Airplane crashes aren’t “hyperlandings”: Notes on Zimbabwe

Some notes on Zimbabwe:

1890/1893 the British South Africa Company invades Mashonaland/Matabeleland, creating the basis for the colony of Southern Rhodesia. This creates a 3 way conflict that will shape the region’s politics for a century.

1965 White minority declares independence from Britain. 14 years of guerrilla warfare between 3 factions ensue.

1965 Britain severs Sterling-Rhodesian currency link, seizes assets. Rhodesia defaults on British-guaranteed debts.

1970s In the late 1970s Rhodesian Ian Smith, facing the prospect of losing the civil war, resorts to heavy borrowing. Military spending rises from 20% in 1975/76 to almost 50% in 1978/79 of the national budget. (Source)

1980 Zimbabwe inherits US$700 million of foreign currency debt from the Rhodesian government. During the 1980s the World Bank extends loans of over US$500 million. Interest rates on some projects in excess of 10%. By the end of the decade debt repayments equal 25% of Zimbabwe’s exports, and 25% of government revenue. (Source). Jubilee Debt writes in 2017: “Since 1980 Zimbabwe has been lent $8 billion but repaid $11 billion. Despite this it is still said today to have a [foreign currency] debt in excess of $7 billion.”

1983-1987 A North Korean-trained elite unit reporting directly to President Mugabe enters ethnic rival area Matabeleland in Zimbabwe, massacring thousands of civilians. Between 1983-1987 anywhere from 3,750 to 80,000 are killed. Thousands more tortured in military internment camps.

1995 “By the mid-1990s, Mugabe had become an irascible and petulant dictator, brooking no opposition, contemptuous of the law and human rights, surrounded by sycophantic ministers and indifferent to the incompetence and corruption around him…A land reform programme financed by Britain came to a halt when it was discovered that Mugabe was handing out farms intended for peasant resettlement to his own cronies.” (Meredith, 2008).

1996 Strike by civil servants, nurses, and junior doctors. General health of the population has begun to decline; by 1997 an estimated 25% of the population has been infected by HIV.

1997 Growing demands for pensions from ex-guerrilla armies from the revolutionary war. Mugabe puts together a Z$4.2 billion pension package and proposed new taxes. A general strike is called in protest of the taxes. Mugabe’s government abandons the taxes.

1997 Mugabe announces plans to compulsorily acquire white-owned commercial farms. Runs against the currency and from the money and capital markets follow. “The climax of these events was on 14 November 1997 when the Zimbabwean dollar crashed and lost 75 percent of its value against the USD on a single day…Thenceforward the exchange rate continued to depreciate uncontrollably, thus the 1997 financial and currency turbulence set the stage for a…long slump in the real economy.” ( Kairiza 2009, p. 5). The Central Bank raises interest rates by 6 percentage points in a single month.

1998 United Merchant Bank of Zimbabwe Ltd declared insolvent in the backwash of the 1997-1998 interest rate hikes. It had fraudulently issued ZWD1,263 million government-guaranteed promissory notes and “sold them to other banks and deposited the money into personal offshore accounts of the bank’s owner. Due to the high extent of the exposure of other commercial bank to this bank, the whole bank system was in a crisis and the central bank had to intervene to bail out the affected banks with insidious effects on the fight against inflation (Fundira, 2003)” (Kairiza 2009, p. 6).

1998, Food riots in Harare; army is deployed to restore order, killing at least ten, injuring hundreds.

1998 Without consulting parliament, Mugabe orders Zimbabwean troops into the Democratic Republic of the Congo. Involvement in the war costs Zimbabwe approximately US$1 million a day. (source)

1999 23 military officers arrested for plotting a coup against Mugabe.

1999 IMF terminates financial support for Zimbabwe, citing economic mismanagement and widespread corruption as impediments to reform.

2000 UK freezes all development aid to Zimbabwe.

2000 During elections, political opponents harassed and killed. 27 murders, 27 rapes, 2466 assaults, and 617 abductions, with 10,000 people displaced by violence. EU observers rule the election is neither free nor fair.

2000 Land invasions begin. Armed gangs attack and occupy white-owned farms. A large number of the seized farms remained empty, while many of those redistributed to black peasant-farmers unable to engage in production because lack access to fertiliser.

1999 Export proceeds from tobacco = 612 million US$. In 2003: Only 321 million US$

2000 Zimbabwe produces over 2,000,000 tons of maize in 2000. By 2008, it produces less than a quarter of that (450,000 tons).

2000 GDP: 7.4 billion US$. 2005 GDP: 3.4 billion US$

2002 Zimbabwe suspended from the Commonwealth of Nations due to the reckless farm seizures and blatant election tampering.

2002 Co-sponsored by Hillary Clinton and Joe Biden, the Zimbabwe Democracy and Economic Recovery Act (ZDERA) creates a credit freeze on the Zimbabwean government. The US Treasury begins to stop: (1) any extension by the respective institution of any loan, credit, or guarantee to the Government of Zimbabwe (2) any cancellation or reduction of indebtedness owed by the Government of Zimbabwe to the United States or any international financial institution.

2003 Zimbabwean officials voluntarily terminate its Commonwealth membership.

2003 Zimbabwe’s economy has collapsed. Up to a quarter of Zimbabwe’s 11 million people have fled the country. 3/4 of the remaining Zimbabweans are living on less than 1 US dollar a day. (Source)

1997 Life expectancy: 54 for men. 63 for women.

2004 Life expectancy for men: 36. Life expectancy for women: 34. (WHO, 2006)

2005 An estimated 80% of Zimbabwe’s population is unemployed.

…by 2008 Only 20% of children in Zimbabwe are in schooling. Cholera outbreak after water supplies and sewage systems have continued to breakdown; by 2009, over 98,000 cholera cases. HIV/AIDS rate for individuals aged between 15 and 49 is 15.3%.

