| T O P I C R E V I E W |
| horgad |
Posted - 06/06/2008 : 09:46:28
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| 25 L A T E S T R E P L I E S (Newest First) |
| redneck |
Posted - 07/16/2008 : 13:45:53
quote:
Zimbabwe's economic meltdown harks back to the collapse of its major export industry, commercial farming, after Mugabe's controversial land reform program early in the decade. That left the nation starved of foreign exchange, but government spending went on.
How did it do that? It printed money. But printing more and more money without an increase in productivity fueled rampant hyperinflation.
As hyperinflation spiraled last year, Fidelity printed million-dollar notes, then 5-million, 10-million, 25-million, 50-million. This year, it has been forced to print 100-million, 250-million and 500-million notes in rapid succession, all now practically worthless. The highest denomination is now 50 billion Zimbabwean dollars (worth a U.S. dollar on the street).
Despite the recent currency shortage, the Zimbabwean dollar has continued to slide against the U.S. dollar and shopkeepers are still increasing their prices steeply. The price of the state-owned Herald newspaper has leaped from 200,000 Zimbabwean dollars early this month to 25 billion now. Before the crunch, a beer at a bar in Harare, the capital, cost 15 billion Zimbabwean dollars. At 5 p.m. July 4, it cost 100 billion ($4 at the time) in the same bar.
An hour later, the price had gone up to 150 billion ($6).
A husband to his wife;
Honey, could you pick up a case of beer,I left $3,600,000,000,000.00 on the nightstand under the lamp.
.
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| horgad |
Posted - 07/16/2008 : 12:51:46
quote:
Originally posted by kavajava
Now it appears that they are about to run out of paper to print the money on...no kidding.
Here is the link--it is worth reading!
http://www.latimes.com/news/nationworld/world/la-fg-money14-2008jul14,0,3947241.story?page=1
If they don't figure out a replacement soon, maybe their inflationary collapse will do an about face and head straight for a deflationary depression...talk about whiplash.
------------Quote----------
The result on the streets was an immediate cash crunch.
"If you think this currency shortage is bad, wait two weeks. By then it will be a disaster," |
| kavajava |
Posted - 07/16/2008 : 10:42:37
Now it appears that they are about to run out of paper to print the money on...no kidding.
Here is the link--it is worth reading!
http://www.latimes.com/news/nationworld/world/la-fg-money14-2008jul14,0,3947241.story?page=1 |
| Ant |
Posted - 07/07/2008 : 18:09:24
quote:
Originally posted by Nickelless
I wonder how much tangible resources--food, land, etc.--is available in Zimbabwe for those lucky enough to have a little silver or copper or gold. Or has Mugabe confiscated everything, not just the land?
The impression I get is that even if someone does have the means to buy something, if Mugabe doesn't want him to have it, he won't get it. And whatever he's already got, he won't have it for long. I don't even know how much is left there that's worth having -- a lot of the infrastructure has decayed.
I met two people who came here from Zimbabwe in 2006. If they had stayed in Zimbabwe, they would be dead. One of them was taken into custody and raped by Mugabe's people. As bad as the inflation is down there, there are a lot of people in the country who have got their hands full trying not to be killed. I think they're just in shock. |
| swusc |
Posted - 07/07/2008 : 00:52:18
quote:
Also--regarding a power void--I read somewhere that there are basically three types of governments: monarchies, democracies, and dictatorships--the article went on to say (and I cannot remember the reasons, but do remember that they made sense at the time) that the next likely rule in the US was by a dictator.
Thoughts?
Well there are other forms of government. A republic would be another one. We had/have a republic of one form, but it is slowing becoming a democracy. All three of those forms of government are very bad.
monarchies and dictatorships are bad because finding a good, honest, fair, smart ruler that can handle running things fairly is about like winning the lottery. The problems with giving few total control is very easy to see. It is a very bad idea for most of the people under that form of government.
