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Zimbabwe Government Down to $217, America May Be Next

Posted By Daniel Greenfield On January 30, 2013 @ 2:09 pm In The Point | 15 Comments


That’s American dollars, [2] not Zimbabwean dollars which generally lack even the value of the paper that they are printed on.

This is what happens when your Debt to GDP ratio is at 220% and your government’s economic plans consists of seizing land from farmers and handing it out to your cronies while trying to borrow even more money to keep the entire disastrous thing going.

Before you get depressed about the state of your finances, spare a thought for the nation of Zimbabwe, which as of Tuesday had exactly $217 in the bank. That’s 217 dollars, not $217 million or $217 billion.

Finance Minister Tendai Biti said Tuesday that that was all that was left in the country’s public accounts after it paid its civil servants last week

But the debt the country built up during those years of nationalist rule by President Robert Mugabe left it with a minimal tax base and few cash reserves

If this kind of economy sounds familiar, it should be. We have one of those too. The only difference is that the United States still has a tax base. Once it loses that the way Zimbabwe did, then we will be Zimbabwe [3].

That tallies with a comment by deputy premier Arthur Mutambara in July last year that Zimbabwe “is practically broke” with the national debt now outstripping the country’s gross domestic product (GDP).

“If you owe someone US$7 billion and your GDP is US$7 billion then you do not have any money,” said the robotics professor before adding, “We are heavily borrowed and we do not have a GDP to talk about.”

That’s a bit of common sense. Unfortunately the United States owes a trillion more than its GDP. So we don’t have a GDP to talk about either. We just have the massive pile of ObamaDebt (TM).

How far away are we from Zimbabwe’s 220% GDP Debt ratio? Not that far away [4].

Scheduled spending cuts from the 2011 budget deal, combined with the fiscal cliff agreement, put the debt on track to reach 200 percent of GDP by 2040, five years later than was projected prior to the passage of the two deals.

By 2040, the nanny state may also be down to $217 in the bank.

Where does Zimbabwe’s money go?

the regular wage bill for civil servants — which accounts for 73 percent of the national budget.

73 percent. Think that’s a lot? Try California [5].

state worker compensation as a percentage of state government revenues (not passed through to local governments and agencies) was actually found to be higher, 84%

Zimbabwe. It’s closer than you think.

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URLs in this post:

[1] Image: http://frontpagemag.com/2013/dgreenfield/zimbabwe-government-down-to-217-america-may-be-next/zimbabwe_100_trillion_2009_obverse1/

[2] That’s American dollars,: http://worldnews.nbcnews.com/_news/2013/01/29/16758970-zimbabwe-checks-its-bank-balance-finds-only-217?lite

[3] then we will be Zimbabwe: http://www.swradioafrica.com/2012/07/06/zimbabwes-debt-problem-a-ticking-time-bomb/

[4] GDP Debt ratio? Not that far away: http://thehill.com/blogs/on-the-money/economy/279857-report-fiscal-outlook-not-improved-by-debt-deal

[5] Try California: http://unionwatch.org/what-percent-of-californias-budget-is-employee-compensation/

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