A few years ago I started commenting on the hyperinflation of Zimbabwe. Back in February, Zimbabwe started using US Dollars as the common transactional currency. This reminds me of how markets have over time usually picked a currency to use, in history the choice was usually gold and or silver. Interestingly, the Zimbabwe economy is on its way back to recovery with items on store shelves once again as you will see in this video. What the market place of Zimbabwe seems to have missed, is that the US is doing to its dollar exactly what the Reserve Bank of Zimbabwe did to its own currency. http://themessthatgreenspanmade.blogspot.com/2009/09/shopping-in-zimbabwe.html

Hyper-Inflation: Central Banks Gone Wild by Michael Checkan, Advisory Panelist

Editor’s Note: Many of our long-time readers will remember our old friend and colleague Michael Checkan at Asset Strategies International, Inc. A specialist in precious metals and foreign currencies, today he takes a look at a unique “hyper-inflationary” economy and the havoc it plays on foreign currencies.

With the U.S. Government printing money like never before, the whispers of inflation float over the currency and bond markets. In fact, inflation has dropped to almost nothing after hitting a high of 5.6% in July of last year.

Within the past two weeks the Fed created one trillion dollars out of thin air. Apart from left or right wing rhetoric, this is reality.

History has taught us that governments can take a perfectly good piece of paper, put some ink on it, and make it totally worthless.

It happened in Hungary in 1946, Argentina

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Mr. Gideon Gono, head of the Reserve Bank of Zimbabwe, suddenly shifted from adding zeros to subtracting them leading the world in deflation.More from Daily Reckoning’s Bill Bonner:

Zero is a perfidious number.  Nobody likes it.  Nobody wants to be “a zero.”  Nobody wants to get a zero on a test…or zero returns on his investments.

It is a line that leads nowhere…with no substance in the middle of it.  You can add a zero…or multiply by zeros; it gets you nowhere.  And is a zero?  Is it something?  Or nothing?  No one knows.

Some remarkable news in the history of zeros appeared last week.  Mr. Gideon Gono, head of the Reserve Bank of Zimbabwe, suddenly shifted from adding zeros to subtracting them.  Within the space of 76 hours, Zimbabwe led the world in two opposite directions.  On Monday, with prices rising at 231 million percent per

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Alex’s Notes: Think it “cant happen here”?

You sure about that?

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Zimbabwe removes 12 zeros from currency
CNN.com/World
February 2, 2009

HARARE, Zimbabwe (CNN) — Zimbabwe slashed 12 zeros from its currency as hyperinflation continued to erode its value, the country’s central bank announced Monday.

“Even in the face of current economic and political challenges confronting the economy, the Zimbabwe dollar ought to and must remain the nation’s currency, so as to safeguard our national identity and sovereignty. … Our national currency is a fundamental economic pillar of our sovereignty,” said Gideon Gono, governor of the Reserve Bank of Zimbabwe.

“Accordingly, therefore, this monetary policy statement unveils yet another necessary program of revaluing our local currency, through the removal of 12 zeros with immediate effect.”

Full article

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The Harare Herald reports that the Reserve Bank of Zimbabwe has introduced a new family of trillion-dollar banknotes in denominations of $100 trillion, $50 trillion, $20 trillion and $10 trillion.

One of the biggest fears today is that the US is entering a Japanese-like slump that could last a decade. But Justice Litle says we have learned the lessons from that crisis. This time, the government fears doing too little, but gives little thought about the risks of doing too much. And this is why we should be more scared of one day ending up like Zimbabwe…

This from Taipan Publishing Group:

The world is clearly afraid that “Great Depression 2.0” could be at hand. Downturns come and go, but the global economy as a whole hasn’t contracted since the 1930s. Some think it could happen again next year.

We hear less about it in the news, but there is another fear that keeps investors up at night – the off chance that America turns into Japan.

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