Monday, January 12, 2009

$25 Billion For A Loaf Of Bread

That's what is going on in Zimbabwe.
It can happen here too.

CNN Money reports this:
Zimbabwe is grappling with hyperinflation now officially estimated at 231 million percent, and its currency is fast losing its value. As of Friday, one U.S. dollar was trading at around ZW$25 billion.

When the government issued a $10 billion note just three weeks ago, it bought 20 loaves of bread. That note now can purchase less than half of one loaf.

Realizing the worthlessness of the currency, the RBZ has allowed most goods and services to be charged in foreign currency. As a result, grocery purchases, government hospital bills, property sales, rent, vegetables and even mobile phone recharge cards are now paid for in foreign currency, as the worthless Zimbabwe dollar virtually ceases to be legal tender.

Once a regional economic model, Zimbabwe is in the throes of an economic crisis, with unemployment running at more than 80 percent and many families unable to afford a square meal. President Robert Mugabe's critics blame his policies for the economic meltdown, but he says the West is sabotaging his efforts.

What caused this crisis? The Zimbabwe crisis started in 2000 when the Zimbabwean government effectively destroyed their agricultural industry by displacing farmers from their lands.

Zimbabwe’s economy immediately went into recession and inflation began to rise.

Do you know what they did to "fix the problem"?
They printed more money.

They did that because they had salaries to pay, projects to finance, things to buy. Just like everyone else they were suddenly faced with the crisis of having to pay much more for things, and they didn’t have enough, so they printed more money to cover it.

Does that sound familiar?
Our US government has been printing money non-stop to pay for the bailouts which was caused by the problems in our financial markets stemming from universal housing (i.e. lending money to people who could not afford to pay the loans back in order to give them easier access to housing) Industry after industry has been affected and the government keep s meddling instead of allowing the markets to correct the problems. Money spent for bailouts are unchecked and untracked. No one really knows what is being done with it.

We are also now in a recession and our unemployment rates are rising.

How is Mr. Obama planning on "fixing thing"? More government spending - More debt - Printing more money.

It looks like we aren't alone - Britain is also printing more money to solve their financial problems. They think that:
"if the Government prints more money and stuffs it into our pockets, we will all feel richer. So we will go out and spend. We might by clothes, or cars, or houses again. And that might just save some of those retailers and carmakers who are in such a bad way right now."

We need to take a lesson not only from our own Great Depression, but from Zimbabwe as well.

We cannot simply spend our way, and print our way out of these economic problems.
It just doesn't work.

This is why we need money backed by gold.

Money backed by nothing is essentially worthless.


Kim said...

It is amazing how officials miss this obvious chain of events time and time again. Bring us back to gold!

skinh said...

I agree with the previous post that there is an obvious chain of events, if it obvious there must be a concerted effort to use these events to undermine US sovereignty or at least the principles on which we are/were founded.

Headless Horseman said...

I just bought Zimbabwe for $7 U.S.

I'm very pleased with my purchase. It goes well with my recent purchase of the Congo for $11 U.S.

I probably should have waited for the prices to go down...but what can i say? I'm impulsive!

Anonymous said...

Don't wait for some government numbskull to wake up and protect the value of your money. Take action and turn your money into gold and safe investments / currencies right now. As I type this, gold is at $833/oz. It is predicted to go to over $2000 (as measured in dollars, meaning that it will cost MORE of your dollars for you to get out later).

Withdraw your savings and turn 50% into Kruggerands. The other part you should invest abroad. Do it with Euro Pacific Capital; they know all about this, and as you know Peter Schiff predicted this crisis. You could do worse. Either way, if you REALLY understand that printing money means inflation, and you hear that the Fed is going to print more money, you should be geting out while the getting is good, at full speed.

Also, once the dollar starts to collapse, everyone and their dog will want to get their money out of the country; 0bama will then put restrictions on how much money you can take out. He might even do a gold confiscation like uncle sam did in the 1930s. By then it will be too late.

There are already new laws on the books designed to stop americans leaving the country with their assets to head off the exodus; Google it for yourself.

Unless and until the Fed is abolished and sound money introduced, you have no obligation to keep your wealth in this criminal ponzi money known as Federal Reserve Notes. If your savings are destroyed after having been warned, then you have only yourself to blame.