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17 Apr 07

British Pound Breaks Through $2: Financial News - Yahoo! Finance

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hyperinflation inflation

King said the rise in inflation partly reflected an "unexpectedly sharp" increase in domestic energy prices during the second half of last year and a rise in food prices caused by a weather-induced global reduction in supply. Inflation was also supported by increased spending and business confidence, he said.
In a letter triggered by the soaring inflation rate, Bank of England Governor Mervyn King said that policy-makers "must ensure" price expectations will be "anchored."

15 Feb 07

Republic or Empire (Harpers.org)

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hyperinflation inflation

Among the creditors that finance this unprecedented sum, two of the largest are the central banks of China ($854 billion in
reserves of dollars and other foreign currencies) and Japan ($850 billion), both of which are the managers of the huge trade
surpluses these countries enjoy with the United States. This helps explain why the United States' debt burden has not yet
triggered what standard economic theory would predict, which is a steep decline in the value of the U.S. dollar followed by
a severe contraction of the American economy—the Chinese and Japanese governments continue to be willing to be paid in dollars
in order to sustain American demand for their exports. For the sake of domestic employment, both countries lend huge amounts
to the American treasury, but there is no guarantee how long they will want or be able to do so.

11 Feb 07

As Inflation Soars, Zimbabwe Economy Plunges - New York Times

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hyperinflation inflation

the government sells gasoline to farmers at a bargain rate of 330 Zimbabwe dollars per liter — and farmers promptly resell it on the black market for 10 times that, leaving their fields idle.
In recent weeks, the national power authority has warned of a collapse of electrical service. A breakdown in water treatment has set off a new outbreak of cholera in the capital, Harare. All public services were cut off in Marondera, a regional capital of 50,000 in eastern Zimbabwe, after the city ran out of money to fix broken equipment.
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- Pay increases have so utterly failed to keep pace with price increases that some Harare workers now complain that bus fare to and from work consumes their entire salaries.
  Citing a leaked central bank document, Reuters reported Tuesday that prices of basic items like meat, cooking oil and clothes had risen 223 percent in the past week alone.
- The trigger of this crisis — hyperinflation — reached an annual rate of 1,281 percent this month, and has been near or over 1,000 percent since last April. Hyperinflation has bankrupted the government, left 8 in 10 citizens destitute and decimated the country’s factories and farms.
- The government awarded all civil servants a 300 percent raise two weeks ago. But the increase is only a fraction of the inflation rate, so the nation’s 110,000 teachers are staging a work slowdown for more money. Measured by the black-market value of Zimbabwe’s ragtag currency, even their new salaries total less than 60 American dollars a month.
  Doctors and nurses have been on strike for five weeks, seeking a pay increase of nearly 9,000 percent, and health care is all but nonexistent. Harare’s police chief warned in a recently leaked memo that if rank-and-file officers did not get a substantial raise, they might riot.
- JOHANNESBURG, Feb. 6 — For close to seven years, Zimbabwe’s economy and quality of life have been in slow, uninterrupted decline.

As Inflation Soars, Zimbabwe Economy Plunges - New York Times

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hyperinflation inflation

For the government, “the big problem about Zimbabwe is that the one thing you can’t rig is the economy,” said one Harare political analyst, who refused to be identified for fear of being persecuted. “When it fails, it fails. And that can have unpredictable effects.”
public workers, the bedrock of government support, this year have begun to walk off the job because there is no longer enough money to pay them a living wage.
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The average teacher, for example, earns barely one-fourth of the salary needed to keep a family of six out of poverty. The military, unhappy with January’s 300 percent pay hike, is seeking 1,000 percent.
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- The black market, which already flourishes beyond the reach of tax collectors and regulators, is likely to grab an even larger share of the economy when the government freezes prices in March, because stores will be unable to make a profit selling products at government-fixed prices.
- They say they can fix prices, but the things that cause price increases come from so many different directions that the government can’t control them all.”
- Efforts to suppress dissent are rising: in recent weeks, trade union officials were seriously injured in police beatings, arsonists burned the home of a leading pro-democracy activist and church leaders were arrested while meeting to discuss the economic crisis.
- The central bank’s latest response to these problems, announced this week, was to declare inflation illegal. From March 1 to June 30, anyone who raises prices or wages will be arrested and punished.