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Guest Post: Hyperinflation Has Arrived In Iran
As we have been actively warning for a few days now (Iran's Misery Index and here) - and has now become mainstream media-critical - Iran is accelerating toward significant regime volatility... it seems our note on hyperinflationary case studies and the 'blame' and 'denial' extension is particularly timely...
Submitted by Steve H. Hanke via Cato-at-Liberty,
Since the U.S. and E.U. first enacted sanctions against Iran, in 2010, the value of the Iranian rial (IRR) has plummeted, imposing untold misery on the Iranian people. When a currency collapses, you can be certain that other economic metrics are moving in a negative direction, too. Indeed, using new data from Iran’s foreign-exchange black market, I estimate that Iran’s monthly inflation rate has reached 69.6%. With a monthly inflation rate this high (over 50%), Iran is undoubtedly experiencing hyperinflation.
When President Obama signed the Comprehensive Iran Sanctions, Accountability, and Divestment Act, in July 2010, the official Iranian rial-U.S. dollar exchange rate was very close to the black-market rate. But, as the accompanying chart shows, the official and black-market rates have increasingly diverged since July 2010. This decline began to accelerate last month, when Iranians witnessed a dramatic 9.65% drop in the value of the rial, over the course of a single weekend (8-10 September 2012). The free-fall has continued since then. On 2 October 2012, the black-market exchange rate reached 35,000 IRR/USD – a rate which reflects a 65% decline in the rial, relative to the U.S. dollar.
The rial’s death spiral is wiping out the currency’s purchasing power. In consequence, Iran is now experiencing a devastating increase in prices – hyperinflation. As Nicholas Krus and I document in our recent Cato Working Paper, World Hyperinflations, there have been 57 documented cases of hyperinflation in history, the most recent of which was North Korea’s 2009-11 hyperinflation. That said, North Korea’s hyperinflation did not come close to the magnitudes reached in the recent, second-highest hyperinflation in the world, that of Zimbabwe, in 2008, nor has Iran’s hyperinflation – at least not yet.
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Go long TEPIX (Teheran stock index) futures with currency hedges, bitchez!
Bankster financial terrorists on the loose. Look out.
http://www.youtube.com/watch?v=01-2pNCZiNk
Seriously. Fucking stop it, you homicidal maniacs. Fuck the NWO.
Thats it - keep beating those fuking war drums.
Nice to know that isreal still baits us to fight their wars for them.
http://www.thedailyshow.com/watch/wed-june-17-2009/jason-jones--behind-the-veil---minarets-of-menace
All that war crap is a distraction. This is not the same as say....Europe in 1935 when everyone started arming themselves. Ron Paul was correct, there isn't a single country on Earth that can defeat the US Military and no one is going to try either.
Yeah, that's why we beat Iraq and Afghanistan so quickly.
Nation building sucks, destroying everything is easy.
If you rebuild it they won't grow as many poppies.
Was thinking about this when I learned of the one day 16% drop in rial currency value earlier this week. I am sorry for the Iranian people. Hell to deal with hyperinflation.
A reminder to the rest of us that things move along much more slowly than we expect and then WHAMMO it quickly spirals. Many more currencies and mediums of exchange are at risk for the same.
What's a few less camel jockeys between friends....a mil here, a mil there, what the heck. Just dunno what NY is going to do for taxi drivers going forward.
Greeks
Maybe there will be hyperinflation in the Eurozone as well. Someone I know has noticed that there are lots of freshly minted Spanish euro coins in circulation. He has received them at various places across Europe. Could it be that Spain is minting their own euro coins?
Several of the Euro countries have been selling unauthorized Euro denominated bonds that aren't "sterelized". Oh great, more funny money.
NATO: Pick up the gun... Iran: I don't want to pick it up mister, you'll shoot me. http://www.youtube.com/watch?v=FQ6kMWA2WRk
I'm guessing that Iran's CB is not necessarily printing more but that the relation between money supply and consumer goods has changed thusly: due to sanctions fewer consumer goods being chased by same amount of money > price inflation. USSA/Israel's undeclared war on Iran is beginning to bite. What next?
