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Thoughts on Zimbabwe’s New Money the ZiG

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One annoying thing is that people think of government budgets much like they do household ones. Main reason that’s wrong is that the government can print money. Not to say that it’s a good idea to push it to the limit (I know, I’m Zimbabwean), like the MMT folk believe1, just that you need more explaining than $liabilities > $assets or if not then understand that governments have many intangible assets that households don’t.

Zimbabwe finally unveilled it’s “structured currency” the ZiG any my thinking is that it’s not worth thinking about because we have had numerous “solutions” to our currency woes and they don’t seem to amount to much for long. I mean,

  1. Who the hell used the ZiG when it was introduced in 2023? It’s now a “centrally backed gold token” now by the way.
  2. Did the gold tokens mop up Zim dollars in 2022? The rate was stable for a while but they were stiffing suppliers so of course the rate didn’t drop.
  3. Did replacing every USD with the “RTGS” dollar in 2019 usher us into an export-led growth miracle by allowing the government to toy with the money2 to make our exports competitive?
  4. Was the bond note of 2016 supposedly backed by areally 1 is to 1?
  5. Did bond coins solve the change crisis?
  6. Did forex in 2009 remove Zimbabwe’s ability to print money meaning they had to earn, say, US$26 billion?
  7. Did chopping off 12 zeros in 2009 with shitty looking money help so we don’t have integer overflows? No, but at least we found out quickly.
  8. Did chopping off 10 zeros in 2008 with “agro checks” that non farmers used help with integer overflows?
  9. Did chopping off 3 zeroes in 2006 (and leaving us with a 1¢ note) help?
  10. Did adding notes with 2 more zeroes in 2004 help?
  11. How about letting Cargil print their own legal tender in 2003?
  12. What about a $500 in 2001?
  13. How about $100 in 1995?
  14. And lastly, what about the $50 from 1994 which came after 25 years of $20 bills being the largest.

Sure, the “Second” “Republic’s” “New” “Dispensation”3 only features in 3 of these but if you read the footnote, we’ve only had it since 2017 so we don’t know if there will be more. Note that all these “solutions” brought about loads of informed and uninformed economic analysis and for what?

Exactly.

Think of this as getting yet another zero chopped off. The most you should discuss is whether the QR code does anything that the serial number can’t.

As I was discussing this in a Whatsapp group, someone remarked:

We ignore economics because we figured out that unlike a company, countries can run insolvent just fine.

To which another guy responded:

Like a drug addict who discovered that he can stay addicted since he’ll never die.

It’s funnier in Shona, but this puts it nicely.

Sure, governments can run “just fine”. Somehow, Zimbabwe hasn’t struggled with fuel or food shortages (yet anyway) despite the government being insanley broke. The secret is to not rely on the government for these things, as Eddie Cross would try to argue, but the government can act like the scorpion which stings the contractors like frogs which try to carry it across the lake. While the government will be fine, the people under it suffer big time. For instance, all the telcos are in massive debt so they can’t invest in their network without hiking prices, making me question my hate for Elon as Starlink makes sense in urban environments4 given how shitty our governments are.

So sure, a government isn’t a household but rather it’s an individual who’s actions affects others—much like how a drug addict impacts their family, communities and even places far away. So carry on life as normal, no reason to expect anything different. The best advice I heard is this:

It doesn’t matter what currency you have as long as you have a lot of it.

Tautological, but it points to what you should focus on instead.

  1. Funny thing about MMT is that once you understand money creation, most of the tenents make sense and are agreed on in mainstream economics. Issue is the one part where you can control inflation by taxing it back because printing money is easier than collecting taxes. ↩︎

  2. Then it was “the strongest currency in the region”. In statistics this is called right censoring where a subject leaves a study before a significant outcome can occur. Think of a study where we measure life expectency of new born babies for 5 years and conclude that babies don’t live to 5. Sounds silly but it happens. For instance the authors of the study which says men leave their wives when they get sick retracted it because their code assumed that all marriage terminations were considered to be divorced. I mean, As would be expected for this age range, marriages were more likely to end in widowhood than divorce, and divorce was a rare event. In addition, more marriages were lost to follow-up than ended in divorce and widowhood combined. ↩︎

  3. “Second”? Mugabe followed Banana (although Banana was mostly ceremonial) so he’s the third. “Republic?” Let’s not open that can of worms. “New”? Some nerve to call yourself the second dispensation when you worked for the guy from the previous one as his right hand man. “Dispensation”? What are you doing so different from the other guy currency wise? ↩︎

  4. I don’t know how revolutionary this whole thing will be in Africa. Like we expect it to be some huge revolutionary thing but nobody entertains that tech can actually reduce productivity. Still, it’ll be a huge deal in rural areas and urban areas run by stupid politicians. ↩︎