Saturday, January 17, 2009

Hyperinflation and Zimbabwe - Myth, Misinformation and the "Expert"


The True Cause of Zimbabwe's Hyperinflation

Once again (still) the "experts" can't wait to parrot what they have heard someone else say in order to show off how smart they are. In most cases, it's pomposity and prideful nonsense.

Austrians say the problem is too much paper. Keynesians say the government should spend more. Neither camp has a solid grasp on the effects of interest and both groups are in denial, when it comes to fully understanding debt.

In fact, in macroeconomic terms, you can hardly find a model that illustrates this: the money needed to pay interest is never created inside the system and that principal is extinguished from circulation when a payment of principal is made.

The more you learn about how it really works, who the "experts" are following, why they are following the wrong explanation, how old that theory is and who benefits from its propagation, the easier it is to realize why they can't figure it out.

NEWS FLASH: Hyperinflation is not caused by paper money. It is not caused by too much money. It is caused by unpayable interest rates.

QUESTION: If you're a shopkeeper and you have a loan at an interest rate of 800% and your taxes are nearly 64% (plus a 15% "value added tax" for a total of 79%) of your income, do you think that you will have to raise your prices to stay in business?

ANSWER: Yes. Daily.

QUESTION: Why is this happening? Is someone manipulating their interest rates, causing economic chaos because they want Zimbabwe's gold, platinum and diamonds?

ANSWER: Ya think?
The Reserve Bank of Zimbabwe is refusing to pay for gold deliveries.
Most of the gold mines have collapsed.
Investment banks are buying up the mines at pennies on the dollar.
This did not happen to Zimbabwe because they did not have enough gold.
This did not happen to Zimbabwe because they did not have enough natural resources.
This did not happen to Zimbabwe because the government spent too little.
This did not happen to Zimbabwe because they had too much paper money.
This happened because they had too much debt and the unpayable interest is destroying them.

Say, aren't the people dependent on bank loans for a medium of exchange and don't the banks set the interest rates on their loaned money?

When the banks hike the interest rates to manipulate the money supply to the point that only 15% of the people can work, the medium of exchange is destroyed and the banks end up with the gold, is that financial terrorism?


***January 2013 UPDATE***

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