"pure" Deomcracies are bad because most people aren't smart enough to run a country. Yet you give total power to the masses. When you let the average rule, then you get average results. Let's be honest average isn't to smart. (40% don't finish high school, 20% can't find the U.S. on a map, 4% can't read and write, few really understand economics, few understand warfare, and so on. Heck how many people really understand all that stuff? I know nothing about fighting a war) The masses will over time become lazy and steal resources from those that have them. Look at the Roman empire...They were very successful, and they allowed themselves to basically enslave the whole known world to support themselves, but I don't think the world would let that happen now. At least I hope it wouldn't. Yet, with all that cheap labor they still collapsed from within.
So we have some that oppresses the people and others that encourages failure. Is anyone really shocked that the founding fathers didn't want any of the three? The set up the rule of law and spread out the power to protect the people, but encourage people to work to get ahead. So whenever you heard people wanting to give more power to the government, having judges write laws from the bench, congress handing out powers to enact laws/wars to the executive branch, and so on scream bloody murder. When you hear them saying democracy is great, remember that it isn't. A pure democracy isn't that great unless you are lazy and stupid. The U.S.A. wasn't founded as a democracy. It was a republic where the rule of law and property property rights existed. A pure democracy has no property rights and no rule of law... it is the rule of majority wins.
Have you ever wondered why the electoral college exist? Why senators were picked by state governments before the early 1900s? Why the one house that was picked by the masses had shorter terms and larger numbers? The founding fathers didn't want to give the masses to much say. They wanted the masses to pick the smarter people and them pick the smarter people to be President and Senators. Then they didn't want any one group to have enough power to screw things up or steal from the people.
Off topic, but do you ever wonder about the right to bear arms? It was setup to allow the people to over throw the government if needed. IT WAS WRITTEN BY PEOPLE THAT JUST OVERTHROWN A GOVERNMENT. Yet, we let the government restrict the guns and weapons we can have and own. People the founding fathers wouldn't have had a problem with people having assault rifles or bombs or any of that stuff. Those people had war ships and cannons. Heck our Navy in the War of 1812 was mostly private ships fighting/stealing for America. Lets see They were ok with people have battle ships of that time period, but they would freak out over someone that had a gun that can shoot a few rounds a second. Let me call bull crap on that right now. Anyone that says otherwise is either an idiot or just has an opinion to push. Heck I don't like some crap people say, but that doesn't give me the right to push/have the government restrict it. The media has the power to kill just as much as guns do. They might have more.
We have a great country. A lot of smart people help build this country-- Millions of soliders fought, suffered, and many died so that we could live and be free (under the rule of some laws). Yet, I see us trying to undo what made us Great. Punishing hard work, rewarding the lazy, removing freedoms, trying to restrict adults, and so on. Government isn't to make people perfect or make the world fair and great. Government is there to make the planning field fair under some set of rules. Anything more than that is a crime against the human race.
-SWUSC
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| horgad |
Posted - 07/06/2008 : 20:13:38
quote:
...that the next likely rule in the US was by a dictator.
Thoughts?
Don't we already have that now.  OK maybe not, but the executive branch of the Federal Government has way more now than was ever intended and nobody seems to care enough to do much about it... |
| kavajava |
Posted - 07/06/2008 : 14:30:15
quote:
Originally posted by horgad
It is interesting and even helpful to look at the problems in Zimbabwe and try and draw correlations to the US.
Probably, the scariest thing in the US or in any major powerhouse country that suffers an economic collapse is that a power void is created and there is no telling who will step forward to fill that void. The masses in desperation will grab at anything that gives them hope. So you are as likely to get the next Hitler as to get the next George Washington. 
Some good points horgad--it is too easy to look at Zimbabwe and interpolate it to here--we do need to keep in mind the differences (which isn't to say it may not get really bad here).
Also--regarding a power void--I read somewhere that there are basically three types of governments: monarchies, democracies, and dictatorships--the article went on to say (and I cannot remember the reasons, but do remember that they made sense at the time) that the next likely rule in the US was by a dictator.
Thoughts? |
| horgad |
Posted - 07/03/2008 : 07:47:10
It is interesting and even helpful to look at the problems in Zimbabwe and try and draw correlations to the US. Heck, I like to go down that path myself from time to time, but always when doing so I keep in the back of my mind that the US is NOT Zimbabwe.
