Millions of Zimbabweans Face Starvation due to Nationalisation caused by Hyperinflation
Zimbabwe is just a mess. Due to the nationalisation of their agriculture sector and food shortages caused by hyperinflation, millions of the country's citizens face starvation. The inflation rate in this southern African country is at an unbelievable 2.2 million percent - and economists think that this is actually understated, and that the actual inflation rate may be running between 10 million and 15 million percent. Because of this, and a major cash shortage, the Zimbabwean government has introduced a $100 billion bank note.
In the United States, points out Bill, we look at countries like Zimbabwe and shake our heads in disbelief. It seems almost like slapstick comedy to us.
As Milton Friedman once said, "If you let the government run the Sahara Desert, soon there will be a shortage of sand." And in the U.S., we have Fannie and Freddie, who represent a huge nationalisation event in the United States.
"This is a remarkable thing for the supposedly most 'free market' country in the world," continues Bill. "Nationalising their biggest industry, the mortgage industry. Johnson trying to pretty up the nation's account, so he took Fannie and turned it into a private business."
This added a whole new innovation to the history of nationalisations. The United States created a company where the profits were private, but the losses were to be funded by the government.
"Nationalisation is a great milestone in our economic lives," Bill said to the 1,000 attendees. "Adjusted for the price of gasoline, no one has made money in stocks for 40 years. When you adjust American wages for inflation, you'll see that they've gone nowhere for the past 40 years, either. No one has been getting rich. How is this possible? you have to ask this to find out what's going on, where it leads and what we'll do about it.
"We take for granted that economics matter. We have only been thinking of this for the last 25 years. This idea of capitalism brought to us in the 80s was fatally flawed. People got the idea that to be rich you need a free market and free trade. But really, you don't get rich because of those things - those are just the circumstances that allow you to get rich... if you do the right thing. If you do the wrong thing, it will allow you to go broke. You can't get rich on consumption, as Dr. Richebächer used to say. You need capital formation. Save your money and invest it in productive enterprises."
Kate Incontrera
for The Daily Reckoning Australia
P.S. to get The Daily Reckoning direct to your inbox sign up to our free e-mail newsletter or if you prefer to use RSS, subscribe to the Daily Reckoning RSS feed.
Related Articles:
- South African Dockers are Refusing to Unload Chinese Firearms
- 1 Out of 10 American Mortgages Are Owned by Other Countries
- Until This Debt is Reduced, Americans Will Be Reluctant to Borrow or Spend
- Irving Fisher Remains Immensely Important in the History of Economic Thought
- Fannie and Freddie: Playing With a Stacked Deck
About the Author
Kate Incontrera is the managing editor of The Daily Reckoning. She is also the author of The Daily Reckoning's Weekend Edition, a weekly wrap-up of contrarian investment analysis.
Comment by Mireille on 25 July 2008:
The U S seems to be moving toward communism.
Comment by rosalyn on 25 July 2008:
Yes I agree, and it has been heading that way since the end of WW2, when German neo nazis declared that the war is not over. There is a website called http://www.worldreports.org, read the last two years of their reports and judge for yourself. it will also give a different view of the global credit crunch. Interesting reading.
Comment by David on 25 July 2008:
The US has been moving toward communism since the Fed Reserve Act was passed in 1913/17.
Socialism was full blown with the Raw Deal dealt by FDR in the 30's and has only gotten worse every year since.
Comment by Ross on 25 July 2008:
Kate, Zimbabwe was crippled by capital and trade sanctions and there was a simultaneous aggressive rear guard campaign run by a deposed elite that failed to negotiate political land reforms beyond the status quo.
Doing the cart or horse exercise for Zimbabwe is beyond my resources but the pending political settlement that sidelines the western hegemony (in much the same way as has occurred in Lebanon) carries weight circumstantially. As does the Western hegemony's now pattern use of a "hollywood left" agenda media to demonise state political foes while funding insurrection for geo-strategic purposes.
As for the US, it was the an own goal bearing few equals in history. Simple ponzi scheming run by so few but given succour by so many within the US's complex labrynth of institutional & political corruption.
Comment by yabadaba on 25 July 2009:
Your title is too short, it should have int it, that the starvation is also due in part to the World Bank imposing the Structural Adjustment Plan on Zimbabwe in an effort to privatise mines other resource companies. Economic hitmen do exist. When Mugabe refused, loans were refused, resulting in Zimabbawe failing to meet it's balance of payments. Shortly after, England stepped back from it's commitments on the Lnacastere House agreement, which inturn turned Mugabe into a madman. Shortly after, England's friend and ally...erm...Australia vetoed that Zimbabwe be immediately removed from the Commonwealth.......the rest is history. But do not over simplify, gratifying your penchant on heaping scorn when you truly deserve a lot yourself. You go for ages unchallenged and think it's because you're brilliant.
Are you gonna say anything at all about the role of the World Bank, England and your beloved Australia which robbed the aboriginals of their land? I doubt it...