How then, do we move backwards? How does a society, with most of the people having no clue of future events, move from being dependent on a vast and intertwined network of goods and services produced by the indigenous people of whereever, to a local resource and renewable energy based society, and do so in the timeframe available (20-30 years using the most liberal extimates, 10-20 with resonable estimates, 5-10 with worst case scenarios), all the while prices on everything increasing, world politics getting more militaristic, governments continuously reducing civil liberties, shortages of goods on the market and weather patterns resembling bad Hollywood movies?
Posted: Sat Jul 19, 2008 11:44 pm Post subject: Zimbabwe introduces 100-billion-dollar note
Zimbabwe introduces 100-billion-dollar note
Quote:
Zimbabwe, grappling with a record 2.2 million percent inflation, has introduced a new 100-billion-dollar bank note in a bid to tackle rampant cash shortages, the central bank said Saturday.
The new note will go into circulation on Monday, the bank said in a statement cited by state media, joining about half a dozen new high denomination notes already issued this year.
In January, a 10-million-dollar note was issued, then a 50-million-dollar note in April. In May, notes for 100 million and 250 million dollars were issued, swiftly followed by those for five billion, 25 billion and 50 billion.
The southern African nation, currently gripped by a post-election crisis, has been ravaged by hyperinflation which shot up from 165,000 percent in February to 2.2 million in June.
Independent economists however believe the official inflation figure is grossly understated, estimating it could be running between 10 million and 15 million percent.
Zimbabwe's chronic economic crisis has left at least 80 percent of the population living below the poverty threshold and mass shortages of basic goods in shops.
Posted: Sat Jul 19, 2008 11:47 pm Post subject: Re: Zimbabwe introduces 100-billion-dollar note
Sweet! Bye bye student loans! _________________ "I was born in a deep forest
I wish I could live here all my life
I am made from stones and roots
My home, these woods and roads
All my life I loved this sound
Of the woods all around
Eagles fly where the winds blow free" -Korpiklaani
Posted: Sun Jul 20, 2008 12:00 am Post subject: Re: Zimbabwe introduces 100-billion-dollar note
Snowrunner wrote:
I am just curious, what exactly IS causing this huge infaltion in Zimbabwe? Anybody got a link?
I can understand that Mugabe basically wrecked the place, but that alone can't be it, can it?
Quote:
Zimbabwe fell into hyperinflation after the government began seizing commercial farms in about 2000. Foreign investors fled, manufacturing ground to a halt, goods and foreign currency needed to buy imports fell into short supply and prices shot up.
Inflation, about 400 percent per year last November, edged over 600 percent in January, but began to soar after the government revealed that it had paid the International Monetary Fund $221 million to cover an arrears that threatened Zimbabwe's membership in the organization.
Quote:
That leaves one option: "much more inflation," he said. "Because this government is always going to be printing its way out of its current difficulty."
Note: 'Foreign investors fled, manufacturing ground to a halt, goods and foreign currency needed to buy imports fell into short supply and prices shot up.''this government is always going to be printing its way out of its current difficulty.'
Posted: Sun Jul 20, 2008 12:14 am Post subject: Re: Zimbabwe introduces 100-billion-dollar note
Hogan wrote:
Note: 'Foreign investors fled, manufacturing ground to a halt, goods and foreign currency needed to buy imports fell into short supply and prices shot up.''this government is always going to be printing its way out of its current difficulty.'
Sound familiar?
First, thanks. And yes, that does sound familiar, also have a look at Chile and Pinochet....
Joined: Aug 24, 2005 Posts: 273 Location: Costa Geriatrica, Spain
Posted: Sun Jul 20, 2008 12:18 am Post subject: Re: Zimbabwe introduces 100-billion-dollar note
Snowrunner wrote:
I am just curious, what exactly IS causing this huge infaltion in Zimbabwe? Anybody got a link?
I can understand that Mugabe basically wrecked the place, but that alone can't be it, can it?
Yup.
Bob Mugabe is basically a robber.
When the President of a country starts stealing everything that isnt bolted down... correction ...including the land which is bolted down, and the money out of peoples bank accounts, thats what happens. Capital flight. Everybody who can gets the hell out. Result nobody will lend Bob anything - except maybe the Chinese - and Bob responds by cranking up presses and just printing $$$ . Inevitable result, hyperinflation, the Red Queens race.
The only thing that keeps the country going is the inflo of hard currency from the enormous Zimbabwean Diaspora - people working abroad smuggling real money into the country to keep their relatives alive, plus an extensive black market based on this input. There's an extensive pan african shadow banking system which allows this and keeps the moolah out of Bobs sweaty hands. I've seen it in action. One guy, who is a friend of a friend of a friend of a friend ( you never know his real name, but hes cool - vouched for by happy customers) in London with a mobile, another in Harare with a mobile. Money changes hands in London, then money changes hands in Harare. International money transfer at its simplest. There's a fairly steep commission but it works a treat. Safer than the official banking system.
Last edited by skeptik on Sun Jul 20, 2008 12:50 am; edited 4 times in total
Posted: Sun Jul 20, 2008 12:41 am Post subject: Re: Zimbabwe introduces 100-billion-dollar note
If you have 15 million percent inflation, what is the point of understating it?
"Oh, inflation is only 2.2 million this month? Phew, I thought we had a problem." _________________ The oil barrel is half-full.
Joined: Mar 07, 2007 Posts: 318 Location: Holland, United Kingdom (of the seven Netherlands)
Posted: Sun Jul 20, 2008 3:57 am Post subject: Re: Zimbabwe introduces 100-billion-dollar note
kublikhan wrote:
If you have 15 million percent inflation, what is the point of understating it?
