April 16th, 2010 
Elisheva Wiriaatmadja
Private investment advisor Martin W. Hennecke warned in October 2008 that the dollar, euro and poundsterling are going to be destroyed Zimbabwe style. Because of hyperinflation, the three currency above will lose their purchasing power little by little until they are worth almost nothing. Hennecke warns as the inflation rises today, cash investment is now one of the highest risk investment.
According to data reported last Friday, Zimbabwe’s annual inflation rate just accelerated 3.5 percent year-on-year in March, from -0.7 percent the previous month. Food prices has been rising continuously for a few years now and back in January 2009 a loaf of bread already cost $25 billion Zimbabwean dollars. That is how bad the hyperinflation has destroyed their currency. Because the Zimbabwean dollar is losing its value, at one point in 2009 gold became the preferable currency. In order to buy a loaf of bread, Zimbabweans have to pan at least 0.3 grams of gold everyday.
In 2003, when the governor of the Reserve Bank of Zimbabwe, Gideon Gono, took office, the annual inflation rate was 619 percent. By the end of 2008 it exceeded 231 million percent! Times Online wrote:
A police inspector’s Christmas bonus last week was worth one American cent on the widely used parallel black market.
Will the US dollar, the Euro and Sterling eventually worth almost nothing and be destroyed like this?
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The current administration has already added about 1.5 trillion in new money into circulation. This is roughly equal to 170% of the previous total amount of money in circulation (http://research.stlouisfed.org/fred2/series/BASE). History tells us that new money added to circulation takes about 2 years to work its way into the system and manifest its inflationary effects (the banks are still sitting on piles of the bailout money), so we have some time. Be aware, a TRILLION is a lot of money. & there is no way that the Fed will be able to back this $ out of the economy in time without raising rates to 45% tomorrow. How can we not have hyperinflation?
Once high rates of inflation are apparent, foreign governments will see the value of their US bonds falling and will probably begin dumping their holdings of dollars, thus accelerating hyperinflation. Once the cost of everything is skyrocketing, the government will not be able to collect taxes fast enough, and it will have to resort to printing even more money (as happened in Germany about 100 years ago when 99% of their government spending was with printed money and only 1% from tax receipts) further speeding up the hyperinflationary death spiral.
What seems to matter as far as initiating hyperinflation appears to be when government deficit spending via printing money increases to about 1/3rd of revenue. When a country crosses this line, hyperinflation starts sometime in the future, but nobody really knows how long in the future. The USA just crossed this line for the 1st time.
Inflation, or in a severe case, hyperinflation, is a local event; it does not affect currencies in foreign countries, and may even help their stock markets via shifting purchasing power to unaffected countries. It will be very bad for anyone who is not prepared.
If you have access to your foreign money in a foreign country, you are safe from hyperinflation, as well as bank failures that may result. In today’s world, Swiss banks can issue debit or credit cards that are good just about everywhere, so you can still spend as you need to. The money you spend via debit or credit card would not be converted into the depreciating currency until the instant that the sale takes place.
Read the quote at the top of this page:
http://swisssolution.webs.com/