Zimbabwe vs Weimar
@weimartifacts
In this post we discuss Zimbabwe hyperinflation from 2008-2009. On the first plot we have provided index price with regard to golden mark and US dollar in Weimar and Zimbabwe's case respectively. We are not sure that this is proper way to calculate time axis when, for Weimar, the hyperinflation time is subtracted with 1914 although it was the time when Kaiser's Reich went off gold standard. For Zimbabwe we had US Dollar price in local currency from 2001 to 2009. We assume that one may try to adjust axes on such a way they could be quite overlapping so the pattern becomes even more similar.
However, to our view it may be more important to pay attention to one small detail: an inflection point on the Zimbabwe dollar vs US dollar plot at the 4th year of inflation. Why they are different? To answer this question we probably need an expert and some more data as well.
We should make a note: today, there is hyperinflation, too, but who doesn't experience high CPI numbers nowadays?! Just from recent news (CNBC):
Zimbabwe hikes key interest rate to 200% from 80% amid runaway inflation.
As for CPI:
Annual inflation rate has been in triple digits for two straight months, rising to 191.6 percent in June from 131.7 percent in previous month.
And the national currency of Zimbabwe is also in freefall as it:
…has dropped 69 percent to $361 per US dollar.
In 2022 M2 money supply and inflation rate plot or the Zimbabwe dollar depreciation dynamics have a lot in common.
If we dig deeper, we may discover almost the same plot from 2008-2009. Spot the difference in 2019 and 2008 Money Supply plot.
It may bee seen from the first glance that small decrease in money supply led to disproportional lowering of CPI numbers and if we look at position of US Dollar rate the inflection point on it which makes it a bit different to Weimar. So probably Zimbabwe Central bank indeed tried to stop printing money at some point in history, on the contrary the German printer stopped only in 1924 when new Rentenmark was introduced by Hjalmar Schacht.
On the second glance we may see that situation repeats itself precisely in the same third-world country with currency with no reserve status. A reader shouldn't wonder that it was widely believed in Weimar that the root evil is not money printing but something else (military industrial complex, Antanta, jews etc.).