The ongoing monetary crisis in Zimbabwe is being cited as a classic example of the runaway inflation predicted by doomsayers who forecast worldwide economic panic and collapse of the current fiscal system with the current crisis just the beginning.  It is also the first case of a country’s currency hyper inflating in the 21st century.

The Zimbabwe dollar used to be worth approximately USD$1.59 in the 1980’s. However, with the introduction of land reforms and the collapse of the local economy, the Zimbabwean dollar has spiralled out of control and has become worth less than the paper the money is printed on despite the inflationary measures taken by the government. The land reforms that allowed the government to take control of farms and ranches previously owned by skilled farmers with the technical expertise caused the ultimate downfall of Zimbabwe’s agriculture based economy as production dropped from 4.3 million tons in 2000 to 1.348 million tons this year. As a result, the cost of living rose dramatically and caused the currency to lose its value as the government struggled to pay its bills and printed more money to cover their expenses.

Professor Steve H. Hanke of the John Hopkins University  estimated that at its peak, the inflation of the dollar reached previously uncharted territories at 89.7 sextillion percent per annum.

As an example of the ridiculous inflation numbers, on 19 July 2008, the Reserve Bank of Zimbabwe announced plans to introduce a Z$100 billion bank note, barely enough to purchase a loaf of bread. On 12 January 2009, barely 6 months later, Zimbabwe announced the imminent issue of Z$100 trillion bank notes worth approximately USD $30 at the time.

In January and February, the Zimbabwean government took steps to curb the inflation including a revaluation of its currency. A new Z$1 was worth Z$1 trillion of the previous but it proved to be insufficient to significantly curb the rising prices. Finally in April, the Zimbabwean Dollar was suspended and foreign currencies such as the South African Rand and US Dollar are now the standard for trading. Businesses have taken to the change so much so that local companies are refusing to accept the Zimbabwean dollar anymore.

On an interesting note, the Zimbabwean dollar, or for that matter, the one hundred trillion dollar bill that was produced in Zimbabwe, has become a collector's item in the United States.