Thursday, October 4, 2012

Hyperinflation in Iran

While monetary authorities can attempt to peg the value of their currency to that of other countries, the real index between it and another is the black market, the true source of value information about any product. In the case of the Iranian Rial, its value has dropped against the US dollar by 65% in a little over 2 years. Steve H.Hanke has posted information on this here. A case could be made that the situation is even worse than it appears, since the value of the US dollar, described as stable by the government, has fallen against a number of commodities, oil and gold, for instance. An analysis of the causes of for the Iranian inflation is given here. As usual, it is government meddling in the economy that produces the distortions that destroy their own medium of exchange. Persians are buying gold and property as a hedge.  Further information from Financial Times here.

Further info here.

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