The Zimbabwean economy is in a "death spiral" that will continue to inflict suffering upon the people of the country unless stringent monetary reforms are instituted to reverse the effect of years of profligate central bank money-printing, says U.S. economist Steve Hanke.
Hanke, an expert on the phenomenon of hyperinflation which in Zimbabwe has reached mind-boggling proportions with estimates of percentage inflation rates measured in the sextillions, currently declines to put a specific figure on Zimbabwean hyperinflation other than to set a frequency at which the general level of prices doubles - about every 1.3 days.
The professor of applied economists at Johns Hopkins University in Baltimore had been posting estimates of Zimbabwe's inflation rate on the Web site of the Cato Institute. The last such estimate for November estimated Zimbabwean inflation at 89.7 sextillion percent.
The site describes the most recent official estimate of inflation from the Reserve Bank of Zimbabwe of 231 million percent last July as "hopelessly outdated."
Hanke in June 2008 published a monograph entitled "Zimbabwe: From Hyperinflation to Growth," outlining the country's hyperinflationary woes and possible cures.
He told reporter Blessing Zulu of VOA's STudio 7 for Zimbabwe that RBZ Governor Gideon Gono is "certainly the world's worst central banker at present, maybe even in history."
"This is one of the great hyperinflations in the history of the world that's occurred in Zimbabwe and the results have been absolutely catastrophic from an economic point of view and more importantly from just a human point of view," Hanke said. "Either you emigrate from Zimbabe for a great segment of the population or you stay there and die.
"The only way the (recovery) switch will be turned on and the death spiral will stop is if there is some sound money alternative that comes in and sweeps the Reserve Bank away."
Hanke said the Zimbabwean economy is being "spontaneously dollarized" through what economists call "currency substitution," in which businesses and consumers abandon money which is losing value to migrate to currencies that are more reliable stores of value.
Hanke outlined three options for turning the inflation-riddled Zimbabwean economy around: full dollarization, with the Zimbabwe dollar abandoned; a currency board system under which a new Zimbabwe dollar would be fully convertible into a reserve currency at a fixed exchange rate, requiring 100% of foreign reserves backing up the local currency; or a so-called free banking system in which private banks would issue their own reserve-backed notes.
He said Zimbabwe has at one point or another in its history - including that of colonial predecessor Rhodesia - employed all three alternative monetary systems.