Posted on 10/03/2012 5:27:40 PM PDT by dynachrome
Since the U.S. and E.U. first enacted sanctions against Iran, in 2010, the value of the Iranian rial (IRR) has plummeted, imposing untold misery on the Iranian people. When a currency collapses, you can be certain that other economic metrics are moving in a negative direction, too. Indeed, using new data from Iran’s foreign-exchange black market, I estimate that Iran’s monthly inflation rate has reached 69.6%. With a monthly inflation rate this high (over 50%), Iran is undoubtedly experiencing hyperinflation.
When President Obama signed the Comprehensive Iran Sanctions, Accountability, and Divestment Act, in July 2010, the official Iranian rial-U.S. dollar exchange rate was very close to the black-market rate. But, as the accompanying chart shows, the official and black-market rates have increasingly diverged since July 2010. This decline began to accelerate last month, when Iranians witnessed a dramatic 9.65% drop in the value of the rial, over the course of a single weekend (8-10 September 2012). The free-fall has continued since then. On 2 October 2012, the black-market exchange rate reached 35,000 IRR/USD – a rate which reflects a 65% decline in the rial, relative to the U.S. dollar. The rial’s death spiral is wiping out the currency’s purchasing power. In consequence, Iran is now experiencing a devastating increase in prices – hyperinflation. As Nicholas Krus and I document in our recent Cato Working Paper, World Hyperinflations, there have been 57 documented cases of hyperinflation in history, the most recent of which was North Korea’s 2009-11 hyperinflation. That said, North Korea’s hyperinflation did not come close to the magnitudes reached in the recent, second-highest hyperinflation in the world, that of Zimbabwe, in 2008, nor has Iran’s hyperinflation – at least not yet.
If the US Dollar is ever rejected as the world’s reserve currency, this will be our future.
Then there was the pre-WWII German mark.
True.
Also a reason for Iran to start a war.
The mere existence of non-Muslims is reason enough for them to do that. Of course, this is greater impetus to do so.
I have a million mark note from 1923. Printed on one side only to save the cost of ink/printing
Ping.
I’m trying to get a trillion dollar note from Zimbabwe. I have copies but want the real thing.
3rd one down. Pricey considering what it was worth at the end. I gave one to my sister for her birthday. nyuk, nyuk.
http://www.capitalistpig.com/merch.html
Try ebay. Easy enough to get a 5oo trillion bill. Cost ya about 4 or 5 bucks, mostly shipping.
Folks forget, Austria’s currency went tits-up first, a preview of the fall of the Mark. Curiously, they didn’t make the connection between endless money printing and hyperinflation.
I think that is a distinct possibility. We should watch them like hawks. Knowing Obama, however, we will once again get caught with our pants down.
Is something wrong at FR that we are reposting the same stories over and over?
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