The INFLATION thread

[webmiester]

Kaya nga eh INFLATION is very very destructive, Even more destructive than economic slowdowns that these clowns from the US Federal Reserve keep on pumping money at a time where inflation is a big risk...

But I don't really see a great depression like of the 1930's. I instead see a 1970's like stagflation as more likely....

Im not so familiar about the 1970's stagflation. Can you give me a little bit more idea of what happened here?

[tidus1203]

Basically in the 1970's the US removed the GOLD STANDARD. Prior to that $1 was worth a certain amount of gold (I am not sure about the exact weight of gold that is worth $1). So in effect the US cannot print money if there is no gold backing it up. In order to print more money they have to find new supply of gold, so money was limited and prices were stable since money was stable too...

When they removed it (the gold standard) the Dollar collapsed really fast since now there is no backing it and they can print it indefinitely as much as they want. So when the Dollar collapsed, prices rise. At that time there was such high inflation something like 20%++ and Paul Volcker was forced to increase interest rates to 20%. That killed the economy but it didn't immediately kill inflation so there were a lot of job losses and business closures but prices didn't really go down with it since there is a lag effect... In short, it was bad since wala na ngang trabaho tumataas pa presyo. Unlike the Great Depression of the 1930's (by the way the economic slowdown in the 1970's was not as bad as the 1930's), the economy collapsed but there was deflation so the rich still were ok that time...

[webmiester]

Basically in the 1970's the US removed the GOLD STANDARD. Prior to that $1 was worth a certain amount of gold (I am not sure about the exact weight of gold that is worth $1). So in effect the US cannot print money if there is no gold backing it up. In order to print more money they have to find new supply of gold, so money was limited and prices were stable since money was stable too...

When they removed it (the gold standard) the Dollar collapsed really fast since now there is no backing it and they can print it indefinitely as much as they want. So when the Dollar collapsed, prices rise. At that time there was such high inflation something like 20%++ and Paul Volcker was forced to increase interest rates to 20%. That killed the economy but it didn't immediately kill inflation so there were a lot of job losses and business closures but prices didn't really go down with it since there is a lag effect... In short, it was bad since wala na ngang trabaho tumataas pa presyo. Unlike the Great Depression of the 1930's (by the way the economic slowdown in the 1970's was not as bad as the 1930's), the economy collapsed but there was deflation so the rich still were ok that time...

That sounds interesting. It appears that the "gold standard" was one of the major differences between the decline in the 1930's and the one in the 1970's...

How was the situation here in the Philippines?

[tidus1203]

About the Philippines, I don't know since I studies economic history in the US. But that time there was martial law here so maybe pretty much everything is state owned so maybe it was easier for them to cope with the global problem back in the 70's.

[tidus1203]

HARARE, Zimbabwe - Amid Zimbabwe's mind-boggling hyper inflation, a new 100 billion dollar bank note has more value as a novelty item on eBay than on the streets of the capital.

The note, launched this week, is worth enough to buy a loaf of bread — if you can find one on Zimbabwe's depleted store shelves. Meanwhile on eBay, the bill was on offer for nearly US$80.

Notes in the millions of dollars are useful only as toilet paper and it's cheaper to light a fire with low denomination bills than with newspaper.

In the political and economic turmoil since disputed March 29 elections, prices have risen almost daily. Factories and businesses have shut down amid empty order books and chronic shortages of gasoline, power, water and spare parts for equipment repairs.

President Robert Mugabe and opposition leader Morgan Tsvangirai signed an agreement Monday to hold talks about power-sharing to end the crisis and restore economic stability. But the news failed to move the exchange rate, since little cash is available.

House prices and lottery prizes are quoted in quadrillions — that's with 15 zeros. Zimbabweans says it's only a matter of time before big ticket items will be priced in the quintillions, which have 18 zeros.

Official inflation is quoted at 2.2 million percent but independent finance houses say it's closer to 12.5 million percent.

One major commercial bank said its automated teller machines are not configured to dispense multi-zero withdrawals and freeze in what it called a "data overflow error." Software writers are busy writing programs to try to overcome the problem.

