When the Lunatics take over the Asylum
I took a call from an overseas friend who asked what was happening. I remarked that it was like living in an asylum where the patients are in charge. She laughed and said that was the best description of Zimbabwe she had heard for some time.
Right now, the Government is running a budget deficit that could exceed US$2 billion this year. Our revenues from all sources will reach about US$3,5 billion and therefore we are going to spend nearly US$6 billion. Now that is a budget deficit of enormous proportions – I am certain it must be close to a world record. The problem is that theoretically, they cannot print money – which is what they did in the previous collapse from 2000 to 2008 and they cannot borrow money from the outside for political and financial reasons (we have not paid our debts or any interest now for over 20 years).
His Excellency (HE for short) is simply ordering spending and this has now completely spiraled out of control. The Ministry of Finance, simply takes orders and pays its creditors in what is called “electronic” money. The Reserve Bank sends an electronic transfer to the creditors bank and calls it United States Dollars, even though it has no basis of support and is certainly not convertible outside the country. It worked for a while but as the domestic debt crept up, so the problems associated with this madness became evident.
First the cash disappeared, almost as quickly as it had appeared in 2009. Then they issued a new local currency which they pretended was backed, but it was not and this too disappeared, almost like bad magic. Then, unbelievably, the “US dollars” in our bank accounts started to shrink.
In the days of the printing press in the basement of the Reserve Bank, I explained the phenonium of shrinking dollars to the people in my constituency as the work of a rat in their pockets. This rat ate the dollars we banked or put in our pockets so that when we took them out they bought less.