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How 9 Countries Completely Lost Control Of Inflation
business insider ^ | Sep. 18, 2012, 7:23 PM | Matthew Boesler

Posted on 09/22/2012 7:32:18 AM PDT by BenLurkin

Hyperinflationary episodes have appeared several times over the past century – 55, to be exact – as the world's nations have experimented with fiat currencies backed by the full faith and credit of the governments that issue them.

At times, that full faith and credit has been misplaced – and holders of unstable currencies have been caught empty-handed in countries all over the world.

Even some of the largest economies in the world today, though – like China, Germany, and France – have suffered devastating hyperinflationary episodes.

A major historical precursor of hyperinflation is war that destroys the capital stock of an economy and dramatically reduces output – but the misplaced monetary and fiscal policies that ensue are almost always part of the story.

Hungary: August 1945 - July 1946 Daily inflation rate: 207 percent Prices doubled every: 15 hours

Zimbabwe: March 2007 - November 2008 Daily inflation rate: 98 percent Prices doubled every: 25 hours

Yugoslavia/Republika Srpska: April 1992 - January 1994 Daily inflation rate: 65 percent Prices doubled every: 34 hours

Weimar Germany: August 1922 - December 1923 Daily inflation rate: 21 percent Prices doubled every: 3 days, 17 hours

Greece: May 1941 - December 1945 Daily inflation rate: 18 percent Prices doubled every: 4 days, 6 hours

China: October 1947 - May 1949 Daily inflation rate: 14 percent Prices doubled every: 5 days, 8 hours

Peru: July 1990 - August 1990 Daily inflation rate: 5 percent Prices doubled every: 13 days, 2 hours

Nicaragua: June 1986 - March 1991 Daily inflation rate: 4 percent Prices doubled every: 16 days, 10 hours

France: May 1795 - November 1796 Daily inflation rate: 5 percent Prices doubled every: 15 days, 2 hours

(Excerpt) Read more at businessinsider.com ...


TOPICS: Business/Economy; History
KEYWORDS:
More details on each event at the link.
1 posted on 09/22/2012 7:32:24 AM PDT by BenLurkin
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To: BenLurkin

Well, our leaders are MUCH to smart for that.

Hyperinflation could NEVER happen in America.

“It’s different this time.”


2 posted on 09/22/2012 7:35:40 AM PDT by Travis McGee (www.EnemiesForeignAndDomestic.com)
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To: BenLurkin

The United States — 2012


3 posted on 09/22/2012 7:35:40 AM PDT by bmwcyle (Corollary - Electing the same person over and over and expecting a different outcome is insanity)
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To: Travis McGee

thats a joke


4 posted on 09/22/2012 7:43:06 AM PDT by dalebert
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To: BenLurkin

I’m curious, does anyone know what happens to interest rates in hyperinflation times?

Suppose before the inflation the bank savings rate was 5% per year, and the borrowing rate was 6%. What happens to those numbers?


5 posted on 09/22/2012 7:45:43 AM PDT by Leaning Right
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To: bmwcyle

with all this QE money printing it is coming as sure as the sun will rise.


6 posted on 09/22/2012 7:46:36 AM PDT by Venturer
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To: BenLurkin
Buy gold now then buy silver when gold rises. The key is to know when to sell. Holding all the gold you can get doesn't mean much if you don't monetize it. Unless, of course, you don't need the cash and want to keep it to pass down.

Right now it's all a crap shoot, and the dice won't stop rolling until election day. If we get a disaster redux then the metals will soar. If we get a new team then they will drop. Tough call to make right now.

7 posted on 09/22/2012 7:50:47 AM PDT by wtc911 (Amigo - you've been had.)
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To: BenLurkin

A most excellent and informative post. Too bad stuff like this isn’t taught in our schools. An injection of reality like this would make for a better citizenry.


8 posted on 09/22/2012 7:55:56 AM PDT by Starboard
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To: Travis McGee

9 posted on 09/22/2012 7:56:22 AM PDT by BenLurkin (This is not a statement of fact. It is either opinion or satire; or both)
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To: Venturer

GLD (SPDR ETF Gold Trust) has risen about $20/share over the past three months. Probably just starting its ascent.


10 posted on 09/22/2012 7:59:47 AM PDT by Starboard
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To: Leaning Right
Traditionally, interest rates are always above the rate of inflation because the expected rate of return on any investment must account for inflation. If you ever find interest rates below the rate of inflation (like right now, for instance), then you know that something is seriously wrong and that someone (like the Fed, for instance) is manipulating interest rates to be artificially low by making money available to banks at near zero interest. The Fed is actually getting to a point where they will offer negative interest rates to banks just like Japan did back in the 90s.

The problem is that the banks don't want to lend money because they don't want to take on the risk of default since that risk is higher than normal in this economy, and the payoff (i.e. rates) so low. Fix the economy, and everything else will fall into place. And the only role the government can play in that is to remove the uncertainty, put a set of favorable rules firmly in place for the next 20 years, and then get their own financial house in order. Every dollar in deficit spending is a dollar of value that is stolen from the future of this country.