Urgent electronic transfers in trillions also take several days as electronic accounting systems grapple with transactions in 12 zeros.

Bank transfers command a special rate. A hundred billion dollars is worth US$5 at the official rate, US$1 at the black market rate — but just 30 U.S. cents in a transfer because by the time the funds are processed the Zimbabwe currency can be expected to be worth a lot less.

Shops have dropped six zeros from price tags, adding them again after totals are tallied at tills.

Zimbabwe has 27 denominations of bills and no coins. Lower value bills — 10 million Zimbabwe dollars — are all but obsolete, even in brick-sized bundles. Beggars and street urchins rarely bother to pick up such bills dropped on the street.

But one recent day in Marondera town outside Harare, traffic stopped and business came to a halt when someone — apparently upset by the dizzying rate of inflation — started throwing 50-billion-dollar notes from a moving car. Residents scrambled to collect the money.

The biggest bakery in Harare shut down this month and sent 1,200 workers home on forced leave because flour stocks recently ran out. For years, the bakery donated free loaves every week to a home for the handicapped and charity-run hostels.

One Internet provider has invited customers to pay their fees in gasoline coupons that hold their value.

A 58-year-old Harare financial director who asked not to be identified said his monthly salary is paid in local money which converts to US$50 at the bank rate. When available at his local sports club, a hamburger costs the equivalent of US$12. He hasn't eaten out in a year.

A cup of coffee at a government-owned five-star hotel was 130 billion Zimbabwe dollars, or US$5.30 this week. A waitress at the hotel said she earns 100 billion Zimbabwe dollars, US$4 a month.

A German company stopped shipments of bank note paper to the central bank's printers this month as the European Union looked to strengthen sanctions. The release of new money slowed as the central bank said it was looking to Indonesia and Malaysia to supply the specialized paper.

The daily grind for Zimbabweans to survive in the economic meltdown has won them a rating as the world's unhappiest people in the World Values Survey of the Michigan Institute for Social Research.

Zimbabweans were slightly unhappier than Armenians and Moldovans, also victims poverty and "the legacies of authoritarian rule," the researchers said.

Dereck Nhamo, who manages a warehouse, says he wants to join the teeming ranks of unemployed because he can't afford to work any longer.

Nhamo earns less than his bus fare to the warehouse in Harare but adds to his monthly income by selling firewood collected on weekends in outlying woodlands.

"It doesn't make sense to go to work any more," Nhamo said.

http://www.gmanews.tv/story/108846/Z...-B-dollar-note

The result of printing too much money without the goods to back it all up. Also this is a result of the populists moves of Robert Mugabe regarding the white owned farmland being confiscated and redistributed to the blacks. If our government follows populists, we can see what could possibly happen. Let us all learn the lessons of Zimbabwe. $100B note can only buy one loaf of bread, what a joke

[tidus1203]

HARARE, Zimbabwe - Amid Zimbabwe's mind-boggling hyper inflation, a new 100 billion dollar bank note has more value as a novelty item on eBay than on the streets of the capital.

The note, launched this week, is worth enough to buy a loaf of bread — if you can find one on Zimbabwe's depleted store shelves. Meanwhile on eBay, the bill was on offer for nearly US$80.

Notes in the millions of dollars are useful only as toilet paper and it's cheaper to light a fire with low denomination bills than with newspaper.

In the political and economic turmoil since disputed March 29 elections, prices have risen almost daily. Factories and businesses have shut down amid empty order books and chronic shortages of gasoline, power, water and spare parts for equipment repairs.

President Robert Mugabe and opposition leader Morgan Tsvangirai signed an agreement Monday to hold talks about power-sharing to end the crisis and restore economic stability. But the news failed to move the exchange rate, since little cash is available.

House prices and lottery prizes are quoted in quadrillions — that's with 15 zeros. Zimbabweans says it's only a matter of time before big ticket items will be priced in the quintillions, which have 18 zeros.

