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Wednesday, March 6, 2013

A Real Story About Inflation

My Uncle was a cropping farmer in Zimbabwe. He purchased his first farm as a young man and worked it for couple of decades.

Robert Mugabe decided in 2000 to implement his "Land Distribution Policy".

The mob of "war veterans" arrived one morning and the beatings began.

My Uncle and his family fled to South Africa. They eventually immigrated to New Zealand.

Meanwhile the farm was distributed between Mugabe's loyal supporters.

But the bank had a problem. There was still a mortgage on the property.

The bank started sending my Uncle letters to his address in New Zealand demanding payment of missed loan payments.

He replied, how can I pay the loan when my farm has been confiscated? To which the bank replied pointing out the finer points of the loan documents.

Eventually my Uncle got out the currency converter and entered his sizable loan balance in Zimbabwe dollars and converted into NZD. 

The balance worked out to be a few hundred New Zealand dollars!

So he just paid it.

Since the backbone of Zimbabwe's economy was evicted from their land the country went into hyper inflation. The value of the Zimbabwe dollar dropped so much that a loan in the millions could be paid off with a few hundred NZ dollars.

While my Uncle lost his life's work when his farm was confiscated he still has his credit rating in tact.

3 comments:

  1. Hello,
    I visited your blog.
    Congratulations for your work!! An interesting and nice blog!!
    Good luck with your blog!
    Greetings from Algarve, Portugal
    Paulo Gonçalves

    I invite you to visit my blog
    http://viajaredescobrir.blogspot.com

    ReplyDelete
  2. Hi Paulo
    Thanks for the comment, welcome to the blog. I'm glad you enjoy it.

    Cheers
    Glen

    ReplyDelete
  3. Nice and concise, Glen. To the point and accurate. Like it.

    ReplyDelete