PRESIDENT MUGABE AND THE AUSSIE 1¢ COIN
There are numerous news articles today about the Clayton's introduction of a $1,000 note to the Zimbabwe economy. There are currency changes around the world all the time - why is this one interesting to the general public? Rampant inflation has been an unfortunate feature of the Zimbabwean economy for some years now (it's currently running at no less than 1,594% per annum at present), trouble is the purchasing power of this note was worthless before it was even issued!
Couple this with the news that Mugabe will spend "$1.5 million" on his birthday celebrations next week, and you can understand why most average Zimbabweans would be livid about the way their economy is being "run". (I don't know what currency that $1.5 million is in - if it's Zimbabwean dollars that's only enough to buy 1,500 tomatoes according to the SMH article - given his profligacy it's probably US$, in which case that's a whole lotta tomatoes!)
This story on how changes to a nation's currency reflect (to a degree) the way that nation's government manages it's economy reminded me about a question I was asked last week when interviewed by Bernadette Young of Perth's 720 ABC radio. The interview came about following the 15th anniversary of the withdrawal of Australia's 1¢ & 2¢ coins in 1992, and Bernadette asked if I thought the 5¢ coin would ever be removed. I hadn't considered the question before (and gibbered something incoherent as a result), but I do believe it will go eventually.
Treasurer Keating announced the withdrawal of the 1¢ & 2¢ coins in his 1990 budget, a time when there were a raft of economic changes underway. Why is the timing of this withdrawal interesting? I came across this article a few months ago - it's an unlikely source for me (The Philadelphia Church of God website!), but it makes a good comment:
"The foremost reason is that when nations choose to eliminate their smaller coinage or degrade the metal content in their coins, it is commonly a tell-tale sign of the currency’s devaluation. To discontinue production or shift metal content would be a blatant admission of the loss of purchasing power of the dollar, and it is beneficial to hide this so as not to damage the dollar’s reputation, even if it means losing millions in minting costs."
Now I bet there wouldn't be many Australians out there that have granted any link between the withdrawal of the 1¢ and 2¢ coins and our government's management of the economy, but the above comment does indeed make sense.
New Zealand made some changes to it's national coinage some months ago, for precisely these reasons - it cost more to make the coins than they were worth. Can you smell Mugabe's Zimbabwean tomatoes in all this?