Friday, June 15, 2012

How Much Did Zimbabwe's Money Supply Grow Before Hyperinflation?

Central Banks are reportedly getting geared up for coordinated stimulus if Greek elections don't go well.  While it's tough to say what the exact response would be, or whether there will actually be one, the result would be a further attack on global currencies.  For a reminder of what can happen when Central Banks systematically attack their own currency, below is the extreme example of Zimbabwe.  The chart shows the growth in the monetary base through 2006.  In the initial stages of the inflation, the base increased by 6x, compared to 3x in the US in the most recent period.  In Zimbabwe the base would spike even further than this as hyperinflation really began to take root in 2008.

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