Zimbabwe Hyperinflation
Hyperinflation is without hyperbole the most destructive economic phenomena mankind has encountered. The irony is that hyperinflation is manmade and to some degree self inflicted. Governments or central banks go all in trying to solve one problem only to create a blackhole from which nothing can escape, and their economy craters.
Through the annals of history we read of the Romans debasing their currency, German citizens pushing wheelbarrows of money only to buy a loaf of bread, and Zimbabwe printing the infamous 100 trillion dollar bill.
Through the magic of social networks, and the connections we make, I met someone who not only lived through the hyperinflation of 2007-08 but found an escape hatch. He has found a way to thrive and forge ahead; but not without first going through fiscal hell.
I’ve been begging him for permission to share his story and he finally relented. I’m so excited.
Dollar Hustler, Matthew Chikoto
Tell us a bit about yourself
I’m Matthew Chikoto, also known as “dollarhustler” on Twitter, with the handle @mathewchicks. I grew up in Zimbabwe, in Mashonaland East Province. I’m grateful to narrate my Zimbabwean story as was life in the days of HyperInflation.
Tell us something unique about yourself that we wouldn’t readily know that you don’t mind sharing
I’m a believer in Christ Jesus, and find strength and courage in the Word of God. I have a strong interest in politics, be it local or international. I believe every citizen must understand the laws that govern them and how they are governed. Lastly I believe real empowerment comes from equal access to opportunities, and the resources required for all to live their best life.
Tell us about Zimbabwe and what happened with the economy there
What happened in Zimbabwe in 2007-2008 at the height of hyperinflation was a dire economic situation. There were shortages of food in retail shops, this was caused by the price control measures which were introduced by the government. There was scarcity of basic staples yet black market or parallel market had all these much needed goods. At the centre of this, the economy was nearly fully US dollarized yet the authorities were insisting that the local currency was the only legit currency.
In this void, rose a thriving parallel market where all goods and staples could be found. Here, they accepted only the USD. This was because of the inherent stability and strength of the USD. With a stable currency you could buy basic foods yet on the other hand, in retail stores, shelves were empty since they were required by law to set their prices in local currency.
Image Caption: Harare, capital city of Zimbabwe
How did retail respond to the parallel markets?
This made retail stores find a lucrative side business where they would supply goods to the parallel market in exchange for USD. This was further incentivized by banks and governments by introducing exchange rate disparities as they began offering only half the official rate. So, when you went to the banks, they offered you half of what you would get on the street. Exchange rate variations, policy inconsistencies, and the need to secure political power, pushed the government to print larger and larger bigger notes.
In response, the government blamed its enemies, citing how foreign powers were meddling in the economic affairs as a way to punish them for the land reform program. To them it was not mismanagement but economic sabotage. The people of Zimbabwe paid the price, untold suffering, with wages being eroded daily.
You worked today only to afford your taxi fare home.
Image Caption: Stack of 100 trillion dollar bills.
How did citizens protect their savings, investments and businesses?
The citizens carried the punishment and paid for this economic mess with their lifetimes as they lost all their savings. Their pensions were equally eroded with hyper inflation reducing them to a price of bread. My father lost his lifetime pension, the entire money he worked from 1983 to 2004. He was relegated into poverty during that era.
Those who sought to preserve their savings had to convert everything they had into USD, a stable currency which could be seen as a store of value. This made the demand for foreign currency skyrocket and pushed the rates higher against the local currency.
For most of the business resorted to trade in illegal foreign currencies like Botswana Pula, South African Rand and US dollar. The local currency remained the legal tender but because of it’s worthlessness, the business started to reject it or over-priced their goods if you pay in local currency. This was to allow them to buy the foreign currency, especially the USD, which the whole economy accepted more compared to other currencies.
What happened to those that trusted the narrative and did nothing to protect themselves?
They lost everything, there was no economy to talk about.
Image Caption: Mbare Musika Bus Terminus
What lessons did you learn from this experience
The lesson I learnt is that, when politicians run the economy many things can go wrong. Populist policies which ignored every economic indicator were passed and implemented. The government wanted to look like they were in control of the situation yet they were making things worse. Not only did their denial not help the situation, but it actually made it worse. People’s savings and pensions were eroded, nothing was left for the general populace. The most important lesson of 2008 is that we need to have strong institutions, not political personalities.
