In 1903, a lawyer in Germany took out an insurance policy and made payments on it faithfully. When the policy came due in twenty years, he cashed it in and bought a single loaf of bread with the proceeds. He was fortunate. If he had waited a few days longer, the money he received would have bought no more than a few crumbs. Germany had been on the usual fractional reserve gold standard prior to World War I, with the Reichsbank—its central bank—expanding the money supply at a “mild” 1–2 percent inflation rate. When war broke out in 1914, the government followed the standard policy of deficit spending rather than attempting to raise taxes. The Reichsbank’s role was to monetize the … [Read more...]
Inflation, High Inflation, and Hyperinflation
The following article was written by Dr. Thorsten Polleit and was originally published in October 2022. Since then, inflation has come down significantly, but his analysis is still valid. Dr. Polleit is Chief Economist of Degussa Bank and an Honorary Professor at the University of Bayreuth. He also acts as an investment advisor. ~Tim McMahon, editor. Inflation, High Inflation, and Hyperinflation The word “inflation” is heard and read everywhere these days. However, since different people sometimes have very different understandings of inflation, here is a definition: Inflation is the sustained rise in the prices of goods across the board. This definition conveys that inflation … [Read more...]
Worldwide Inflation by Country in 2023
Click for Larger Image Data Source Even though Argentina is in the news due to its high inflation rate it isn't the only country suffering from hyperinflation. It's not even the highest inflation... with Venezuela and Lebanon even higher. In this article, we will look at global inflation rates by country and inflation around the world as of November 2023. The World Inflation Rate The average inflation rate around the world is 11.1%. The global inflation rate surged from 4.35% in 2021, and 3.18% in 2020. Jump to: Top Hyperinflation Countries Inflation in Europe Countries with Deflation Low inflation Countries without Deflation Inflation in Asia Alphabetical … [Read more...]
Two Ways to Destroy the Economy: Hyperinflation and Central Planning
In the following video, Professor Engelhardt says that if he were a "Super Villain" and wanted to destroy an economy, there are two ways that seem obvious to him. The first is "Central Planning", aka. "Socialism" and the Second is Hyperinflation. Since he would be a lazy super villain, he says Central Planning is "too much work", so he would choose hyperinflation. He goes on to say that hyperinflation is difficult to define; even Economists like Murray Rothbard and Ludwig Von Mises used different definitions of plain inflation depending on the context. Generally, inflation was originally defined as an "increase in the money supply in excess of the increase in the demand for money". More … [Read more...]
Hyperinflation in Turkey and Argentina Today?
The Massive Gap Between Official Turkish Inflation and Reality The Turkish economy is a trainwreck. Labor is constantly striking for higher wages because inflation is so high. According to the Labor Studies Group, at least 56 worker strikes broke out in Turkey between January 12th and February 10th, and last year the Turkish currency lost 40% of its value against the U.S. Dollar. Interestingly, contrary to all mainstream Economists, Turkey’s President Erdogan insists that lower interest rates fight inflation. So he has kept interest rates artificially low, making the situation worse. Turkey’s falling exchange rate creates a problem for Turkish businesses that get their revenues in lira and … [Read more...]
9 Inflation Books You Must Read
For the average person, deflation, inflation, and even hyperinflation may seem quite murky or mysterious. However, it's actually a lot easier than you'd think. With the right books, the idea of inflation can be broken down for you, and you can start to understand how monetary inflation works. You might also like: How the FED Controls the Money Supply Money Multiplier Velocity of Money Agflation- What is it? Inflation and Velocity of Money What is the Real Definition of Inflation? Here are 9 books that you have to check out if you want to understand more about inflation. 1) Inflation Matters by Pete Comley Inflation Matters is a truly comprehensive book … [Read more...]
Hyperinflation Strikes Lebanon… Again
Lebanon's economy is crashing and burning... literally. Fiery protests began in August 2019, in the wake of youth unemployment reaching 37% and the general unemployment at 25%. This was even before the entire world shut down due to COVID. And this was just the beginning of hyperinflation for Lebanon. In 2019 Lebanon's inflation rate averaged a reasonable 2.9% for the entire year, but by July 2020 Lebanese inflation was well into hyperinflationary territory at 112.39%. So prices were moving up so fast they had more than doubled from July 2019 through July 2020. And from there it got worse. From August 2019 through August 2020 prices were up over 120%. And remember that the average for 2019 … [Read more...]
January Inflation Setting Stage for Big Run Up
Inflation Summary: Annual Inflation up from 1.36% in December to 1.40% in January. CPI Index rose slightly from 260.474 in December to 261.582 in January. Monthly Inflation for December was 0.09%, January was 0.43%. Next release March 10th Annual inflation for the 12 months ending in January was 1.40% The CPI index itself was up from 260.474 in December to 261.582 in January. Resulting in a monthly inflation rate of 0.43%. Annual inflation for the 12 months ending in December was 1.36%, the 12 months ending in January was 1.40%. Since the BLS rounds their numbers they report both as 1.4%. Setting the Stage for Inflation Due to the Corona Virus, March and April … [Read more...]
Why Hasn’t the U.S. Dollar Experienced Hyperinflation?
I recently answered this question on Quora and thought I'd share the answer here as well. Why hasn't the U.S. dollar experienced hyperinflation? That is an excellent question. As we can see from the chart the FED has engaged in 4 major phases of Quantitative Easing (QE) where they drastically increased their “assets” and one phase of Quantitative Tightening (QT) where they tried to decrease their assets. FED assets is sort of a euphemism for money printing. Basically, it involves creating money out of thin air and then buying something. That “something” becomes an asset on the FED’s books. Prior to 2008, the primary thing the FED bought was U.S. Treasury debt i.e. Treasury Bills, Bonds, … [Read more...]
A Guide for Business Owners: How to Prepare Your Organization for Inflation
COVID-19 has brought the global economy to its knees and in response, the governments of the world have opened the money printing spigots. The U.S. FED for instance has bought roughly 3 TRILLION in assets this year (labeled "Quantitative Easing 4" on this chart). Many fear that this much "money printing" will result in massive inflation or even hyperinflation. As you can see from the chart below, high inflation rates were the bane of the 1970s and early 1980s when the inflation rate rarely dipped below 4%. By contrast, the period beginning with the new millennium has rarely seen inflation go above 4%. Inflation in the 1970s caused much suffering and business disruption, … [Read more...]
