Silver Snowball - What can inflation do for you?

From Ed Freeman, Silver Snowball Admin.

I started Silver Snowball because I thought it might be a good idea for people to own a little silver. Unlike "paper money" which is well . . . paper, silver has been real money for thousands of years. I don't claim to be able to predict the future, though I can certainly observe events that are happening right before our eyes. I don't claim to know for certain that paper currency in countries like the USA will someday become as valuable as currency in a country like Zimbabwe. Then again, I don't claim to know it WON'T happen either.

Again I can only notice what's happening right before our eyes. It sure seems like inflation is getting worse and that paper money doesn't go as far as it used to. I do know that silver seems to hold it's value and a Silver Dollar still buys as much as it used to. So maybe, just maybe being in the silver business and offering people a way to accumulate beautiful silver coins is a decent thing to do.

Here's a "light-hearted" look at what inflation has done in Zimbabwe. Do YOU live in a country that relies on "paper money"? Could it happen in your country? That's your call. You decide. You may want to base your decision on what is happening RIGHT BEFORE YOUR EYES.

Zimbabwe: Country's Unhappy Millionaires

VINCENT Chidatsi sells juice cards under a tree in Kwame Nkurumah Avenue, his "office" for the past five years.

He forks out at least $10 million a day in bus fares to and from Chitungwiza.

"The money I spend on a day is increasing almost daily but the money I get is not increasing at that rate," he said.

Sithabile Matimba is a receptionist in the Graniteside industrial area. She has worked for the same company for 10 years.

Her $100 million a month salary barely covers the basics: she needs $176 million a month for transport from Mabvuku to Graniteside.

"I have to look for money for rent and food. I have to supplement my income through the sale of maputi at work," she said.

Chidatsi and Matimba are among Zimbabwe's unhappy millionaires, who have watched in disbelief as inflation ravaged the purchasing power of the Zimdollar.

While the central bank tried to enhance convenience by introducing higher denominated notes to ease citizens' woes of carrying bags of cash, there is a danger the victory is phyrric.

Only last month, central bank governor Gideon Gono unveiled $10 million, $5 million and $1 million notes, as a stop-gap measure to ease people's pain of carrying large bags of cash.

But as is the norm in a hyperinflationary environment, the prices of goods and services are rising at an astronomical pace.

Since June 2006, Zimbabwe has been in hyperinflationary mode, with month-on- month inflation consistently at over 50 percent over six months

A one-way trip from Epworth into the city cost $700 000 in December, but is now $4 million. A loaf of bread now costs $3 million from $700 000 in December.

Analysts say the high inflation - 26 000 percent in November, according to Reserve Bank of Zimbabwe figures, and 150 000 percent in January according to the International Monetary Fund forecast - has reduced the value of the currency.

"In the world the top percentile of rich people are millionaires but here beggars on the streets are millionaires," said Dr Daniel Ndlela, an independent economist.

In hypeinflationary conditions, a central bank prints larger notes to ease the burden of carrying sackfuls of cash.

Zimbabwe has joined the crusade of doling out larger denominated notes. The $10 million note, introduced last month, is the largest note, not only in Africa but in the world, which analysts say is embarrassing.

"We are the most ridiculous people," said Ndlela. "There is no currency in Africa that is measured in millions.".

Hyperinflation has not only rendered useless the nominal value of the currency, but has whittled down the value of the people's labour.

Analysts say the introduction of large denominations, though a good step in enhancing convenience, will not tame inflation.

"Fundamentally, the introduction of higher denominated notes is a good step in terms of enhancing convenience," said David Mupamhadzi, group economist at the Zimbabwe Allied Banking Group. "But it cannot be used as a substitute to tame inflation."

Mupamhadzi proposes a radical policy shift which might be painful, but is "a necessary cure" for the ailment.

He says there is need to open up the market to curb price distortions driving inflation.

"Although it is going to be painful, we need the pain for future benefits," he said.

In a hyperinflationary environment, governments often try to disguise the true rate of inflation through suppression of publication of money supply statistics, or inflation indices.

Zimbabwe has been no exception and the November inflation figures were only released less that two weeks ago, not by the Central Statistical Office, but by the RBZ when it announced its monetary policy statement.

Governments under hyperinflation can effect price and wage controls to disguise the true rate of inflation.

In June last year, the government ordered businesses to slash prices of all goods and services by half in a populist move that emptied the shelves.

Businesses are still to restock to pre-June levels, notwithstanding cheap funds doled out by the Reserve Bank of Zimbabwe to companies for restocking.

Matimba is worried that if a solution is not found "as a matter of urgency bags (of money) would bounce back".

Dr Ndlela said: "If the authorities refuse to change the currency, and assuming these guys will be there in August, we won't be able to pronounce our money."

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To answer the question in the subject line, "What can inflation do for you?" one thought is that if you have protected your family by being in a silver business that helps you and others acquire silver then maybe inflation can help your business and the value of your silver grow. And if you don't prepare then perhaps the proper question to ask might be, "What can inflation do to you?"

Thank you for all you are doing to help people own silver,

Ed Freeman

Admin, Silver Snowball - the company where EVERY member gets silver. 781-294-7009

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If you think this can't happen in the good old USA Think Again.
It's already beginning!
The banksters want you to believe that precious metal is in trouble or losing value. Just try to buy some from any coin dealer and see what they want for it, if they will even admit they have some.
Now is a perfect time to get all the Silver you can.
As this continues Silver Snowball is working better than ever.

http://www.silversnowball.com/220

Sincerely,

Paul Stramer P.O. Box 116 Eureka Montana USA 800 889 2839 www.silverpatriot.com pstramer@eurekadsl.net Skype: pstramer www.paulstramer.com

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