Official inflation is quoted at 2.2 million percent but independent finance houses say it's closer to 12.5 million percent.

One major commercial bank said its automated teller machines are not configured to dispense multi-zero withdrawals and freeze in what it called a "data overflow error." Software writers are busy writing programs to try to overcome the problem.

Urgent electronic transfers in trillions also take several days as electronic accounting systems grapple with transactions in 12 zeros.

Bank transfers command a special rate. A hundred billion dollars is worth US$5 at the official rate, US$1 at the black market rate — but just 30 U.S. cents in a transfer because by the time the funds are processed the Zimbabwe currency can be expected to be worth a lot less.

Shops have dropped six zeros from price tags, adding them again after totals are tallied at tills.

Zimbabwe has 27 denominations of bills and no coins. Lower value bills — 10 million Zimbabwe dollars — are all but obsolete, even in brick-sized bundles. Beggars and street urchins rarely bother to pick up such bills dropped on the street.

But one recent day in Marondera town outside Harare, traffic stopped and business came to a halt when someone — apparently upset by the dizzying rate of inflation — started throwing 50-billion-dollar notes from a moving car. Residents scrambled to collect the money.

The biggest bakery in Harare shut down this month and sent 1,200 workers home on forced leave because flour stocks recently ran out. For years, the bakery donated free loaves every week to a home for the handicapped and charity-run hostels.

One Internet provider has invited customers to pay their fees in gasoline coupons that hold their value.

A 58-year-old Harare financial director who asked not to be identified said his monthly salary is paid in local money which converts to US$50 at the bank rate. When available at his local sports club, a hamburger costs the equivalent of US$12. He hasn't eaten out in a year.

A cup of coffee at a government-owned five-star hotel was 130 billion Zimbabwe dollars, or US$5.30 this week. A waitress at the hotel said she earns 100 billion Zimbabwe dollars, US$4 a month.

A German company stopped shipments of bank note paper to the central bank's printers this month as the European Union looked to strengthen sanctions. The release of new money slowed as the central bank said it was looking to Indonesia and Malaysia to supply the specialized paper.

The daily grind for Zimbabweans to survive in the economic meltdown has won them a rating as the world's unhappiest people in the World Values Survey of the Michigan Institute for Social Research.

Zimbabweans were slightly unhappier than Armenians and Moldovans, also victims poverty and "the legacies of authoritarian rule," the researchers said.

Dereck Nhamo, who manages a warehouse, says he wants to join the teeming ranks of unemployed because he can't afford to work any longer.

Nhamo earns less than his bus fare to the warehouse in Harare but adds to his monthly income by selling firewood collected on weekends in outlying woodlands.

"It doesn't make sense to go to work any more," Nhamo said.

http://www.gmanews.tv/story/108846/Z...-B-dollar-note

The result of printing too much money without the goods to back it all up. Also this is a result of the populists moves of Robert Mugabe regarding the white owned farmland being confiscated and redistributed to the blacks. If our government follows populists, we can see what could possibly happen. Let us all learn the lessons of Zimbabwe. $100B note can only buy one loaf of bread, what a joke

[tanoshi]

in a perfect world, all those living in QC would be working in QC, Makati in Makati, best is home on the upper floor and work on the ground floor, in that way cost of travel would be lessen.

in a perfect world, those living in visayas would only work in visayas, those in mindanao work in mindanao, those in luzon work in luzon. that if there is no work opportunity, the community would unite and create their own opportunity.

in a perfect world, the idle lands in the philippine provinces would yield food sufficient to sustain the world.

but the world is not perfect, and there are so much excuses.

