Soooo, what happens when these counterfeit Zimbabwe U.S. dollars reach America?!?! Will we be arrested for using these Zimbabwe counterfeit U.S. dollars that were put into circulation??? Oh, and by the way, for those of you who do not know... Zimbabwe has been ruled by a Marxist sleazbag dictator named Robert Mugabe since 1980.
Per Quartz article, Here are all the countries that don’t have a currency of their own:Zimbabwe is a special case. It abandoned its own currency in 2009 and currently has eight official currencies as legal tender: the US dollar, South African rand, Botswana pula, British pound sterling, Australian dollar, Chinese yuan, Indian rupee, and Japanese yen.
The Atlantic, USA
written by Matt Vasilogambros
May 6, 2016
The African nation, which uses the American currency among others, ran out of physical cash. So, it’s going to print its own.
Zimbabwe is running out of cash and needs to print more money—so its central bank will print a new currency pegged to the U.S. dollar. The move has led to fears that the southeast African nation will soon abandon its multicurrency system and return to the hated local currency.
Zimbabwe has used the U.S. dollar since 2009 to substitute its own failed money, the Zimbabwe dollar. It also uses the South African rand, the euro, and the Chinese yuan, alongside the dollar. However, because Zimbabwe has run a trade deficit for several years, importing more than it exports, the country is literally running out of paper money.
In 2015, for example, it imported $5.5 billion in goods and only exported $2.5 billion. (The country’s economic problems are so bad it even had to sell off some of its wildlife.) That $3 billion trade deficit means the country’s supply of physical dollars continues to decrease. Zimbabweans can’t withdraw money from the bank because there isn’t enough of it—and banks have limited withdrawals at some ATMs.
To combat the shortage, Zimbabwe’s central bank will design and circulate new two-, five-, 10-, and 20-dollar “bond notes” that will be worth the equivalent of the U.S. dollar, but won’t actually be certified American currency.
Those notes won’t be worthless, however. Zimbabwe’s version of the dollar will be backed by $200 million in support from the African Export-Import Bank, a Cairo-based institution that promotes trade within the continent. Zimbabwe, then, will produce $200 million worth of new bills.
Among other measures announced this week to address the monetary problems: Officials have limited the amount of money that people can take out of the country to $1,000; and the central bank will convert 40 percent of all bank deposits that come from exports to the South African rand, and an additional 10 percent to euros.
The dollar is used as the official currency in other countries, as well. El Salvador, the Marshall Islands, the Federated States of Micronesia, Palau, and the islands of the Caribbean Netherlands—Bonaire, Sint Eustatius, and Saba—all use the dollar as their official currency.
Other countries have also adopted the dollar as their currency, but issued their own coins that are valued the same as American dimes, quarters, or nickels. Panama, East Timor, and Ecuador use American paper money, alongside their own individual coins. Similarly, since 2014, Zimbabwe has designed and circulated one-, five-, 10-, and 25-cent “bond coins” that are set to the value of the U.S. dollar. The coins bear little resemblance to their American counterparts. Zimbabwe’s new paper money will be made in the same vein.
Zimbabwe made the switch to the U.S. dollar in 2009 after its currency virtually had no value from over-printing and its economy collapsed following policies instituted by the government of longtime President Robert Mugabe. During that period, Zimbabwe produced 100-trillion-dollar notes. It got so bad that by the end of 2008, the inflation rate was 79.6 billion percent. By then, 1 U.S. dollar equated to 2.6 decillion (1033) Zimbabwean dollars.
Seven years later, the country isn’t facing hyperinflation, where there’s too much currency, but deflation, as there’s not enough physical cash around.
“It’s an indication of the lack of confidence in the Zimbabwean Central Bank,” says Russell Green, an international economics fellow at Rice University’s Baker Institution. “They want to print their own money, but they know that they’ve gotten in trouble in the past printing their own money.”
The absorption of the U.S. dollar as a country’s own currency, or even the attachment of its currency rate to the dollar, has previously proved perilous to other countries. Argentina’s peso had a fixed exchange rate to the U.S. dollar, and for a decade every one peso was equivalent to one dollar. However, after an economic depression that lasted from 1998 to 2002, which led to the fall of the government and a $95 billion default on its foreign debt, Argentina dropped the fixed exchange rate. Argentina’s central bank ran out of money during that time.
“The problem that all of these countries have, whether it’s with a complete dollarization or with a pegged currency, is if they’re running persistent trade deficits, eventually you run out of the foreign currency,” Green says. “That’s unfortunately Zimbabwe’s case.”
Keeping the dollar may not be a worthwhile option for Zimbabwe moving forward if it continues to need to print more money with the support of outside institutions. It may even have to go back to its old currency—a move many Zimbabweans fear.
The EconomistWho wants to be a trillionaire?