So here are a few important differences to keep in mind:
1. The US is a major food exporter.
2. The US has many, many natural resources beyond what Zimbabwe has.
3. The US is a major if not the major military superpower.
4. The US has nuclear weapons and technology and is a leader in space technology.
5. Every country in the world has some investment in the US and/or the US dollar.
Maybe a better correlation to what might happen here would be the collapse of Russia, but in any case things will play out here differently than Zimbabwe for sure. Russia had a complete collapse, reorganized and is coming back strong. Why? Because the basic resources that made Russia strong in the first place were still there after the collapse. They just needed somebody (Putin) to come along and pick up what pieces were left and put them back together. As they say history does not repeat, but it rhymes.
Probably, the scariest thing in the US or in any major powerhouse country that suffers an economic collapse is that a power void is created and there is no telling who will step forward to fill that void. The masses in desperation will grab at anything that gives them hope. So you are as likely to get the next Hitler as to get the next George Washington. |
| kavajava |
Posted - 07/03/2008 : 00:00:43
Think about that...20% per week...
now go and buy some silver, or sort some pennies. |
| silverhalide |
Posted - 07/01/2008 : 12:40:07
The exchange rate is 12.226 billion per USD so roughly they are experiencing inflation at a rate of 20% per week. |
| Nickelless |
Posted - 06/27/2008 : 17:46:42
I wonder how much tangible resources--food, land, etc.--is available in Zimbabwe for those lucky enough to have a little silver or copper or gold. Or has Mugabe confiscated everything, not just the land? |
| NDFARMER |
Posted - 06/27/2008 : 14:13:17
quote:
Originally posted by kavajava
A pound of copper would be worth about $4, which would be around 40 billion Zimbabwe dollars, which could get you a bit over two dozen eggs (based on the exchange rate a couple days ago--probably less now).
Kind of makes me think all the more that lugging these bags of unsorted pennies down into the basement and then lugging the zincers back up the stairs and back to the bank are really going to be worth it someday. |
| kavajava |
Posted - 06/27/2008 : 13:21:02
A pound of copper would be worth about $4, which would be around 40 billion Zimbabwe dollars, which could get you a bit over two dozen eggs (based on the exchange rate a couple days ago--probably less now). |
| Nickelless |
Posted - 06/27/2008 : 03:57:09
Just wondering, how much would a pound of copper buy in Zimbabwe? |
| kavajava |
Posted - 06/26/2008 : 10:16:31
The official inflation rate was put at 165,000 percent by the government in February, but independent estimates put the real figure closer to 4 million percent.
A shopper lucky enough to find milk will spend 3 billion dollars (30 U.S. cents) for about 1 pint. A tray of 30 eggs, also scarce, can bought in a store for 45 billion dollars ($4.50 U.S.).
Full story here: http://ap.google.com/article/ALeqM5g04c5lk7bR-yMzZo8LcVGo_M0_owD91HAFLG0 |
| Ponce |
Posted - 06/25/2008 : 19:23:23
I read the complete article for that bill elsewhere and it was a meal shared by two...... I was in Rhodesia back in 76 working as an aerial observer between Chipinga and Umtali, right next to the Mosanbique border......... Rhodesia was the bread basket of Africa and from overhead all that you could see was green fields.
By the way, at that time it was something like 89 Z to the dollar. |
| Know Common Cents |
Posted - 06/16/2008 : 19:40:58
Z$ are the true hot potato. They should be spent the moment you receive them. That cycle just can't continue, but it seems to have gone on much longer than most could even imagine.
There has been abject poverty in this area of Africa for many, many years. Before retiring, my Father traveled on business to many countries in central and southern Africa. Each time he'd return, I'd marvel at what he saw. He told me many times that the people would gather in large crowds underneath those few street lights that were still operable. He found out all too soon that they were congregating there to catch and eat the flying insects that were attracted to the light.
