Will we see hyperinflation in the next few years?
 

Moderator - will you please move this to Hangar Talk? Posted in wrong forum by mistake...


Today, Zimbabwe released their “new” 50 Billion dollar bill. Didn't have a picture of it but here is the “old” 100 Billion Dollar bill they released some 6 months ago.

http://www.psephoholic.com/images/10...ap_400x274.jpg

Confused? Well, last August they actually slashed 10 zeros in their currency so 10 billion “old” Zimbabwe dollars became 1 “new” Zimbabwe dollar!

However, since their inflation is about 100% a day!!! - yes a day - less than 5 months later, one 50 billion Zimbabwe dollar bill will buy approximately 1 1/2 loafs of bread! :eek:

In other words, if they hadn’t slashed those 10 zeros in August, the “old” 100 billion dollar bill of 6 months ago would’ve had an additional 10 zeros on it.

I know that in the “American scale” a billion is one thousand millions - or 1,000,000,000 (nine zeros). [For those who use the ‘long scale’ or “European scale” a billion is actually one million millions so 1,000,000,000,000 (twelve zeros).]

So if there are any math geeks on APC, out of curiosity - if Zimbabwe hadn’t slashed the 10 zeros last August, what would the “old” 100 Billion ZW dollar bill be called today? :confused:

To be precise it’d have twenty one zeros! Or look like this -
ZW$ 1,000,000,000,000,000,000,000. :eek:


So what’s my point?

I know this is an extreme situation and there’s really no direct correlation to the US however, their hyper inflation is fueled but the government printing more money than their economy can support.

So now that WE are printing all this extra money to pay for OUR bailout programs, in the near future should we all expect to be paying $10 for USatoday paper and $45 for a cup of coffee?

Without getting too political and reverting to the usual blame game – please discuss…



Zimbabwe introduces $50 billion note

HARARE, Zimbabwe (CNN) -- Zimbabwe's central bank will introduce a $50 billion note -- enough to buy just two loaves of bread -- as a way of fighting cash shortages amid spiraling inflation.


Zimbabwe's dollar is virtually worthless, with foreign currency now being used to purchase basic items.

The country's acting finance minister, Patrick Chinamasa, made the announcement in a government gazette released Saturday.

Although Chinamasa did not give the date on which the $50 billion and new $20 billion notes would come into circulation, an official at the Reserve Bank of Zimbabwe said the notes would be distributed to all banks by the end of Monday.

Zimbabwe is grappling with hyperinflation now officially estimated at 231 million percent, and its currency is fast losing its value. As of Friday, one U.S. dollar was trading at around ZW$25 billion.

When the government issued a $10 billion note just three weeks ago, it bought 20 loaves of bread. That note now can purchase less than half of one loaf.

Realizing the worthlessness of the currency, the RBZ has allowed most goods and services to be charged in foreign currency. As a result, grocery purchases, government hospital bills, property sales, rent, vegetables and even mobile phone recharge cards are now paid for in foreign currency, as the worthless Zimbabwe dollar virtually ceases to be legal tender.

Once a regional economic model, Zimbabwe is in the throes of an economic crisis, with unemployment running at more than 80 percent and many families unable to afford a square meal. President Robert Mugabe's critics blame his policies for the economic meltdown, but he says the West is sabotaging his efforts.

In order to attract foreign currency, Zimbabwe's central bank has, since September, licensed at least 1,000 shops to sell goods in foreign currency. All mobile phone service providers are now licensed to accept foreign exchange for airtime and other services.

John Robertson, an economist in Zimbabwe, said he's puzzled by the introduction of the $50 billion and $20 billion notes.

"I am not really sure what these notes would be for," he said. "No one now accepts the local currency. It is a waste of resources to print Zimbabwe dollar notes now. Who accepts a currency that loses value by almost 100 percent daily?"

In August, the RBZ slashed ten zeros from the currency. But the zeroes have bounced back with more vigor.

A power-sharing deal between Mugabe and opposition leader Morgan Tsvangirai signed in September, and brokered by former South African leader Thabo Mbeki, raised hopes of halting Zimbabwe's plunge into economic destruction.

But the pact has stalled over the allocation of key cabinet ministries, with Tsvangirai accusing Mugabe of grabbing all key posts such as defense, home affairs, local government, foreign affairs and finance.

Quite a few economists have been warning of it with the size of the bailouts. But they always say it is avoidable, with proper(and probably very painful) monetary policy. I think to get really bad hyperinflation you need a horribly corrupt government. Obama has brought in Paul Volker as an advisor, so that will probably help with the inflationary pressures American will face from the bailouts.

River - Well, I agree with a lot of what you've said here but my question here is if we will bee seeing hyperinflation or not and why?
It's pointless to be blaming one side only because they both created the mess we're all in...

Very good article; of course the thief Mugabe will have none of that... :(

There doesn't seem to be a generally agreed definition of exactly how high inflation has to be to be termed hyperinflation, but it seems most economists would agree that anything beyond 100% per month certainly qualifies as hyperinflation.

Using that definition I don't believe that we will get hyperinflation here.

I do believe that we will get historically quite high inflation, along the lines of the late 70s and early eighties. I think that we might have a slight, short term of falling prices, but when the coming deficit spending stimulus package hits, inflation will go up to 10%-15% per year for a few years.

Joe

The incoming Adminstration will not do anything but make matters worse. We are heading right back to 1976 thru 1980. High employment, high interest rates, etc. Corrupt goverment? For the last 2 years the legistlative branch of the goverment has been under control of a party that said it was going to clean up corruption. It's getting a good start by selling a senate seat, affairs in Floridia, politicians paying off mistress, governors using call girls, So I would say, hyperinflation is right around the corner.

This survey defines hyperinflation as:

Hyperinflation An inflation rate exceeding 50 percent per month.

Inflation is bad news for the stock market too so I am weary of the bailout program overall however, the other side hasn't really come up with many proposals of their own (probably because they don't want to be perceived as obstructionists to the newly elected president).

the problem, of course, being that we are unlikely to actually use proper and monetary policy, due to the pain.

btw
Sextillion.