In the most recent episode in Zimbabwe's hyperinflationary saga, the german company which sells bank notes to Robert Mugabe has announced it will not continue providing paper money to Zimababwe's Reserve Bank, due to political pressure exerted from the high political circles of the german federal government in Berlin.

The move by Munich-based Giesecke & Devrient comes at a time when inflation indexes in the South African nation surpass the 1 million percent mark (whatever that means), since the Zimbabwean Reserve Banks is exponentially increasing the money supply. In fact the one million percent number is already obsolete, being only two weeks old, the number thrown around last week was 4 million percent and this week the number is closer to 9 million percent per year.

But don't you worry, Zimbabwe's Reserve Bank is already preparing for its umpteenth monetary reform or reconversion, in the best chavecista style, by which they will eliminate a whole bunch of zeros from the Zimbabwe dollar, which at this time is trading at 12.2 million per US dollar.

The problem is that now Robert Mugabe will have to find another paper money provider to print his ever depreciating Zimbabwe Dollars.

Curious note: The German company Giesecke & Devrient is the same company that used to print the Reichmarks during the hyperinflationary episode of 1922-1923 in the Weimar Republic. When the issue is hyperinflating a currency until it is destroyed, why deal with newcomers when you have an experienced company at your hand?

The lesson I'd like you to take from this sad story is the following: paper or fiat money, by which I mean any kind of money devoid of tangible physical backing, is always destroyed by government. Always.

 Economics, International