How Not to Combat Inflation

If anyone tells you that monetary policy has nothing to do with Spend Management, they're just plain wrong. In fact inflation and falling/rising currencies prices have a huge impact on Spend Management in practice. For example, consider the falling US dollar, and how it has made global sourcing from such countries as Brazil and Central Europe less practical in the past year. Over on Supply Excellence this week, Tim Minahan recently offered a fascinating take on monetary policy gone wild. Citing massive inflation in Zimbabwe and the government's theatre of the absurd response at combating it, Tim proves why monetary policy matters when it comes to Spend Management.

According to Tim, "Earlier this month, Zimbabwean officials ordered that prices of many goods be cut in half in an attempt to combat the country's 3,700% inflation rate. (No, that's not a typo.) ... Business owners that fail to comply with the new price controls will be tossed in the poky. Not surprisingly, many businesses say the government-mandated prices are below cost ... BBC News reports that "a total of 1,328 Zimbabwean businessmen and women have been arrested and fined" for breaking the government-ordered price controls within the past two weeks."

Jason Busch

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