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Source: ARK Disrupt Issue 97: October 23rd, 2017 https://ark-invest.com/research/ark-disrupt-issue-97-electric-vehicles-artificial-intelligence-bitcoin-and-crispr @bhavanaARK on Twitter

In the 1990s, land “reforms” caused a collapse in agricultural production and an economic bust in Zimbabwe. Monetary policy mistakes compounded its problems, culminating in hyperinflation that devalued its currency almost completely in the middle to the latter part of the last decade, as shown below. Out of desperation in 2009, Zimbabwe made the US dollar its legal tender.

Inflation, Consumer Prices (Annual %)

chart depicting Inflation Consumer Prices in Zimbabwe 1990-2007
Source: World Bank

Unfortunately, Zimbabwe did not reinforce the monetary discipline of dollarization with fiscal discipline, and once again it is in desperate trouble. Capital outflows have accelerated, forcing its central bank to import ~$10 million per week to keep the economy afloat. Nonetheless, acute cash shortages are forcing its banks to ration dollar withdrawals daily.

In the face of this cash crisis, Zimbabwe’s consumers and businesses have resorted to the use of bitcoin, pushing its price on the local Golio.io exchange to $10,000, more than a 60% premium to the price of bitcoin elsewhere in the world. That premium seems to indicate that the dollarized monetary system in Zimbabwe is unraveling and that bitcoin is the preferred store of value, if not means of exchange.

Zimbabwe dollar borrowers should be thrilled that hyperinflation is eviscerating their debt burdens and would do well to transition into the bitcoin ecosystem.  Zimbabwe dollar lenders are getting crushed by worthless fiat currency. Somewhere in this saga, could we be getting a glimpse at the next global banking crisis?



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Fred Pye

Frederick T. Pye


Frederick T. Pye is the Chairman, Chief Executive Officer and Director of 3iQ Corp. He is also the Chairman and Director of 3iQ Digital Holdings Inc. Mr. Pye is recognized for creating and promoting creative and unique investment products for the investment industry.

Mr. Pye has managed private client portfolios with Landry Investment Management and various other investment dealers. Prior to this Mr. Pye was Founder, President & Chief Executive Officer of Argentum Management and Research Corporation, a company dedicated to managing and distributing quantitative investment portfolios including the first long-short mutual fund in Canada.

He was also Senior Vice-President and National Sales Manager of Fidelity Investments Canada and an integral part of the team that saw assets rise from $80 million to over $7.5 billion in assets under management during his tenure. He also held various positions with Guardian Trust Company, which listed the first Gold, Silver and Platinum Certificates on the Montreal Exchange.

Mr. Pye obtained a Masters in Business Administration from Concordia University.