Death of a currency, rebirth of an economy

The Zimbabwe dollar is dead and no-one is there to mourn it. Faced with an inflation rate described with double-digit exponentials, the country resorted to the least evil solution the precarious government could come up with: bury the currency.

Other hyperinflation episodes had been tackled with a variety of policies, including the famous "shock therapy" that entailed transforming the economy into a free market overnight. Obviously this option wasn't on the table in Harare. A dictator still in power with a loyal police and military cannot be made to accept sweeping reform. Incidentally, abandoning the national currency resulted in a remarkably great arrangement: three separate currencies can today be used in Zimbabwe, shielding the economy from the danger of a single foreign collapse (unless contagion sets in).

Today, Zimbabwean hyperinflation is over and its central bank has lost all its inflationary powers. It is a godsend to monetarists. Watch Zimbabwe, it might be the story of an economic miracle brought by the demise of a berserk central banking authority.