Is war the primary cause of hyperinflation for Zimbabwe?
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M$4 Answers
A short, yet detailed explanation of Zimbabwe's hyperinflation can be found in this article:
http://www.newzimbabwe.com/pages/inflation180.17386.html
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M$You can leave an optional "tip" with Mahalo's virtual currency, Mahalo Dollars. If you are asking a difficult question that might require some research, or if you'd like a wide variety of feedback, a higher tip often leads to more answers to your question.
M$
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M$
MONEY IS THE MAIN CAUSE
The main cause of hyperinflation is a massive and rapid increase in the amount of money, which is not supported by growth in the output of goods and services. This results in an imbalance between the supply and demand for the money (including currency and bank deposits), accompanied by a complete loss of confidence in the money, similar to a bank run. Enactment of legal tender laws and price controls to prevent discounting the value of paper money relative to gold, silver, hard currency, or commodities, fails to force acceptance of a paper money which lacks intrinsic value. If the entity responsible for printing a currency promotes excessive money printing, with other factors contributing a reinforcing effect, hyperinflation usually continues. Often the body responsible for printing the currency cannot physically print paper currency faster than the rate at which it is devaluing, thus neutralizing their attempts to stimulate the economy.
SUMMARY
Hyperinflation in Zimbabwe main cause is massive and rapid increase in the amount of money, which is not supported by growth in the output of goods and services. This results in an imbalance between the supply and demand for the money.
So basically it is not a result of war. :)
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M$
I put a lot of time into mine, I am a little hurt.
Both answers were very good. I have almost 1,000 questions and claimed inflation, so count on more Zimbabwe questions.
Will you summarize the article
One sentence of the article summarizes it fairly well.
"Zimbabwe’s hyper-Inflation is a result of the monetary authority irresponsibly borrowing money to pay all its expenses and funding quasi-fiscal activities."
There is never a clear, concrete cause of inflation, especially hyperinflation. However, wikipedia has this to say:
"Inflation was stable until Robert Mugabe began a program of land reforms that primarily focused on taking land from white farmers and redistributing those properties and assets to black farmers; this in turn sent food production and revenues from export of food plummeting."
It's also a national psychological crisis more than a political one.
Again, according to the article:
"In neo-classical economic theory, hyperinflation is rooted in a deterioration of the monetary base; that is the confidence that there is a store of value which the currency will be able to command later. The perceived risk of holding currency rises dramatically, and sellers demand increasingly high premiums to accept the currency. This in turn leads to a greater fear that the currency will collapse, causing even higher premiums."