Image Caption: Youngest billionaire ever?
Tell us where you are now and what your building is.
I moved to South Africa in 2013 looking for greener pastures. I then worked as a waiter in a restaurant in Capetown. It was necessary to find opportunities after surviving the 2007-8 economic madness. With the arrival of COVID-19 in 2020, restaurants were forced to close and so I lost my job. Unfortunately the one I was working at closed for good, never to open their doors again.
Tell us how have since been able to pivot
Thinking of the days of Hyperinflation back in Zimbabwe in 2008 motivated me to know that I can thrive in any circumstance. Including the current economic lockdowns imposed by COVID-19. So I started my online brand www.dollarhustler.com doing my affiliate marketing on Twitter.
What got you interested in affiliate marketing and investing?
When I lost my job, I looked at what I could do to survive the lockdowns. So I met ChrisJohnson talking about affiliate marketing. I decided to take a bet on myself. I signed up for his affiliate program and made my first affiliate sale in July 2020. That changed my mindset knowing I could make money with affiliate marketing. Since then I have grown everyday and keep making sales every day. My strategy is to build a strong, reliable and credible brand which will bring consistent income in the next 5 years.
What were your first few months like and what is it like now?
My first months were not easy, I could take up to 21 days without a sale yet I was showing up everyday promoting my hustle. I learnt that affiliate marketing was not a “get rich quick scheme” but a long term investment you build for years. I have been surviving mainly on affiliate marketing although I do flipping also.
What advice do you have for someone starting out in affiliate marketing?
The hustle is not a sprint race, it’s a marathon. Show up every day, promote yourself and engage with folks on Twitter, and social media communities where you find potential leads. Be patient and be ready to put in some hard work. Make sure you find ways to make more eyes see your promotions, be reputable and of integrity.
What is your secret advantage or skill that separates you from the rest
I’m patient and hard work is how I live every day. I try to be myself and live authentically as who God created. I believe in consistency and compound magic it brings. Give us a link to where we can go and learn more about you:
https://instagram.com/mas.mbac
Image Caption: Victoria Falls, Zimbabwe.
Bonus Material
Hyperinflation is the great destroyer of wealth both at the individual and national levels. Yes, there is a point where printing money can solve some economic problems, however it can quickly spiral. What’s more, once its out of control it is nearly impossible to stop and the country and the citizens begin to cross over the edge together.
Victoria Falls
The title artwork for this article is not chosen by random chance, it is Victoria Falls and is a national treasure for Zimbabwe. In working with Matt for this article, he chose this art because he said it captured the feel and emotion of the experience.
You rush to the edge, and then there is no turning back.
Recovery
What I find of equal interest to the phenomena of hyperinflation is how a country regains its footing after the nation finally stops printing. I find this of particular interest because we should invest in these assets ahead of time, perhaps even during times of normalized inflation.
1) Bond holders of the former debt are destroyed, perhaps receiving mere cents on their previous dollared investment.
2) The currency gets rewritten. As the nation wants to separate, and rebrand itself from the previous disaster, it does so by issuing a new currency.
3) The new currency is usually valued against real estate, farmland, natural resources, gold, their foreign currency reserves, or future bearing contracts.
4) In nearly all cases, hard assets that are valued worldwide and immune to localized manipulation are preferred.
Closing Thought
It has been a tremendous honor sharing Matt’s story and I hope you’re able to read between the message and find ideas of what you could invest in to shore up your investments and ensure a wealthy future for yourself and your family.
If I could impart one message, its to look for the markers of the problem before it surfaces and keep investing in solid quality assets.
Here are some hallmarks of inflationary problems:
- People unwilling to work – as they value their time more than the currency being offered
- Declaring an alternative or foreign currency illegal, or manipulating the exchange rate
- Efforts to lower oil prices from other exporting nations
- Rent controls to keep prices artificially down
- Rise in hard asset prices
- Empty supermarkets as people scramble to buy food staples.
- Withdrawals from banks limited or restricted
- Rise of parallel markets where the legal currency is not honored
- Governments blaming foreign controls or nations for their problems
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2 comments
I can’t imagine what it feels like to work 2 decades and have nothing leftover by the end of it. And it’s not even your fault that you have nothing by the end, it’s the government’s fault.
Good on you for taking steps to get out of that bad deal. Now it’s nowhere to go but up from here.
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