ELI5 Why Did Zimbabwe Have A Massive Inflation?

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ELI5 Why Did Zimbabwe Have A Massive Inflation?

In: Economics

Hyper-inflation in Zimbabwe had one major cause. The government printed lots of money to pay for things (specifically the salaries of the military).

There is evidence that Mugabe’s land reform policies and endemic corruption contributed.

Why the military? Back in the late 1990s and early 2000s, Zaire collapsed. A lot of African countries moved in to secure access to the country’s vast mineral wealth. War is expensive. Mugabe figured he could get away with printing money to pay soldiers for a while.

Except that, once flush with cash, people go out and spend it. They buy up things. Which means there are fewer things for everyone else to buy. Vendors, who can only stock so much stuff, raise prices because the demand is there and people are coming in with bundles of cash.

This feedback loop went out of control.