11 posted on 09/22/2012 8:05:17 AM PDT by Hoodat ("As for God, His way is perfect" - Psalm 18:30)
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To: Leaning Right

I’m curious, does anyone know what happens to interest rates in hyperinflation times?
********
This wasn’t exactly a case of hyperinflation but back in the Carter era (or rather ‘error’) the daily interest rate on the money market that we had parked money in reached an astonishing 17%. As I recall that was abut the high water mark but for quite a while the rate of return was well into the teens.


12 posted on 09/22/2012 8:10:54 AM PDT by Starboard
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To: dalebert

I didn’t think it needed a /sarc tag for the irony impaired.


13 posted on 09/22/2012 8:18:39 AM PDT by Travis McGee (www.EnemiesForeignAndDomestic.com)
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To: Starboard

Gold ETFs are great, until folks realize that each gold bar is on the books many times over, and many of the bars taht do exist have tungsten cores.

The only gold that counts is physical gold in your possession.


14 posted on 09/22/2012 8:20:44 AM PDT by Travis McGee (www.EnemiesForeignAndDomestic.com)
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To: Hoodat

And the only role the government can play in that is to remove the uncertainty, put a set of favorable rules firmly in place for the next 20 years, and then get their own financial house in order.
*******
Very good post. I agree completely that’s what needs to be done but, barring a real economic calamity, one wonders if there’s sufficient political wisdom and will to do this. Taking away the “punch bowl” of government largesse is going to result in significant social unrest and political fallout. The necessary economic/structural adjustments may only be possible if we experience a significant recession/depression IMO (i.e., when we run out of other people’s money and there are no options left).


15 posted on 09/22/2012 8:22:52 AM PDT by Starboard
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To: Travis McGee

I can’t afford gold. But for,years I was buying 4 or 5 ounces of silver a month. I stopped when it hit 22 bucks an ounce so my DCA on it is around 9 bucks or so.

Not that I’m down on gold, I just found silver more practical and affordable in my personal situation. So we have a few pounds of the stuff put back. We would never have been able to do that with gold.

And I figure something is always better than nothing. Lately tho we’ve been buying copper, brass, and lead.


16 posted on 09/22/2012 8:29:14 AM PDT by Lurker (Violence is rarely the answer. But when it is it is the only answer.)
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To: Lurker

Gold is for people who already have no more room on their property for silver, ammunition, guns, stored food, etc.

IOW, not for many people.

(But it is more compact for escape purposes.)


17 posted on 09/22/2012 8:45:02 AM PDT by Travis McGee (www.EnemiesForeignAndDomestic.com)
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To: Travis McGee

By “many of the bars” what kind of percentage out of the total are you talking about? How many is many? Is this somehow verifiable? Just curious to know.

Over the past five years GLD has returned over 100%. It has a large trading volume and may be a suitable component in some portfolios. As with all investments, do your due diligence, monitor carefully and diversify for protection.


18 posted on 09/22/2012 8:53:47 AM PDT by Starboard
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To: Travis McGee
The only gold that counts is physical gold in your possession.

True dat. Also, you only own what you can protect.

19 posted on 09/22/2012 8:57:19 AM PDT by Paine in the Neck (Socialism consumes everything)
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To: wtc911
If we get a disaster redux then the metals will soar. If we get a new team then they will drop. Tough call to make right now.<<

IMHO It's not a tough call at all......Any drop in prices will launch a buying binge.....INFLATION IS ALREADY BAKED IN THE PIE!

(the problem will be....any manipulated drop in PM prices will be met with an increased “premium” from sellers )

20 posted on 09/22/2012 9:02:09 AM PDT by M-cubed
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To: Hoodat; Starboard
Thanks for the replies.

As a follow-up: Let's suppose that person A has $1000 under his mattress, and person B has $1000 in a “safe” bank savings account.

Now hyperinflation hits. Person A's mattress $1000 rapidly becomes worthless.

Historically, is person B that much better off? Will his bank keep raising deposit rates fast enough to at least dampen the hyperinflation effect? Or is person B ruined as well?

21 posted on 09/22/2012 9:19:51 AM PDT by Leaning Right
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To: Leaning Right

Both are hurt by holding cash. Passbook holders will be only slightly better off as their rates will creep up at a glacial pace so they’ll essentially be ruined as well. Bondholders will take a bath on the value of their holdings but that’s another matter. The rates of various forms of money market accounts will rise fairly quickly in response to the general increase in the level of interest rates.


22 posted on 09/22/2012 9:39:18 AM PDT by Starboard
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To: M-cubed

I’m looking harder at silver than gold. I bought my last hundred ounces too near the top and need to cost average. I am also heavy in lead but that’s a different conversation.


23 posted on 09/22/2012 11:07:48 AM PDT by wtc911 (Amigo - you've been had.)
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To: M-cubed

I’m looking harder at silver than gold. I bought my last hundred ounces too near the top and need to cost average. I am also heavy in lead but that’s a different conversation.


24 posted on 09/22/2012 11:12:06 AM PDT by wtc911 (Amigo - you've been had.)
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To: Leaning Right

At least the guy with money in his mattress HAS the money.
The guy with his money in the bank will have a hard time withdrawing it.


25 posted on 09/22/2012 11:17:27 AM PDT by ctdonath2 ($1 meals: http://abuckaplate.blogspot.com)
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