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The One Quintillion Pengo Note

By: Richard Daughty, The Mogambo Guru - The Daily Reckoning


-- Posted Tuesday, 21 August 2007 | Digg This ArticleDigg It!

Naturally, all of the inflation in the money supply will be reflected in inflation in consumer prices (and not just in the prices of stocks, bonds and houses like the government wants), and sure enough, here comes the Bureau of Labor Statistics report saying that the "Producer Price Index for Finished Goods advanced 0.6 percent in July, seasonally adjusted." It was even worse at "the earlier stages of processing", as "prices received by manufacturers of intermediate goods rose 0.6 percent in July" and even farther back on the production chain, "the index for crude materials climbed 1.2 percent" in July! 1.2 percent in one freaking month!

And it shows up from Junior Mogambo Ranger (JMR) Ken C., too, who calculated that if a 14-ounce box of breakfast cereal that cost $1.59 ($0.1136 per ounce) was reduced to a 12-ounce box, but kept the price at $1.59 ($0.1325 per ounce), this would be a 16.7% inflation in the price per ounce of cereal. Welcome to the hell of inflation in prices that you get from an inflation in the money supply, and the outrageous, lying tricks they use to disguise it.

And, since we all seem to be talking "all China, all the time", China's latest reading of inflation went up again, to 5.5%! Hahaha! Welcome to inflation hell, you Chinese morons!

I feel fully justified in calling the Chinese "morons" because Safehaven.com posted the essay "Global Money Supply" by Mike Hewitt of DollarDaze.org, where we surprisingly learn that China is participating in this monetary expansion crap even though "China saw an extended period of hyperinflation shortly after the Central Bank of China took complete control of the money supply and began issuing fiat currency. In June 1937, 3.41 yuan traded for one US dollar. By May 1949, one US dollar fetched 23,280,000 yuan for anyone who cared to have some."

And since we are talking about inflation being manifested in the reduction in the buying power of the currency, the all-time world record was set when "Hungary went through two hyperinflationary periods. From 1922 and 1924 the inflation in Hungary reached 98%. This seems quite timid when compared to the inflation rate of 41.9 quintillion percent reached in mid-1946 recorded as being the worst in modern history. At this rate prices doubled every 15 hours. By July 1946, the 1931 gold pengo is worth 130 trillion paper pengos."

As an interesting aside to this, "The Hungarian National Bank has the dubious honour of circulating the largest denomination banknote - that being the 100 quintillion pengo."

How much is a quintillion? Less than a zillion! Hahaha! Okay, seriously, in the United States and France, it's a 1 followed by 18 zeroes, while in Great Britain and Germany, a quintillion is the number 1 followed by 30 zeroes. Either way, it's a lot. And less than a zillion! Hahaha!

P.S. To get The Daily Reckoning sent directly to your inbox, sign up for our free email newsletter, or if you prefer to use RSS, subscribe to the Daily Reckoning RSS feed.

Editor's Note: Richard Daughty is general partner and COO for Smith Consultant Group, serving the financial and medical communities, and the editor of The Mogambo Guru economic newsletter - an avocational exercise to heap disrespect on those who desperately deserve it.

The Mogambo Guru is quoted frequently in Barron's, The Daily Reckoning and other fine publications.


-- Posted Tuesday, 21 August 2007 | Digg This Article


Visit The Daily Reckoning's website.



 



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