ItiseasytocriticisethechiefofZimbabwesnationalbank。

Infact,itishardnottocriticisehim。

Keyneswarnedthatthereisalotofruininanation。

Mr。

Gonoscontributiontoeconomicsistoshowhowmuchruinthereis。

That–andprovingthatthelawsofsupplyanddemandstillapplytomoney。

ThelatestnewstellsuswhathehathwroughtanditsoundslikeHell:thetrashpilesupinHarareandthewatersystemnolongerworks。

Vendorsaresellingbottlesofwaterfor$25。

Cholerahasbrokenout。

Anthraxtoo。

Shopsareempty。

Peoplearehungry。

Nothingworks。

Thisweek,eventheforcesoflawandorderareontherampage,breakingwindows,lootingwhatlittleremainsintheshops。

Thesoldiersandpolicehaventbeenpaid–atleast,notwithrealmoney。

BetweenAugust2007andJune2008,theZimbabweanmoneysupplyincreased20milliontimes。

Naturally,thisledtothekindofspectacularincreasesinconsumerpricesthatmoderneconomistshadonlyseenonnewsreels。

Consumerpriceinflationwasclockedattwomillion%sixmonthsago。

Now,itissaidtohavespedupto230million%。

Ofcourse,Mr。

Gonorolledoutalltheusualinflation-fightingmeasures–all,thatis,exceptfortheonethatworks。

Priceshavebeencontrolled。

Mr。

Gonopersonallywentround,foundshopownerswhohaveillegallyraisedprices,andhadthemarrested。

Bankwithdrawalshavebeenlimitedto500,000Zimbabwedollarsperday。

Ifyouwantedtobuy2kgofsugar,forexample,youdhavetostandinlineforfourdaysatanautomatedteller。

Butatpresentrates,youcouldstandinlineattheautomatictellerseverydayforeternityandnevergetenoughmoneytobuyadrinkofwater。

TheweekendwasGideonGonos49thbirthday。

Wesalutehim。

Hemaybeamoron;butatleasthesausefulone。

Betterthananotherbadtheory;hehasprovidedabadexample。

Inanagewhencentralbankersallovertheworldaretryingtoavoidadeclineinthecostofliving,Mr。

Gonohasprovedthatthereareworsethings。

ButdespiteGonohimself,Gonoismseemstobegainingadmirersintherestoftheworld;becausethealternativesdontseemtowork。

Keynesianism,forexample。

TheKeynesianssaythatwhenpeoplestopsquanderingtheirmoney,thefedshavetostepinandsquanderitforthem。

Rightnow,practicallyeverygovernmentintheworldispromisinghugenewspendingprogrammes。

Deficitsbedamned!

Intheheatoftheemergency,EuropewaivesasidetheMaastrichtlimitsandAmericapreparesitsfirsttrillion-dollardeficitin2009。

By2010,Americasdeficitcouldeasilyreach$2trn。

ButwillKeynesonsteroids,asonejournalistputit,work?

Theresnoevidenceofitintherecord。

Americatrieditinthe1930s。

Japantrieditinthe1990s。

Inneithercaseweretheresultsfavourable。

MiltonFriedmansawtheproblemwithKeynesianism–itledtorisingprices,andthenstagflation。

Hepointedtothelevermarkedmonetarypolicy。

Givethatapull,hesaid;justmakesuretheeconomyhasenoughmoney,everythingelsewilltakecareofitself。

MaggieThatcherandRonaldReaganbothpulledonthemonetary-policylever。

Andintherecessionof2001-2002,AlanGreenspanyankeditsohardthehandlepracticallybrokeoff。

MiltonFriedmanwasstillaliveatthetimeandactuallyapprovedofGreenspanshandiwork,sayingthathehadsparedtheeconomyaworserecession,orwordstothateffect。

Butnowwefaceanevenworserecession。

AndtheFedisrunningoutofmonetaryammunition。

TheFedskeyrateisonly100basispointsfromzero。

TheFedsresourcesareobviouslylimited,saidBernanke,inaspeechinAustin,Texas。

Butthen,whiletheFedcantpushinterestratesbelowzero,thesecondarrowintheFederalReservesquiver–theprovisionofliquidity–remainseffective,hesaid。

OneoptionisfortheFedtobuylonger-termTreasuryoragencysecuritiesontheopenmarketinsubstantialquantities,Bernankesaid。

Gonoism,inotherwords。

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