Zimbabwe's Currency Colapse

Gabriel Cruz 10500502

Why Zimbabwe

• Question: Why are financial institutions importanto Rich people make money by taking money from the pooro Why are they there

• No: Financial institutions are important

Preview

• The country of Zimbabwe• Zimbabwe during the 1990's• Zimbabwe's Land Reform• Consequences of Land Reform• Zimbabwe's Central Bank Policies• Effect on Inflation• Inflation's Effect on the Country• The Importance of Competent Leadership and Central

Banks

The Country Of Zimbabwe

• Zimbabwe is a land-locked country in sub-Saharan Africa

• Former English Colony• Known for its beautiful

waterfalls and it dire economic situation

 

Zimbabwe during the 1990's

• In the Early 1990's Zimbabwe was considered the "bread-basket of Africa"

• It's flourishing agriculture sector was being pushed to new levels of efficiency

• Today if Zimbabwe had kept on track it would be on about the same level as Brazil in terms of development

 

Zimbabwe's Land Reform

• Beginning in the late 90's the Land Reform policies of Zimbabwe Changed

• Robert Mugabe, President of Zimbabwe accelerated land reform and encouraged violent seizures of land

• Emphasis was placed on large industrial farms, the backbone of Zimbabwe's economy

 

Consequences of Land Reform

• Following the land reform many of the lands seized were given to government officials as private estates 

• Gideon Gono's estate

 

Consequences of Land Reform Cont.

• With massive land seizures across Zimbabwe investors fled

• With a loss of money flowing in Zimbabwe became cash strapped

• Much of the Land Reform was paid for by money from the IMF

• Farms turned into estates caused a decline in food production

• Mass famine begins

 

Zimbabwe's Central Bank's policies

• Zimbabwe was now in debt

• Mass Famine• What to do?• Print lots of money

 

Effect on Inflation

• Central bank begins to print money

• Inflation skyrockets• December 22, 2008 80

billion percent inflation a month

•  6.5 quindecillion novemdecillion percent a year, 65 followed by 107 zeros

 

Effect on Inflation

• July 4, 2008 at 5PM, a bottle of beer cost 100 billion

• July 4, 2008 6PM bottle of beer costs $150 billion

• Much of the increase in costs was due to food prices

• The lack of supply pushed cost up

 

Effect on the Country

• 2008 many social service sectors close

• No one can pay anyone so sanitation services collapse

• Cholera outbreak 2008• Prisons are not able to

feed prisoners • Zimbabwe's          

ambulance

 

The Importance of Competent Leadership and Central Banks• The case of Zimbabwe

shows just how quickly a country can fall with incompetent leadership

• Robert Mugabe and Gideon Gono have single handily move a middle income country to the poorest country in the world

 

The Importance of Competent Leadership and Central Banks

• The case of Zimbabwe shows how important a financial sector is as well

• Hyper-inflation brought all of Zimbabwe's activities to a stop  and destroyed the economy