the dollar. Since the 2009 crash, the current account balance has not been positive for a single year and the country is in place 160 on the Corruption index and 140 on the Ease of doing business index.
Hyperinflation is not an individual event, it is a collection of critical events – a process. Externally, this is evident through ever-increasing prices, but in the background the process is underway where an established currency loses its usefulness as a means of payment. Hyperinflation has occurred all over the world and during all times – in Germany, Greece and China, as well as in ancient Rome, 17th century France and the 18th century USA. According to Professor Steve Hanke, there have been 52 hyperinflations since 1920.
HYPERINFLATION 101. Hyperinflation is when prices increase uncontrollably and destroy an economy in the process. Hyperinflation is caused by the unrestricted creation of money to finance a government’s spending – either by printing new paper money or by creating digital currency. Sooner or later, this leads to a collapse in confidence in the nation’s currency, which results in the economy collapsing and the currency becoming worthless.
“There has never occurred a hyperinflation in history which was not caused by a huge budget deficit of the state” – Peter Bernholz
HYPERINFLATION – STEP FOR STEP. In the early stages of hyperinflation, public spending increases to a point where the state becomes a large part of the economy. The state builds up large debts over a long period and increasingly uses newly printed money as a source of financing. If the debt continues to increase and is not repaid, there will come a time when lenders lose confidence in the state’s repayment capacity, resulting in financial panic and depreciation of the currency. A weakened currency leads to increased import costs. When the state can no longer use debt financing, higher taxation and a continuous increase in the money supply is all it can do. After a period of high inflation, the value of tax revenues gets erased and the only remaining option is to print money.
GERMANY IN THE 1920S. In 1918, at the end of the First World War, Germany was heavily indebted. In addition to a weakened economy, productive land was lost to neighbouring countries and this, together with the debt burden, led to large trade and tax deficits. The debts were to be repaid in foreign currency. The German state responded with the only remaining weapon: to print new money to buy foreign currency. The inflation carousel would then continue until the dissolution of the currency in 1923.
ZIMBABWE – CIVIL WAR & MUGABE. Zimbabwe was occupied by Britain from the late 1880s to the 1960s. With the independence movement sweeping across Africa in the 1960s, Britain loosened its grip and in 1965 Zimbabwe declared independence. This was followed by 14 years of civil war before Robert Mugabe in 1980 became the country’s first elected president. Thereafter the country had a few good years, and due to the strong agricultural industry the country was called “Africa’s bread basket”. When the civil war ended in 1979, Zimbabwe’s GDP amounted to $5.2bn and three years later had increased to $8.5bn – which would also be the highest level for the next 28 years.
BLACK FRIDAY – CURRENCY CRASH. During the 1980s, annual inflation was around 12% per year. During the 1990s, the yearly inflation increased to 33%. On November 14, 1997, the Zimbabwean dollar crashed and lost 75% of its value in one day. This was a definite turning point in Zimbabwe’s hyperinflationary history. The currency would never reach previous levels again. This was followed by economic crises in 2000, 2003 and 2008 – all of which the state tried to curb by printing money. From 2000 to 2005, annual inflation was 300–400%, after which in 2006 it was 1,281%, in 2007 as much as 66,212% and in 2008 before the crash a stunning 231,150,888%.
THE STATE RUNS OUT OF ALTERNATIVES. During the years of hyperinflation, the state took over pension funds, raised and introduced new taxes, nationalized real estate and land, introduced price controls and banned the use of foreign currency. Companies went bankrupt because the cost of repurchasing goods far exceeded the sales price. The banks stopped lending money despite the fact that interest rates were 8,000% and deals began to be made in fuel coupons (which corresponded to x number of liters of petrol). In 2009, the country underwent “dollarization” and usd, gbp and zar were introduced as currencies. Zimbabwe’s economy was not destroyed by war or natural disasters – it was destroyed by a state with a banknote press.
NOT BETTER WITH MNANGAGWA. After almost 40 years of control, Robert Mugabe (94 years) in 2017 handed over control to Emmerson Mnangagwa (76 years). In 2018, hyperinflation in Zimbabwe was reported again and inflation reached 20% in November. The state has introduced a 2% tax on electronic transactions and money in Zimbabwe banks is valued at 20 cents on the dollar. Since the 2009 crash, the current account balance has not been positive for a single year and the country is in place 160 on the Corruption index and 140 on the Ease of doing business index.
August 3, 2024
Una maravilla para entender como funcionan las finanzas de las naciones y qué políticas las destruyen y cómo muchas de esas políticas se siguen aplicando en la actualidad a pesar de que está comprobadísimo que destruyen a las naciones.
May 24, 2019
Good history of Zimbabwe, but weak understanding of macroeconomics.