It isn't the sanctions either.
The unbridled printing by the US,EU and Japan are gonna devalue every other currency.
Iran could "fix" this by going on a gold standard, but it ain't gonna fix their other problems.
What happened to Iran's stock market? Can we get a graph?
This is exactly why embargo's are Acts of War.
There will be blowback,as was planned.
At least they have gold.
Iran bought gold to cut dollar exposureNote to Iran....
Sell all oil n G to the O to the L to the D....!
Fuck the US.....
Quoting Celente is not necessary but as the simple economic parrot I am...First come the trade wars, then currency wars, then real wars. How can a major oil producer already engaged in clandestine trading ops in alternative currencies experience such short term savage inflation if not through direct planning in using the world reserve currency and combined sanctioning designed to starve the unwitting population into revolting thus achieving domination and control without military use? Modern economics is more devastating than any physical means of destruction. Iranian people Im sorry for what my taxes fund. Understand that not all Americans are in tune with Medeline "Worth It" Albrights thought pattern that a million people starved through sanctions to force retaliation and defiance to force the democracy liberation of your country costing another million casualties is acceptable. Some of us have some fucking humanity left, though its tough to get to buried under all the scripts and GMO and fluoride and greed and ignorance....
Ahmedinejad has schooled Ben on how its done
There are many steps leading to war in Iran: NATO”s declaration concerning Syria is one step, i.e., using Syria as the doorway to Iran. And the intelligence services of the West are doing their part.
In addition to the anti-civilian sanctions, a war crime, as Bob Wenzel has pointed out, the CIA and Mossad are rumored to be printing vast numbers of rial in order to devastate the country, no doubt manufactured on the official printing presses of the US enemy power.
The 21st Century would be different they said; no fascism, no Mussolini, no Hitler, no Mao, Stalin, Lenin or Pol Pot. But they didn’t figure on the United States of America and they didn’t figure on a Zionist foreign policy so strong that it envelopes and forces Allies into NATO and into wars and more wars, death and more death - village after village - starvation, burning, loss of everything a man and his family has ever worked for and owned.
Iraq was a sovereign nation that had no designs on attacking the United States. Funny how similar the lies that are destroying the sovereign state of Iran are to the lies manufactured to bring the American people along to destroy Iraq. Will this crime against humanity be a question put to the candidates tonight at the debate? Or is war death and the destruction of nations too trivial for debate?
Or is it because we already know the answer?
Will the misery visit America? Yes. The plight of the Palestinians will become the plight of the human race.
I'm not checking in to find out what those assholes say. All it means to me and my area is a huge f*cking traffic snarl.
***The plight of the Palestinians will become the plight of the human race.***
Our Zionist masters have everything in place (Patriot Act, NDAA, FISA, etc.) to make us all Palestinians in short order!
Good post. Thanks.
currency should be tagged with radioactive elements
Nice night for it. Maybe we'll get to find out just how big a "threat" Iran really is when they start setting off those Wile E. Coyote bombs that Netanyahu is so freaked about.
(BWA HA HA HA!!!)
Talk about Wile E. Coyote bombs that Netanyahu is so freaked about. Harretz has a spoof on this (but not in English). Hilarious
http://www.haaretz.co.il/captain/net/1.1832017
they could fix the rial to a barrel of oil, (but that would take power away from govt)
Iran's current misery index is at 240. lol
It'll be published son
Mispost
Moist sensible post here.
So if we base our currency on the oil trade...and Iran's currency is literally based on the oil trade...basing your currency on the oil trade must not offer any protection from anything. It appears the tide is going out, and we are NAKED!
We're on a black gold standard. That's what's backing the USD. As long as dollar trade volume grows, we're fine. If any contraction occurs (like in the post $147/barrel days), we're screwed. An oil shock becomes a dollar shock and everything else cascades.