If you can convince shop keepers to rais prices by "only" 2.2 million percent instead of 15 million percent, you have slowed down inflation a bit. That way they can use the money they print for a few days longer before it becomes toilet paper.
I'm still waiting for that anouncement of a US$ 200 note.
Posted: Sun Jul 20, 2008 4:01 am Post subject: Re: Zimbabwe introduces 100-billion-dollar note
Gerben wrote:
kublikhan wrote:
If you have 15 million percent inflation, what is the point of understating it?
If you can convince shop keepers to rais prices by "only" 2.2 million percent instead of 15 million percent, you have slowed down inflation a bit. That way they can use the money they print for a few days longer before it becomes toilet paper.
I'm still waiting for that anouncement of a US$ 200 note.
Look inflation might be a tad high, but Im sure if you strip out food, energy and other necessities then core inflation is probably quite good.
Two million percent inflation, man thats seriously cranking. Imagine filling up at the bowser you wouldn't want a slow pump by the time you have a 1/4 of a tank the price has already doubled or tripled... _________________ "Once the game is over, the king and the pawn go back in the same box."
-Italian Proverb
Joined: Aug 23, 2004 Posts: 321 Location: New Zealand
Posted: Sun Jul 20, 2008 4:06 am Post subject: Re: Zimbabwe introduces 100-billion-dollar note
Quote:
Gideon Gono, governor of the Reserve Bank of Zimbabwe, said the new notes are for "the convenience of the banking public and corporate sector" in light of price hikes.
"The RBZ has noted with concern the unjustifiable and incessant general increases in prices of goods and services. It is therefore appealing to the business community to follow ethical business practices as well as take an interest in the plight of the general public," Gono said in a statement dated Friday.
Posted: Sun Jul 20, 2008 5:32 am Post subject: Re: Zimbabwe introduces 100-billion-dollar note
In 2000, we used to think 2% inflation was normal. In 2007 we thought 4% was normal. Now 20% is normal. You just get used to it. It's just a lagging indicator.
_________________ People first, then things, then dollars.
There will be enslavement & cannibalism.
Posted: Sun Jul 20, 2008 10:57 am Post subject: Re: Zimbabwe introduces 100-billion-dollar note
Quote:
Zimbabwe, grappling with a record 2.2 million percent inflation, has introduced a new 100-billion-dollar bank note in a bid to tackle rampant cash shortages, the central bank said Saturday.
From Mises' "Theory of Money and Credit", copyright 1912
Quote:
An expected fall in the value of money is anticipated by speculation so that the money has a lower value in the present than would correspond to the relationship between the immediate supply of it and demand for it. Prices are asked and given that are not related to the present amount of money in circulation nor to present demands for money, but to future circumstances. The panic prices paid when the shops are crowded with buyers anxious to pick up something or other while they can, and the panic rates reached on the exchange when foreign currencies and securities that do not represent a claim to fixed sums of money rise precipitously, anticipate the march of events. But there is not enough money available to pay the prices that correspond to the presumable future supply of money and demand for it. And so it comes about that commerce suffers from a shortage of notes, that there are not enough notes on hand for fulfilling commitments that have been entered into. The mechanism of the market that adjusts the total demand and the total supply to each other by altering the exchange ratio no longer functions as far as the exchange ratio between money and other economic goods is concerned. Business suffers sensibly from a shortage of notes. This bad state of affairs, once matters have gone as far as this, can in no way be helped. Still further to increase the note issue (as many recommend) would only make matters worse. For, since this would accelerate the growth of the panic, it would also accentuate the maladjustment between depredation and circulation. Shortage of notes for transacting business is a symptom of an advanced stage of inflation; it is the reverse aspect of panic purchases and panic prices, the reflection of the "bullishness" of the public that will finally lead to catastrophe.
Mises was also one of the earliest to explain why during prolonged inflations individuals experience a definite "shortage of money" when it is actually an "abundance of money" that is causing the inflation in the first place. What happens is that the individuals (anticipating an increase in the rate of inflation) allow their real cash balances temporarily to fall below their (long-run) desired level. In such circumstances the prices being asked and bid for most commodities are no longer related to the present quantity of money in circulation but to the future expected quantity of money. Individuals allow their cash balances to fall dangerously low in the expectation that their future money incomes will rise by enough to allow them to restore their cash balances to the desired level. If the monetary authorities suddenly lower the growth rate of the money supply, money incomes will not increase quickly enough to restore cash balances, and individuals will experience a definite shortage of money. They will complain to the monetary authorities about a lack of liquidity and will insist that all would be well if the monetary authorities would pursue a less restrictive policy. The inability of bankers to understand the causes of this shortage-of-money phenomenon soon leads them down the perilous path of stepping up the growth rate of the money supply.
Posted: Sun Jul 20, 2008 12:41 pm Post subject: Re: Zimbabwe introduces 100-billion-dollar note
smallpoxgirl wrote:
Sweet! Bye bye student loans!
Hello poverty! _________________ Just look at us. Everything is backwards; everything is upside down. Doctors destory health, lawyers destroy justice, universities destroy knowledge, governments destroy freedom, the major media destroy information and religions destroy spirituality.
So it looks to me that they are adding a zero roughly every month. They're all gonna be billionaires, trillionaires, quadrillionaires ... and if our present leaders are not too careful we'll ALL be billionaires and trillionaires and quadrillionaires too ... _________________ Live quotes - crude oil, gold and currencies
http://www.post1.net/lowem/page/livequotes
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