Economy


inflation

Hyperinflation is a condition when a country experience very high inflation rate or “out of control”. The minimum inflation rate per month in order to quality as hyperinflation is 50% or equivalent to 12,875% per year. During hyperinflation, prices increase rapidly and out of control as the currency loses its value.

Hyperinflation occurs when there is a rapid increase in the amount of money supply which is not corresponding to the growth in the output of goods and services. This results in imbalance between the supply and demand for the money. Hyperinflation is generally associated with paper money because this can easily be used to increase the money supply.

Hyperinflation effectively wipes out the purchasing power of private and public savings. It will distorts the economy & causes the monetary base, whether specie or hard currency, to flee the country. In the end it makes the afflicted area anathema to investment.

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The following rankings are for the bankruptcies since 1980, as provided by New Generation Research. Asset figures are taken from each company’s most recent annual report filed before its bankruptcy petition.

Rank 1 – Lehman Brothers Holdings

Lehman brothers

Date of bankruptcy filing: 15th September 2008
Assets: $691 billion

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The Big Mac index is published by The Economist in September 1986 as an informal way of measuring the purchasing power parity (PPP) between two currencies. It provides a view of the extent to which market exchange rates deviate from their true values.

The Big Mac was chosen because it is available to a common specification in many countries around the world, with local McDonald’s franchisees having significant responsibility for negotiating input prices. Currently McDonald’s Big Mac is sold in about 120 countries. The Big Mac index enables a comparison between many countries’ currencies.

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Dubai calls on the Rothschild bank for help, perhaps out of desperation. In Saudi Arabia a Saad Group company defaults. US, European and Asian banks are struggling. The end of Ramadan in September might mark the start of an economic depression worse than that of the 1930s.

Rothschild’s Dubai office has been retained by Dubai’s Department of Finance for advice on the US$ 10 billion financial support fund (FSF) the emirate raised on the bond markets.

Nakheel, the property development arm of Dubai World, was the first to benefit, but is likely to be the last of its kind because funds will be handed out on the basis of two criteria: urgency and strategic importance.

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All this talk about “stimulus packages” and “bailouts”…

A billion dollars…

A hundred billion dollars…

Eight hundred billion dollars…

One TRILLION dollars…

What does that look like? I mean, these various numbers are tossed around like so many doggie treats, so I thought I’d take Google Sketchup out for a test drive and try to get a sense of what exactly a trillion dollars looks like.

We’ll start with a $100 dollar bill. Currently the largest
U.S. denomination in general circulation. Most everyone has seen them, slighty fewer have owned them. Guaranteed to make friends wherever they go.

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