January 14, 2025
I read this book once four years ago (see below for my old unedited review). The subject is fascinating and I remembered the book was easy to read. So I figured I’d reread the first few pages. I couldn’t put it down and I read the whole thing again. I’ve never read a book twice before. The book, or rather the part on Zimbabwe, is that good. Because my impression on this reread was different from my impression on the first read (see original review below), I’ll review the book again.
13 January 2025 (4 stars):
I disagree with my old review that the book is not dense enough. Sure it’s not dense, but that’s what makes it enjoyable. The book’s anecdotes are great.
I gave the book 4 stars instead of 5 because I do not like how the authors stated or implied (without strong evidence) that hyperinflation is practically inevitable in America and other developed countries. In particular I disagree with the word “certain” in the following statement: “It is certain that, if governments continue to pile up debt recklessly and to devalue their currency by printing money, a day of debt reckoning must come.” (p. 49)
It is not because Zimbabwe faced a day of reckoning that such a day will certainly come for developed countries (although it might). Sure developped countries have immense public debts that are growing fast. But hyperinflation followed by collapse does not seem inevitable with the data presented here, even if these countries continue on their current path. To determine whether the public debt will ruin developed countries like it ruined Zimbabwe, we would need to determine at least one of the following:
(1) that the current debt burden is too heavy for these developed countries, or
(2) that the future debt burden will be too heavy for these developed countries, or
(3) that foreign countries like China will abruptly decide to stop lending to developed countries (in which case developed governments will need to abruptly cut spending or print lots of money; this is what happened to Zimbabwe and it decided to print money instead of cut spending).
None of these three points are demonstrated as certain for developed countries in this book. Only 3% of American GDP is spent on interest on public debt and this number has been stable since the 1980s (source: International Monetary Fund). Sure the amount of public debt is rising, but interest paid is not growing because it is compensated by interest rates that are falling or have fallen. Interest paid/GDP is a more relevant ratio than Debt size/GDP because the former ratio accounts for differences in interest rates. (A medium sized debt with a high interest can be a greater burden than a large sized debt with a low interest rate. The debt burden is determined by the interest paid/GDP ratio, but this ratio is never discussed for Zimbabwe in this book meaning that comparison with developed countries seems impossible.) So points (1) and (2) seem doubtful, not at all certain. As for point (3), while it could happen, nowhere do the authors demonstrate that it will. In fact, while they do identify the importance of point 3 very briefly, they do not discuss very much what would need to happen for it to occur.
On an unrelated note, I was surprised with how little I remembered from the book only four years later. I remembered “runners”, people who ran on the street for the government to buy foreign currency in exchange for wads of Zimbabwean cash. I remembered the gas coupons that the people used as a currency for everyday transactions instead of Zimbabwe dollars and I remembered that the coupons had started inflating too. I think my lack of recollection was due to the absence of any chronological structure to the book. I think I would have remembered more if it had one chapter on 1980-1989, one chapter on 1990-1999, one on 2000-2002, etc. I don’t usually have near total amnesia on books I read, especially good ones written in plain language.
Overall, it’s an immensely enjoyable read. But on the question of whether developed countries will experience hyperinflation in the future, one is inclined to apply the Scottish verdict of “not proven”.
29 July 2020 (4 stars): Interesting overview of the hyperinflation of Zimbabwe. Unfortunately much of the research has been done with interviews, presumably because primary documents from the Government of Zimbabwe are not available to historians. The author did the best he could given the circumstances, but we may learn more about this series of events if government archives are opened one day.
The book is also not very dense. It feels like there are 50 pages of actual material, which were (heh) inflated to 200 pages, mostly with opinions and things that have little to do with Zimbabwe. The author’s good writing, however, more than makes up for this, and it’s an enjoyable read.
Chapters 11 and 12 are borderline off-topic, and Chapter 11 came across as making sweeping claims without sufficient evidence to back them up. The US invaded Iraq to preserve their currency’s status as the world reserve currency, in order to continue to debauch it? Seriously? Evidence for this claim?
13 January 2025 (4 stars):
I disagree with my old review that the book is not dense enough. Sure it’s not dense, but that’s what makes it enjoyable. The book’s anecdotes are great.
I gave the book 4 stars instead of 5 because I do not like how the authors stated or implied (without strong evidence) that hyperinflation is practically inevitable in America and other developed countries. In particular I disagree with the word “certain” in the following statement: “It is certain that, if governments continue to pile up debt recklessly and to devalue their currency by printing money, a day of debt reckoning must come.” (p. 49)
It is not because Zimbabwe faced a day of reckoning that such a day will certainly come for developed countries (although it might). Sure developped countries have immense public debts that are growing fast. But hyperinflation followed by collapse does not seem inevitable with the data presented here, even if these countries continue on their current path. To determine whether the public debt will ruin developed countries like it ruined Zimbabwe, we would need to determine at least one of the following:
(1) that the current debt burden is too heavy for these developed countries, or
(2) that the future debt burden will be too heavy for these developed countries, or
(3) that foreign countries like China will abruptly decide to stop lending to developed countries (in which case developed governments will need to abruptly cut spending or print lots of money; this is what happened to Zimbabwe and it decided to print money instead of cut spending).