He ended up living in Johannesburg for 7 years and I was fortunate to travel there several times to visit him. Johannesburg would rival any major city in the US with its skyscrapers, great hotels and shopping plus outstanding restaurants. Looking beyond that, though, it was absolutely disturbing to see the trains coming into the city from Soweto and the other areas of poverty. The workers were making their morning trip into the city to serve as housekeepers, gardeners, laborers, etc. People packed the trains tight inside the rail cars. Others, though, rode on the roof of the rail cars. Lots of people rode that way. Two separate times I saw someone fall off. They didn't move on the ground, but train didn't stop, of course. It just didn't seem to matter to anyone but me.
Now hold that picture in your minds eye and multiply it by tenfold or more. A very high percentage of the population of southern Africa is infected with the AIDS virus. I spoke to some of the older people while there and they told me that they expect this current generation to be wiped out by disease, famine, crime or lack of education. They're being completely written off.
To conclude that sobering thought, I'll lighten things up just a bit by saying that Castle Beer was my beverage of choice while there. Great stuff. They made Castle Milk Stout that was thick, dark, mellow and packed a high-alcohol punch. Gather 'round if you're 21 or over. I'm buying. |
| kavajava |
Posted - 06/15/2008 : 14:37:49
quote:
Originally posted by HoardCopperByTheTon
If you eat slow do you get billed based on the price when you ordered the food, the price at the time you complete the meal, or some adjusted average? 
I just read something this week that did talk about the price of food in a restaurant going up as you ate. Arggghhh can't remember--think it was in Germany during the Wiemar republic?
Also--workers were paid hourly so that they could spend it before it was devalued more. |
| swusc |
Posted - 06/09/2008 : 19:14:16
http://www.federalreserve.gov/releases/h41/Current/
Updated through June 5, 2008
Fed Notes Issued : $823,442,000,000
U.S. Treasuries purchased : $486,909,000,000
Repurchase Agreements: $114,107,000,000
Term auction credit $150,000,000,000
A lot of interbank loans are done by loaning them Treasuries instead of Notes. It is a way to keep the amount of notes down. (Plus I think the Fed Act of 1913 doesn't allow them to buy anything not backed by the U.S. government) The bank have to return the Treasuries, so we can lump them together I think. Only $11,041,000,000 in Notes were issued by gold reserves (actually the revaluing of gold would make that overstate, but it is now backing that many notes). The reset was done by either coin deposits or buying Treasuries. See those dollar coins do have a use :) The Federal Reserve issues the Mint a paper dollar for them, and they sit in the Federal Reserve vaults backing that paper money.
http://www.brillig.com/debt_clock/ has around $9.4 T
I was an Accountant by trade at one point. I made some money, and went back to school. I am currently trying to get some missing classes to get into Med School. We will see if I can get in. I have read a lot about how the Federal Reserve works and inflation. All of my research lead me to believe Congress's spending is the problem. The Fed just plays with the hand it is dealt.
Inflation is a bitch to predict. The supply of money is easy to estimate, but the velocity of money is very hard. http://en.wikipedia.org/wiki/Velocity_of_money If money turned over twice as fast, then you would need a lot less money. If money turned over half as fast then you need a lot more money (or you will have deflation). If you double the money and Velocity stayed the same, then prices would double, since the amount of goods would be the same. If supply double and Velocity doubled, then you would have 400% inflation. I would bet that Zimbabwe is having the supply increase and the Velocity (who wants to hold a currency with high inflation) has increased together. Big picture is not that simple since you really have inflation some goods and deflation in others.
I think the Fed is hoping that they can pump a ton of liquidity into the markets to protect the banks balance sheets (A big bank failing would be awful for the whole country) and the economic slow down will drop the Velocity enough to kill inflation. When the economy start to turn around (Velocity starts increasing), then they can start pulling it back out without killing off big banks (they don't give a crap about small regional banks).
One thing I have learned.. Theory rarely works in real life!
-SWUSC |
| HoardCopperByTheTon |
Posted - 06/09/2008 : 03:12:46
quote:
Originally posted by Ant
quote:
Originally posted by swusc
Are they cheap dates in the U.S? If so, I haven't met her.
-SWUSC
There are lots of inexpensive things to do on a date with someone. Girls willing to go on inexpensive dates . . . enh, not so many. You could always offer to take her back to your place and show her your copper hoard. 
