AIQ       Inflation                    Sat 07 June 2008

Robert Mugabe seems to want to drive inflation to a record level in Zimbabwe.  But a look at Wikipedia shows that he has a long way to go.  I've downloaded a bit of Wiki that covers inflation.  I used to think that the Weimar Republic headed the list.  There is a picture showing a German woman feeding a stove with German banknotes.  The caption below the picture states that the banknotes will last longer than the amount of wood that could be bought using the money.  A telling thought.  Below is the text that shows that, actually, Hungary had the worst inflation of any country at the end of WWII

The text below was copied from Wikipedia

Germany in 1923 when the rate of inflation hit 3.25 × 10⁶ percent per month (prices double every two days).

Greece during its occupation by Nazi Germany in 1941-1944, when the rate of inflation hit 8.55 × 10⁹ percent per month (prices double every 28 hours).

Yugoslavia's rate of inflation hit 5 × 10¹⁵ percent inflation between 1 October 1993 and 24 January 1994 (prices double every 16 hours).

The most severe known incident of inflation was in Hungary after the end of World War II, peaking at 4.19 × 10¹⁶ percent per month (prices double every15 hours).

Other more moderate examples include:

Eastern European countries such as Belarus and Ukraine in the period of economic transition in the early 1990s

Chile from 1972 to 1974

Mexico from 1982 to 1988

Bolivia in 1985

Argentina and Venezuela in 1989

Peru from 1988 to 1990

Nicaragua from 1985 to 1990

Brazil from the 1980s to the early 1990s

Zimbabwe from 2006.

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But think of the way that money has depreciated during my lifetime.  I about 1937 one of my uncles bought a brand new house at 10 Lisbon Avenue Twickenham for £450 freehold.  I really don't know, but looking at the internet I find that AVERAGE PRICES for a 3-bedroomed house in Twickenham are £492,203.  This works out at 1093.7 time the original price.  Multiply this by a hundred and the inflation is one hundred and nine thousand percent.  And you know why?!  Since the war the government has shipped people into the UK by the boatload.  And as house prices are what people are willing to pay; nothing to do with the cost of building; but purely what mugs can be squeezed to pay to get a roof over their head.

The House in Hampton cost me just over a thousand pounds in 1952.  The whole terrace of six cost just two hundred pounds when they were built in 1885.  Divide two hundred by six, and my two and a half bedroom hose cost thirty three pounds in 1885.  I sold it in 1990 for eighty thousand pounds, that is 2424 times the original cost (or  about two and a half thousand times what it would have cost just after it was built.  And it now seems to be able to fetch over three-hundred-thousand pounds.  So it has leapt from £33 to over £300,000.  That's almost ten thousand times its original price between 1885 and 2008 (123 years).  That's 81% per annum simple interest.