Although this may sound like fantasy economics in the UK (for it is), in certain parts of the world it is fast becoming a reality. President Mugabe’s government has announced that the Zimbabwean dollar would be steadily phased out to be replaced by US dollars.
The reason for this is hyper-inflation, which has precipitated a situation which is fast becoming untenable. The last bank note to be printed by the Reserve Bank of Zimbabwe was a 100 trillion Zimbabwean dollar bill. Unfortunately, it isn’t even enough to pay for a bus fare for a week.
Umm, no, not really. No one’s been using the $Z since 2009.
The current deal is simply to allow people who’ve had money locked in bank accounts to finally liquidate them into US $.
Seriously, is all economic journalism to be this bad now?
The question of course is whether falling out of the euro would lead to a return to the Drachma, or some new form of currency? Some 58pc of Syriza supporters in a recent poll said they would rather return to the Drachma than remain in the euro. Maybe so but, having become the first country to smash out of the eurozone, what would the fate of the Drachma look like?
Data from the World Bank show Greece’s inflation rate peaked at 4.7pc in 2010, and has since slumped into deflationary territory. But with the euro gone, and with prices and trading relationships uncertain, it is more than likely that inflation could spiral out of check.
Depends how much cash Syriza prints, doesn’t it? Inflation always and everywhere being a monetary phenomenon?