-
Essay / Currency Devaluation - 1635
Amika, a poor citizen of Zimbabwe, goes to a local store with over twenty billion Zimbabwean dollars in hand. Instead of being afraid of being attacked, she is more worried about whether she will be able to buy a loaf of bread with the money she has. Yesterday she could buy 20 loaves of bread for $10 million, but today she would feel lucky to have a loaf of bread even though she has a lot more money than yesterday. It sounds crazy, but it's reality. "The real news from CNN.com was that the Zimbabwe dollar is now so worthless that 'Zimbabwe's central bank will introduce a $50 billion bill,' which is, as you probably guessed, a new record” (Mogambo). Isn't that scandalous? Yes! It is. This happens when governments print more and more money without considering the consequences of their actions. Zimbabwe is just one example. A significant number of countries face the same problem; their situation may not be as bad as Zimbabwe's, but it is still a serious issue. The question is therefore why has money lost so much value and what are the main consequences? The answer is quite simple. The uncontrolled printing of money unrelated to limited commodities of generally accepted value such as gold or silver, and the growing demand for limited goods led to currencies losing their value significantly. This caused the major problem of inflation. This problem of inflation has spread rapidly in many countries in recent decades. Venezuela, Argentina and Pakistan are well-known examples. It is clear that the main reason for this inflation problem is the inability of so-called "fiat" money (a currency that a government has declared to be legal tender, despite the fact that it has no currency. ..... paper medium...... Hand Production Figures "Bureau of Engraving and Printing. Department of the Treasury", 2012.Web March 21, 2012. "FDR withdraws the United States from the. 'gold standard.' March 2012. Hutchinson, Martin and John Foley. “A Gold Standard Is No Longer Unthinkable,” New YorkTimes, August 15, 2011, New York Web: B2, March 12, 2012. Melloan, George “Returning to the Gold Standard " American Spectator45.1 (2012): 16-21. Web. February 28, 2012. Mogambo, Guru. "What can you buy with 50 billion Zimbabwe dollars? . Web, March 9, 2012. "Demographic Reference Bureau. Population Reference Bureau, 2008. Web. March 1 2012.