-......just my own thoughts.

pending another conflicts in the gulf, below article taken from http://www.arabtimesonline.com/kuwai...=20280&ccid=12 , (got me thinking to better get insurance enough to cover 3years of salary, to shortly sustain my supposed bereaved pregnant wife)

[SIZE=2]Iran says oil likely to touch $500pb on falling dollar, political tensions [/SIZE][SIZE=2]TEHRAN (RTRS): Iran’s OPEC governor said world oil prices could reach as high as $500 per barrel in a few years’ time if the US dollar falls further and political tension worsens, an Iranian weekly said. “If the dollar’s value continues to decrease and if the political crisis becomes worse, the oil price would reach up to $500,” Mohammad Ali Khatibi told Shahrvand-e Emrooz in an interview published on Saturday. He was asked about predictions that oil prices could reach up to $200 per barrel in the next two or three years. Oil dropped $2 to a fresh seven-week low on Friday, extending a decline that has knocked more than $24 off crude in two weeks as high fuel prices continue to batter demand. Crude prices reached an all-time peak of $147 earlier this month.
Disputed
Khatibi also said oil exports from the whole Middle East region would be at risk if the Islamic state came under any military attack over its disputed nuclear programme. “If there is another war in the region, it will not only be Iran’s oil not reaching the market, but rather the oil of the whole region would be cut from the market,” Khatibi said. “In that case, we will not have a price rise. We will have a price explosion.” Around 40 percent of global oil shipments leave the Gulf through the Strait of Hormuz off Iran’s southern coast and Tehran has threatened to impose controls on shipping there if it is attacked, and warned Gulf neighbours of reprisals if they took part.
The United States and Iran are at loggerheads over Tehran’s disputed nuclear work. Washington says it wants a diplomatic solution to the row, but has not ruled out military action if that were to fail.
Tehran says its atomic activities are purely peaceful, aimed at generating electricity.
An easing of tension over Iran rather than a change in supply and demand is the main factor pushing oil prices lower, OPEC President Chakib Khelil said on Saturday.
Khelil added in brief remarks to reporters that world petroleum demand was holding up and the market might remain volatile. He said a recent strengthening of the dollar had also helped pushed prices lower.
“I think the market had to factor in that there that would not be an attack on Iran,” Khelil said, referring to tensions between the United States and Iran over Tehran’s nuclear programme.

Decline
“I don’t see a fall in demand, I don’t see destruction of demand. Supply is the same, or has increased.” Oil dropped $2 to a fresh seven-week low on Friday, extending a decline that has knocked more than $24 off crude in two weeks as high fuel prices continue to batter demand.
Fuel consumption in the United States and other industrialized nations has begun to slide, dragging oil down from record peaks over $147 a barrel on July 11. Additional pressure has come as the US dollar extended gains against the yen and the euro, following reports showing an unexpected rise in US durable goods orders and stronger-than-expected US home sales in June and consumer sentiment for July. But Khelil said diplomacy had more to do with the decline than market fundamentals. He pointed to the participation of senior US diplomat Williams Burns in a July 19 meeting in Geneva between European Union foreign policy chief Javier Solana and officials from Britain, France, Germany, Russia and China and Iran’s chief nuclear negotiator, Saeed Jalili.
The unprecedented participation of a senior US official in the meeting, together with Iranian comments playing down the likelihood of an attack by the United States and Israel, has raised hopes of progress in solving the Iranian nuclear dispute.

“I think that (the Iran situation) is the major event, because with the visit of the US official to Geneva they (market players) had to factor in that there would probably not be (an attack).”
“Then the dollar strengthened, because the Federal Reserve, the US central bank, no longer had the possibility of lowering rates because they’re already very low. The only possibility is to raise then, which tends to reinforce the dollar, unless the European Central Bank decides to raise euro rates which I don’t think it will do.”.
“So I think the people have factored in the strengthening of the dollar and a less intense political situation over Iran, a lot more than other aspects like supply and demand.”

Lower
Khelil reiterated that without geopolitical problems and a weak dollar, oil should be trading much lower at between about $70 to $80 a barrel.
“I had said that if there had not been a fall in the dollar, and if there had not been geopolitical problems, we would probably be at $70 or $80. Normally if the dollar strengthened and the Iran crises is resolved it ought to go in that direction.”
“There could be volatility, up and down, but normally long-term we should move in that (lower) direction, without the interference of geopolitics or of the monetary policy of the US or of others.”

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