German+vs.+Zimbabwean+Hyperinflation

The hyperinflation Zimbabwe currently faces is reminiscent of the Great Inflation Crisis of Weimar Germany in the early 1920's. Though they began differently, both started slowly and got out of hand in a matter of months. In Germany's case, it took five years (from 1914-1919) for the German Mark/U.S. Dollar ratio to increase by 4.7 marks/dollar. In contrast just four years later it took only two months (9/1293-11/1923) to increase by 199,901,140,000 marks/dollar (1). In contrast, the Zimbabwean dollar vs. the U.S. dollar was 102040.81Z$ to 1 in January of 2008. Six months later it was 250,000,000 Z$/U.S. Dollar. It took six months for the Z$/U.S. dollar exchange rate to increase by 249897959.19. In 1980, the Z$ was worth more than the U.S. dollar (2).

The German hyperinflation crisis began in 1920, but exploded in 1923 when an already over-burdened German economy completely tanked after French forces occupied the Ruhr, where much of Germany's industry took place. German workers implemented passive resistance(urged German workers to go on strike and refuse to cooperate with the French authorities) against their French occupiers, leading to a freeze in income for the German economy. In an effort to fix her financial troubles, Germany increased the production of Marks. As the economy worsened, money production increased; in January, 1922, the German Mark was worth just over half a U.S. penny; six months later it was worth one twentieth of that, yet production continued (3). In the worst of the crisis, workers "were paid twice a dy, and given half-hour breaks to rush to the shops with their satchels, suitcases or wheelbarrows, to buy something, anything, before their paper money halved in value yet again" (4). The social effects of this economic meltdown were astronomical. Anyone that saved money or lived on a fixed income lost virtually all their money; in addition there was a decline in law and order, and increase in crime, a growth in suicides, and an increase in prejudices (notably a spike in anti-semitism).

Hyperinflation in the Weimar Republic was due to the additive effects of reparation payments, untimely social reforms, and the French occupation of the Ruhr. The majority of these causes were due to outside forces slowly crushing Germany into scrap. Eventually there was too much pressure and the economy caved. Zimbabwean hyperinflation, however, is generally attributed by economists to "the ruling party's door, [they claim] the government made the situation worse when it seized control of land owned by white farmers, which triggered a sharp drop in production and exports of agricultural goods" (5). This act of jealous authoritarian power is starkingly similar to the French Occupation of the Ruhr. By freezing a significant portion of production, the only way to make money is by printing more of it. However, "President Robert Mugabe blames domestic and foreign enemies for the problems" (6).

Eventually, after the introduction of the Rentenmark, the Great Inflation in the Weimar Republic began to die down, giving Germany a decade or so of stability before Hitler's rise to power. Recently, Zimbabwe's Financial Minister announced that "Zimbabweans will be allowed to conduct business in other currencies, such as as bartering, alongside the Zimbabwe dollar, in an effort to stem the country's runaway inflation" (7). This news came along with a humanitarian crisis and political unrest in Zimbabwe. An outbreak in cholera has killed an estimated 3,000 Zimbabweans and there is still a political crisis from the 2008 presidential election, in which President Mugabe ran unopposed.

(1) Layton, Geoff. __Weimar and the Rise of Nazi Germany.__ 3rd Edition. London. Hodder, 2005. (2) __Zimbabwe's inflation tops 2,200,000%.__ BBC News. 2008. (3) Layton, Geoff. __Weimar and the Rise of Nazi Germany.__ 3rd Edition. London. Hodder, 2005. (4) __Loads of money.__ Economist.com. Millenium issue: German hyperinflation. 23, December, 1999. (5) __Zimbabwe's inflation tops 2,200,000%.__ BBC News. 2008. (6) Ibid (7) __Zimbabwe abandons its currency.__ BBC News. 29, January, 2009.