Monday, February 7, 2011

How is Egypt like Zimbabwe? Egypt just printed money to increase the pay of its Government workers...This did not end well when Zimbabwe did it...Why do we study history again?

Is Egypt heading down the same path as Zimbabwe has for the past decade?   When an Authoritarian starts to print money to pay government employees and/or the military to essentially buy their loyalty, it is a path to monetary destruction.  It becomes a rob Peter (citizens through debasing the currency) to pay Paul (above mentioned bureaucrats/military). This may not end well...

Today:   BBC: Egypt unrest: Public-sector pay rise but protests go on
""The government put up $2.2bn of short-term debt up for auction to inject money into the battered economy....""

2001- 2007: BBC: Zimbabwe inflation rockets higher

""High money supplies have also been fuelling hyperinflation. Critics have accused President Robert Mugabe's government of printing money to finance his election campaign and prop up the economy. Month-on-month inflation in the country accelerated to 839.3% from 433.4%."
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