Lock up your dollars right now; Mugabenomics is back.written by StaffMay 14, 2016LIKE the governors of the Reichsbank, who kept on speeding up the printing presses as Germany plunged into ever-steepening hyperinflation in the 1920s, insisting that the real problem was a shortage of banknotes, Zimbabwe’s government claimed to have overturned the laws of economics during its own bout of hyperinflation nearly a decade ago. Gideon Gono, then governor of the Reserve Bank of Zimbabwe, claimed that “traditional economics do not fully apply in this country,” and said “I am going to print and print and sign the money…because we need money.”The result was an increase in prices so swift that it was almost impossible to calculate the rate of inflation. By some estimates it peaked at 500 billion per cent, as the government printed ever-larger denominations. Notes such as one with a face value of 100 trillion Zimbabwe dollars are worth much more now as a novelty on eBay (where they sell for about $45) than they ever were in shops in Harare.Zimbabwe finally tamed inflation in 2009, when it abandoned the Zim dollar and started using American dollars and other foreign currencies instead. (It converted bank balances to US dollars at a rate of $1 for every 35 quadrillion Zim dollars.) That brought instant relief. But the government of Robert Mugabe, a 92-year-old who has held power since the end of white rule in 1980, has again been spending more than it collects in taxes, and importing more than it exports. It does not help that Mr Mugabe destroyed the country’s main source of foreign revenue when he chased mainly white farmers off their land and handed it to ruling-party bigwigs.Without money to pay civil servants—in particular the soldiers and policemen who keep Mr Mugabe in power—the government intends to start printing it again. This time it insists it is not bringing back the reviled “new” Zim dollar, but is printing notes that are “backed” by some $200m that Zimbabwe has borrowed from the African Export-Import Bank. However, it seems unlikely that holders of these new notes will be allowed to exchange them for those real dollars.Given Mr Mugabe’s track record, that means they are likely to plummet in value very fast. Slow-motion bank runs have already started, as savers fret that their US dollars will be forcibly converted into the new notes. Banks have had to restrict dollar withdrawals, in some cases to as little as $20 a day. The last bout of hyperinflation wiped out savers and pensioners. Savers are braced to be robbed again.The governor of the Reserve Bank, John Mangudya, insists the new notes will be an “incentive” to exporters, not a return to the bad old days. Not even the government believes this. It will not, for example, be using them to pay civil servants. Instead they will be foisted onto exporters who, having paid their suppliers and workers in hard cash, will have to accept funny money for their earnings. What could go wrong? Many will go bust, so export revenues will quickly tumble. Eddie Cross, an opposition MP, says the new policy could mean “the final collapse of the economy”.
written by Jonathan Garber
August 10, 2016
Back in 2008, Zimbabwe experienced an episode of horrific hyperinflation as a result of Robert Mugabe's economic policies. Mugabe implemented price controls and the country's central bank printed endless amounts of money in an effort to end its economic slump. Those policies caused Zimbabwe's inflation rate to explode to a mind-boggling rate of 231,000,000% officially, while others have suggested the actual inflation rate was greater than 4,000,000,000%. "Where money for projects has not been found, we will print it," Mugabe said.
Zimbabwe's government responded by introducing the US dollar along with a combination of South African rand, and other foreign currencies. It even went as far as expunging the Zimbabwean dollar from its banking system back in June 2015. While those measures seceded in bringing Zimbabwe's hyper-inflationary spell under control, it created a new problem, deflation, as the dollar became more widely used.
According to a note sent to clients in July from Exotix Partners' Head of Equity Research Kato Mukuru, that dollarization of the Zimbabwe economy created two problems.
1. There has been too much reliance on the US dollar. The government moved away from the multi-currency regime and said it would conduct all of its transactions dollars. And since most of Zimbabwe's trade is with South Africa, the strong dollar (compared to the rand) has made it more difficult for Zimbabwe to compete.
2. Zimbabwe has been running a current account deficit since 2009. Zimbabwe has been exporting more dollars than its been importing, causing a shortage of dollars in the system.
These two things have made it more difficult for Zimbabwe to attract foreign capital into the country, and has created a wave of falling prices. Official government data from June showed consumer prices were down 1.37% in June, after falling as much as 7.5% in October 2015.
Liquidity problems could cause the government to de-dollarize the economy sooner than expected, warns BMI Research, and that would send the country back into a cycle of rapid inflation. From BMI's note"
"Adoption of a local currency would inevitably result in a rapid increase in the supply of broad money, as the central bank looked to inject enough liquidity into the economy to alleviate the ongoing cash shortage, caused by the current reliance on the US dollar. Without a simultaneous increase in real production, this would increase inflationary pressures."
As for how high inflation would get, BMI believes that would "depend on the rate at which the RBZ printed the new currency," but could easily surpass 30%.
That's not as crazy as it got a few years ago, but it seems as though Zimbabwe finds itself in a Catch-22.
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