Steve Koerber's Old Blog

Remuera's house sold name since 1998 – 021864166

Hyperinflation

Posted by Steve Koerber on October 8, 2008

If you had asked me several years ago what hyperinflation was, I would have thought it referred to the rapid rise in real estate prices we’ve seen until recently.  All good things come to an end and it seems that world real estate markets are no longer rising, but falling back to levels that correlate with long term (rising) trend lines. 

Click here to find out why I might be writing about hyperinflation.

From the same source, this story is so surreal that I’ve pasted it here so you don’t miss it:

Early in the 21st century Zimbabwe started to experience hyperinflation. Inflation reached 624% in early 2004, then fell back to low triple digits before surging to a new high of 1,730% in March 2007. During that time, the Reserve Bank of Zimbabwe revalued their currency on August 1, 2006 at a rate of 1,000 old Zimbabwean dollars to 1 revalued Zimbabwean dollar. In June 2007, inflation in Zimbabwe had risen to 11,000% from an earlier estimate of 9,000%. On May 5th, 2008 the Reserve Bank of Zimbabwe issued bank notes or “bearer cheques” for the value of ZWD 100 million and ZWD 250 million.[18]. Ten days later on May 15th, new bearer cheques with a value of ZWD 500 million (then equivalent to about USD 2.5) were issued [19]. Five days later on May 20th, a new series of notes in the form of “agro cheques” were issued in denominations of ZWD 5 billion, ZWD 25 billion and ZWD 50 billion. An addition agro cheque was issued for ZWD 100 billion on July 21st. [3] Meanwhile inflation has officially surged to 2,200,000%[4] with some analysts estimating figures surpassing 9,000,000 percent [5]. As of July 22nd, 2008, the value of the ZWD had fallen to approximately 688 billion per 1 USD, or 688 trillion pre-August 2006 Zimbabwean dollars. [6] On August 1, 2008, the Zimbabwe dollar was redenominated by removing 10 zeroes. ZWD10billion became 1 dollar after the redenomination. [7]. On August 19, 2008, official figures announced for June estimated the inflation over 11,250,000 percent (Price doubling every 22 days) [8] Zimbabwe’s annual inflation was 231 million percent in July, a state daily reported Thursday citing official statistics.

My question is this.  In the USA currently, the bailout plan announced to buy toxic mortgages from financial institutions is costing around US$700billion.  Estimates of the US’ indebtedness to the rest of the world varies between $9Trillion to $64Trillion.  Some say that the USA is actually bankrupt and can’t possibly pay off outstanding debtors.  Some say the USA is printing money, hand over fist, in a desperate bid to “appear” to be solvent.  If this is true, is a rapid fall in the value of the US dollar just around the corner?  Will China shift their massive foreign exchange reserves to a safer currency?  Will we see hyperinflation soon?  And how would such inflation in the USA affect countries like Australia and New Zealand?

Also see this report for a chilling hyperinflation prediction that was written several months ago (April 2008) before recent Sep/Oct 08 stock market plunges and Investment Bank failures.

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