None of these three points are demonstrated as certain for developed countries in this book. Only 3% of American GDP is spent on interest on public debt and this number has been stable since the 1980s (source: International Monetary Fund). Sure the amount of public debt is rising, but interest paid is not growing because it is compensated by interest rates that are falling or have fallen. Interest paid/GDP is a more relevant ratio than Debt size/GDP because the former ratio accounts for differences in interest rates. (A medium sized debt with a high interest can be a greater burden than a large sized debt with a low interest rate. The debt burden is determined by the interest paid/GDP ratio, but this ratio is never discussed for Zimbabwe in this book meaning that comparison with developed countries seems impossible.) So points (1) and (2) seem doubtful, not at all certain. As for point (3), while it could happen, nowhere do the authors demonstrate that it will. In fact, while they do identify the importance of point 3 very briefly, they do not discuss very much what would need to happen for it to occur.
On an unrelated note, I was surprised with how little I remembered from the book only four years later. I remembered “runners”, people who ran on the street for the government to buy foreign currency in exchange for wads of Zimbabwean cash. I remembered the gas coupons that the people used as a currency for everyday transactions instead of Zimbabwe dollars and I remembered that the coupons had started inflating too. I think my lack of recollection was due to the absence of any chronological structure to the book. I think I would have remembered more if it had one chapter on 1980-1989, one chapter on 1990-1999, one on 2000-2002, etc. I don’t usually have near total amnesia on books I read, especially good ones written in plain language.
Overall, it’s an immensely enjoyable read. But on the question of whether developed countries will experience hyperinflation in the future, one is inclined to apply the Scottish verdict of “not proven”.
29 July 2020 (4 stars): Interesting overview of the hyperinflation of Zimbabwe. Unfortunately much of the research has been done with interviews, presumably because primary documents from the Government of Zimbabwe are not available to historians. The author did the best he could given the circumstances, but we may learn more about this series of events if government archives are opened one day.
The book is also not very dense. It feels like there are 50 pages of actual material, which were (heh) inflated to 200 pages, mostly with opinions and things that have little to do with Zimbabwe. The author’s good writing, however, more than makes up for this, and it’s an enjoyable read.
Chapters 11 and 12 are borderline off-topic, and Chapter 11 came across as making sweeping claims without sufficient evidence to back them up. The US invaded Iraq to preserve their currency’s status as the world reserve currency, in order to continue to debauch it? Seriously? Evidence for this claim?
October 13, 2021
I think I expected a narrative of Zimbabwe and stories that affected everyday Zimbabweans. Good book, just wasn't what I was expecting
February 26, 2022
Superbly written and documented history of Zimbabwe dollar's death. Authors take on intimidating subjects and synthesize them into something anyone can grok.
October 23, 2022
“Typically, when highly indebted governments face a debt crisis, central bank independence is immediately withdrawn.”
This book by two African authors themselves, is an easy and must read (devoid of any economic jargons) for all those who want to know what will happen to their hard-earned money in a hyperinflation economy. Here is the example and lesson for others, of a man who toils all his life to accumulate a princely sum of 1 million Zimbabwean dollars only to find that huge sum at the time of his retirement could only buy him a box of match-stick!. We all experience inflation in some form or other and raise a big hue and cry when it reaches double digit and rightly so because inflation overwhelmingly negatively affects the poor and marginalized. If an inflation of 7-8 per cent per annum is so devastating, then just imagine how the poor will survive when it hits a whopping 231,150,888% as it did in Zimbabwe in 2008!.
The root cause for inflation is govt policy, it's obsession for corporate appeasement and to spend beyond it's income, the term they employ euphemistically as deficit spending and to do that they resort to excessive printing of money causing high inflation. The govts all over the world call this frenzy of overprinting money as Quantitative Easing (QE) and because of this since the GFC of 2008 stock market is on steroids and inflation is on the rise again making the lives of the poor and down trodden miserable and we all wonder why the rich are getting richer and the poor, poorer!?. The specter of hyperinflation is not confined to poor countries alone but it has a history of thousands of years and it has devastated the well off economies of many countries like Hungary, Germany in the recent past and within the last 20 years countries like Greece, Argentina, Venezuela, Syria, Lebanon, Turkey, Sri Lanka... Etc.,
This book is a warning to those who excessively depend on govt assurances and guarantees to protect the value of it's currencies especially in poor and developing countries which are in danger of descending into socio-economic ruin or is in danger of falling into armed conflict or war (like Afghanistan or Syria) or susceptible to geo-political maneuvering by powerful countries (Ukraine is an example) or ruled by short sighted megalomaniac despots (like Zimbabwe).
A must read for all those who are interested in economics and investing and want to learn how to survive in a high inflation society.
3.5 Stars.
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