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Wednesday, June 3, 2009
Newsmax Predicts 'Zimbabwe-Level Inflation'
Topic: Newsmax

From a June 2 article by Julie Crawshaw on Newsmax's Moneynews website:

Investing experts now worry that inflation in the United States will approach that in Zimbabwe because the Federal Reserve will be reluctant to raise interest rates when it should.

Zimbabwe’s inflation rate was last reported at 231 million percent in July.

At no point does Crawshaw quote any "investing expert" offering a contrasting opinion, let alone citing Zimbabwe's situation as a likely scenario the U.S. faces. Nor does she define "hyperinflation" as anything but "Zimbabwe-level inflation."

The Motley Fool, meanwhile, appears to be a much more sane and trustworthy source on the subject:

Let's get one thing clear from the get-go: Hyperinflation is an extreme occurrence.

In the worst-case scenario of hyperinflation, a country's currency is rendered worthless; a trillion dollars wouldn't buy you a Coke. Uber-reporter Michael Lewis wrote an eye-opening account of the kinds of things he saw while visiting recent hyperinflation victim Iceland: an epidemic of people blowing up their Range Rovers for insurance money, hoarding food and foreign currency, and seriously contemplating emigrating from the country.

Stepping back from that dire possibility, a more conservative definition of hyperinflation is a doubling of prices over three years. For the century or so we've been keeping track, the U.S. hasn't come close.


The U.S. banking problems are bad, but we have the rest of our income-producing industries to fall back on. While hyperinflation in the U.S. is possible, it's just not very likely.

Then again, the Motley Fool doesn't have a political agenda to trash President Obama (and then try to profit from said trashing).

Posted by Terry K. at 12:14 AM EDT

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