In 2008, shortly before the currency was effectively abandoned, the inflation rate in Zimbabwe hit a ludicrous inconceivable 897,000,000,000,000,000,000,000 percent per year. (An 89 sextillion percent inflation rate!) So now instead of Zim dollars for practical currency, they are using the South African Rand, the Botswana Pula, the British Pound Sterling and the United States Dollar for most transactions. It will be ironic, if and when the US Dollar begins to inflate. Like us, Zimbabweans may soon feel “stuck”, holding withering US Dollars. OBTW, some bad news from Zimbabwe, that came to us by way of Cathy Buckle’s blog: “Enter into all of this the pending compulsory 51% indigenous shareholding of companies and the waves start flooding in over the edge of the floundering boat. Last weekend the Indigenisation and Empowerment Minister, Saviour Kasukuwere, threatened to close down 9,000 companies because they hadn’t yet submitted indigenisation plans to his ministry. Apparently only 480 out of 9, 557 companies had put in the paperwork that effectively gives control of their companies to complete strangers.”
Reader Gina A. wrote to mention that the cost of her prescriptions medicines (some of them fairly exotic) had skyrocketed in the past 18 months. She asked for some solutions. My advice? Read this book: 101 Ways to Save Money on Health Care.
Carla P. notes: “I usually watch the sale papers when buying groceries. I noticed a great price at one of our stores for one of the major brands of peanut butter: $1.39. The trouble is, the jar had gone from an 18 oz. size to a 16.3 oz. size. About a 10% decrease.”
SurvivalBlog reader “Booth” chided me for harping about inflation, when the government’s key inflation figure–the Consumer Price Index (CPI)–is currently at just 1.94% (in figures calculated through June, 2010). The problem with the CPI is that it is so heavily manipulated that it has hardly any useful meaning. The methodologies used for calculating the CPI are fundamentally flawed. For example, it uses hedonic “adjustments” to the price measures to “allow for quality changes.” For some details, see the analyses by economist John Williams (of ShadowStats) and Barry Ritholtz. In my estimation, the real rate of cost of living inflation in the US is somewhere north of 5%. And if you are saying to yourself, “Well, 5% isn’t so bad”, then consider the Rule of 72. At 5% currency inflation, you are robbed of half of your purchasing power every 14.4 years. So it is no wonder that so few people now keep money in banks in passbook savings accounts. Those provide a negative rate of return, when you consider the real world inflation rate. Inflation is orchestrated theft and a hidden form of taxation, plain and simple.