Man I hear you. Celente says when people have nothing left to lose they lose it. We'll see if our leaders know that, as it is the main source of revolutions through times gone by.
Of course we are not all supporting these damn wars. At present due to military superiority any backlashon our homelands for these aggressions is held at bay. Maybe the next generations will pay for that as well as our/the debt.
We have to distinquish between de-valuation, and inflation created by printing. Just because the currency is rapidly becoming worthless, compared to foreign exchange, doesn't mean that the government is printing like mad. Its external forces at work against Iran, most definitely. Now, who might that be?
Yeah, as I mentioned previously, it's partly sanctions on imported food and someone else said counterfeiting by Mossad and CIA. No doubt both play a role.
As Ron Paul noted on more than one occasion, sanctions are the equal to a declaration of war. Their currency seems to be the first casualty of that war, the real question is who's the next casualty to be?
And what exactly did Iran do to merit these sanctions?
Achmadinejab's UN speech was certain to evoke such retaliation. Can't the Russians, Chinese or the other 120 nonaligned nations support their currency?
And what exactly did Iran do to merit these sanctions?
Please name a larger direct sponsor of terrorism against the West and western interest?
Iran directly supports Hezbollah and Syria.
Iran armed most of the groups targeting American and Nato forces in Iraq.
Of course it is war. Just the covert kind that goes on everyday. Would you rather direct armed conflict?
And the US supports the House of Saud, Pakistan, and China via massive product orders. Hezbollah and Syria are mere pikers.
Iran = 3 million bpdp. priced in gold would be approximately 147000 ounces per day or 4.6 tonnes per day.
And how does this make the region more stable?
Fellow readers have pointed out, they are a Mosaad front.... but here is a related story just out on Debka:
http://www.debka.com/article/22402/Iran-pumps-large-Bassij-militia-force...
sorry... "Mossad"
N...
You lose, puppet of corporatists.
Iran defies the West.
Israel defies the West.
Zionists of the West own Wall St and Washington.
http://www.youtube.com/watch?v=bCw-oWp1wf8&feature=player_embedded#%21
Fashionistas will probably be too impatient to comprehend this video.
I'm sorry for your troubles, but your sort use the common person to advance corporatism. On your own head be it, debt slave.
So, I guess a barrel of oil in Iran will soon be selling for a peanut butter sammich and a diet coke, if it isn't already.
Great Plan. Lets Create a New Weimar Replubic. Fantastic.
Less Iranian domestic Oil consumption means more oil for the west.
We are living withen a zero sum world.
It's obvious that somebody is counterfeiting money. My money would be on the Fed. ;-) Why not? After all, they are the premier currency counterfeiters in the world. Why wouldn't governments turn to them for their expertise?
This is said tongue-in-cheek. :-O
GOLD, INFIDEL BITCHEZZ!!
when cnbc barturomo referenced zh, i nearly puked
Iran must back it's currency with something of value {gold, oil, SOMETHING} and do it quickly to halt this inflation or the government will soon fall.
Gresham's Law says that will not work.
While we've been focused on troops, carriers, and exercises the real action has been happening behind the scenes with cyberattacks, cloak and dagger stuff, and economic warfare.
Military is just there for fireworks and mop up to "assist" local rebels.
You know,i seen orchastrated shit it my life,but,THIS,takes the cake.
One way or another the Fascist Western Cultures are going to "take out" the Iranian people and institute what they feel is "culturally superior" ways. Lets get all their women to turn themselves into whores like ours are and destroy the family. That ought to get them on-board to Western Values.
...sad to see contempt so moved. http://www.youtube.com/watch?v=13z8IL-IaUs
It would be nice if there were a revolution there and our president actually didn't actively side with the mullah's this time around. There are still many problems in the middle east, but a somewhat secular Iran would go a long way toward making a very hot region a whole lot cooler for a while.
You people can't make up your mind. First you want secular. Then you get secular in Iraq, libya, syria, and what do you do? You bomb 'em. With the help of Islamic fundamentalist extremists!