“[Mugabe’s] ultimate objective, however, was to crush all opposition and remain in power for as long as he wanted. Since 2000, he has used all the government’s resources to attack his opponents, sanctioning murder, torture and lawlessness of every kind, rigging elections, violating the courts and suppressing the independent press. In a speech in 2003, [Mugabe] warned he would use even worse violence if necessary, threatening to act like a ‘black Hitler’ against the opposition. ‘If that is Hitler, then let me be a Hitler tenfold. That is what we stand for.’” (Meredith 2008).


Yeah right.

“Hyperinflation” is a kindergarten concept of currency collapse.

Calling a currency collapse “hyperinflation” is like calling an airplane crash a “hyperlanding.” Just as there is a cause for sudden altitude loss, there are causes for the collapse in value of a currency, and causes to the (in some cases) attempt by a regime to buy their way out of collapse. A stable country no more increases its government money supply (nor even its spending) suddenly than a commercial airline pilot randomly throws a 737 into a nosedive.

Some nevertheless insist on narrowly focusing on the fact that a hyperinflation must have a “hyper” expansion of the currency unit (whether via bookkeeping or actually printing more/larger denomination paper notes, or both).
But the very process of that happening is a reaction to a collapsing economy and threatened elite attempting (and sometimes managing) to cling to power, at least for a little bit longer.
It is the desperate position of an elite minority from political instability itself that starts the process and maintains it. As Capie concludes in his survey:

in the examples of very rapid inflation where the events are quite dramatic the sequence is rather: unrest leading to government difficulties and deficits and on to rapid inflation. No doubt the inflation produced further social disorder and the causality can be seen to run both ways, but in seeking the origins of these extreme examples it runs from social disorder to inflation. (Capie 1986, p. 156)

If there is first no collapse in production, no elite minority, and/or no foreign denominated debt, you get no hyperinflation. Just some other type of transition or state failure.

A special set of circumstances needs to exist for hyperinflation. Sometimes, it is simply a case of a larger system failing (ex Soviet States & satellites) or the transition after a war (WWI and WWII). Other times bad economic advice, foreign currency loans, corruption and internal political instability (Latin America & Africa 1980s/1990s). A categorization of all hyperinflations clarifies this.  Here is a longer related discussion of “debt” and government/economic collapse. 


I have compared hyperinflationary economic/regime/political collapses to dying stars. Stars can die with a whimper, and many  governments do so. Occasionally when the circumstances are right (threated minority elite, productivity collapse, foreign currency denominated debt) they instead go out with a supernova. [In the image below, stars evolve and die, with some fading away while others experience various degrees of “supernova.” The territory and population of a geographic territory continue to exist after the collapse of their State; there are many ways that region/population transition from an old State/currency to a new one; some of these transitions will see a currency collapse during that process, with lots of zeros exploding onto the scene. This illustrates precisely nothing of interest regarding spending/price levels in a stable polity].  

star evolution resized

The basic early processes of economic and political decline of collapsing economies that do and don’t hyperinflate are the same, but the details of the final moments differ. If there is a dictator or one party state that has the means, and their wealth, social/political futures, and even lives at times are at risk, they have the motive to cling to power by literally trying to buy a bit more time in power, and something like Zimbabwe can result (a rare combination). Even to them it surely becomes obvious the absurdity of ever more zeros, but by that time they have no choice, hoping for a miracle to halt their plunge. They have no incentive other than self preservation. That is, of course, a political problem. 


Some general dates/events are from various relevant Wikipedia and Britannica articles (Gukurahundi, Rhodesia, British South Africa Company, Zimbabwe History, Robert Mugabe, etc.)

Capie, Forrest. 1986. “Conditions in which very rapid inflation has appeared,” Carnegie-Rochester Conference Series on Public Policy. Vol. 24, pp. 115-168.

Coltart, David. 2008. “A Decade of Suffering in Zimbabwe Economic Collapse and Political Repression under Robert Mugabe.” Development Policy Analysis no. 5. Cato Institute.

Fundira, Bothwell. 2003. Implications of foreign banking and offshore financial centres for money laundering in the region. In C, Goredema, ed. Profiling Money Laundering in Eastern and Southern Africa. Institute for Security Studies, Pretoria.

Kairiza, Terrence. 2009. “Unbundling Zimbabwe’s journey to hyperinflation and official dollarization.” GRIPS Discussion Paper 09-12, National Graduate Institute for Policy Studies, Tokyo.

Meredith, Martin. 2008. “Mandela and Mugabe both embraced violence, but one could not give it upThe Guardian, April 8, 2008 (itself in part from Mugabe: Power, Plunder, and the Struggle for Zimbabwe’s Future, PublicAffairs, New York, 2002)

Check out my “intro to MMT” reader, 1000 Castaways here! 🙂 
(Also at Barnes & Noble, Waterstones etc., and as e-book at Apple.)

3 thoughts on “Airplane crashes aren’t “hyperlandings”: Notes on Zimbabwe

  1. I’m yet to read a very convincing explanation of the 1980s/90s hyperinflation in Brazil – I have a feeling it had something to do with the indexation of wages, benefits and tax brackets but it’s difficult to find anyone offering a more sophisticated explanation than “money printing”. Please let me know if you’ve seen anything worthwhile.

    Liked by 1 person

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s