Powder Blue Report: Quote Of The Day

Monday, July 21, 2008

Quote Of The Day

Paper money eventually returns to its intrinsic value 100% of the time....at zero

Allan Bartlett

3 Comments:

At 3:40 PM, Anonymous said…

but this time it's different...j/k
At 10:06 AM, Anonymous said…

Is Zimbabwe's currency finding intrinsic value?

Zimbabwe issuing new bank notes to revalue currency

HARARE (AFP) — Zimbabwe will issue new bank notes from August 1 that will knock 10 zeros off the dollar and revalue a 10 billion dollar note to equal one zimdollar, the Central Bank governor said on Wednesday.

"Ten billion dollars today, will as from August 1 be revalued to one zimdollar dollar," Gideon Gono said at a function where he announced a raft of economic measure.

The country's 84-year-old President Robert Mugabe was present at the event.

"With effect from August 1, the Reserve Bank is issuing new currency notes, not bearer cheques which some have been counterfeiting," Gono said in an announcement aimed at addressing acute cash shortages rocking the inflation-battered nation.

The government will also encourage the use of coins which lost value due to hyperinflation, now running at a record 2.2 million percent.

A loaf of bread Wednesday sold for 200 billion zimdollars in Harare.

"We are going to require that prices be denominated in the old and the new currencies," Gono added.

A new 100-billion-dollar bank note came into circulation in Zimbabwe last July 21 in a bid to tackle rampant cash shortages, joining about half a dozen new high denomination notes already issued this year.

In January, a 10-million-dollar note was issued, then a 50-million-dollar note in April. In May, notes for 100 million and 250 million dollars were issued, swiftly followed by those for five billion, 25 billion and 50 billion.

Zimbabwe's inflation rate, already the world's highest, hit an astronomical 2.2 million percent after Mugabe's June 27 re-election, the bank announced earlier this month.

The figure is the first from the authorities in Zimbabwe since the announcement of the rate for February, when it was put at 165,000 percent.

But economic analysts believe that the current inflation figure could be well above 10 million percent mark.

Mugabe had said this month that increasing levels of production was key to efforts to tame inflation.

Once one of Africa's best performing economies, Zimbabwe has been in meltdown since the turn of the decade when Mugabe embarked on a controversial land reform programme which saw thousands of white-owned farms seized by the state.

Mugabe often blames Zimbabwe's economic woes on a package of targeted sanctions imposed by the West.

Inflation first passed the 1,000 percent threshold in May 2006 and has been rising almost continuously ever since.

The government has tried a series of measures to curb inflation, including ordering shops and businesses to slash the price of goods last year.

Mugabe warned Wednesday that he could impose tough emergency measures against businesses he accused of profiteering and fuelling inflation.

"Business people ...don't drive us further than you have done in the past," Mugabe said at the Central Bank function.

"If you drive us more we will impose emergency measures and we don't want to place our country in a situation of emergency rules, they can be tough rules," he warned.
At 10:15 AM, Unknown said…

I think it already has, LOL.