What a wonderful idea! She should be suitably impressed. After that do you think I could get her to do what I really want her to do?  ... Help run the machines to sort pennies! I have a hard time trying to run all those machines by myself sometimes. |
| Delawhere Jack |
Posted - 06/08/2008 : 19:51:39
quote:
Originally posted by swusc
Exactly Delawhere.
Around 10% of the U.S. debt is in the form of Fed Notes (some of those notes have been lost, which means they can never be repaid).
Only 10%? Where, (what?) is the rest of it? I had assumed that most if not all of the U.S. debt was financed by the sale of Fed Notes.
Also, what do you do for a living? Are you in finance/economics? You seem to have a greater in depth knowledge of these issues than a layman would. |
| swusc |
Posted - 06/08/2008 : 12:28:48
Just wanted to add the above is just for nature of the problem.
There are a lot of variables that would affect things. (ex a high gold price would likely make all coinage stop trade due to the melt value vs face value) |
| swusc |
Posted - 06/08/2008 : 12:20:02
Exactly Delawhere.
The Fed has two jobs. Spread out the inflation created by Congress and be the lender of last resort to protect the financial markets. They failed to be the lender of last resort in the early 1930s. They don't seem ready to fail in that role in the 2000s.
Just think of what the inflation would have been over the years if the government had printed currency instead of creating treasuries? The inflation rate would have been a few points higher I would guess from the 50s on, but the 2000s would have been real bad.
The major problem is Treasuries are becoming more currency-like due to money market funds and computers. It is a lot easier to use a computer to math out cash flow budgets and buy better matches with Treasuries. Credit/debit cards allow less note need and more electronic money(money market funds).
It is getting harder for the Fed to keep inflation (already created by congress) pinned down. Due to factors outside their control.
Around 10% of the U.S. debt is in the form of Fed Notes (some of those notes have been lost, which means they can never be repaid).
Let's say Congress stops borrowing money. How long would it take to print it all with a target inflation of 1-2%?
1-2% inflation plus 1-2% productivity gains would mean 2-4% currency growth.
2% growth would take 116 years to print it all.
4% growth would take 59 years to print it all.
Don't forget they can't borrow any more money during that time. The Fed has done a great job keeping inflation low. They have protected us from higher inflation. (Note: the above numbers disregard interest savings from issuing Fed notes)
That takes to long. Let do it in 30 years. What would the currency growth rate have to be?
Answer: 8%
That would be 6-7% inflation for 30%. Then 1-2% deflation afterwards.
In 2038 assuming gold tracked inflation 6.5%, you could revalue their gold holdings to $6,000 an oz. Giving the U.S. dollar about 1/6 backing to gold. Congress has screwed us! Actually every Congress since Andrew Jackson has. Andrew Jackson had a National Treasury surplus.
Now if you forced the U.S. government to retire Fed Notes with the interest (4%) (this should be budgeted as it is now). Plus allowed the Fed to slow increase the value of the gold (3%) using the offset to forgive U.S. government debt.
27 (2065) years latter we would have U.S. dollar backed by gold at around $37k an oz.
Those 57 years would have had inflation with no real benefit to the citizens, since the benefit was already wasted on prior generations.
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| Delawhere Jack |
Posted - 06/08/2008 : 09:44:47
quote:
Originally posted by swusc
Just remember this fact. If the U.S. government debt was $0, then their would currently be a non official gold standard of $42.22 per oz of gold. That is all the currency they could issue unless they revalued the gold holdings. They can issue currency to replace U.S. government debt. No debt - no currency other than the notes issued from the gold holdings. The Federal Reserve isn't make the U.S. government's budget.
-SWUSC
Good points, thanks. So we can look at it sort of as the congress being debt-junkies, and the Fed as their enabler.
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| Ant |
Posted - 06/08/2008 : 09:27:59
quote:
Originally posted by swusc
Are they cheap dates in the U.S? If so, I haven't met her.
-SWUSC
There are lots of inexpensive things to do on a date with someone. Girls willing to go on inexpensive dates . . . enh, not so many. You could always offer to take her back to your place and show her your copper hoard. |
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