[Inflation reality check] Joel Skousen: Rampant Inflation in Latin America — "All of those predicting the collapse of the dollar need to understand that the dollar is going to look even stronger as this plays out—as others inflate, percentage wise, more than the FED. No currency is strong—it’s just a relative race to the bottom."

World Affairs Brief, February 15, 2013 Commentary and Insights on a Troubled World. Copyright Joel Skousen. Partial quotations with attribution permitted. Cite source as Joel Skousen’s World Affairs Brief (http://www.worldaffairsbrief.com)
THIS WEEK’S ANALYSIS:
State of the Union–the Art of Lying
Rubio Rebuttal–Political Grandstanding
Messed Up LA Police Department
Take Down of Edgar Steel
US Attorney General Argues Against Homeschooling
Military Exercises in Urban Areas
Rampant Inflation in Latin America
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RAMPANT INFLATION IN LATIN AMERICA
Argentina and Venezuela are running between 22 and 30% inflation as corruption feeds those who run the government. Deficits are used to finance the growing burden of social welfare schemes, and a devalued currency keeps exports alive. All governments manipulate their inflation rates. Japan has doubled its rate of inflation but is still claiming only 2%. Real inflation is almost 10%. Argentina claims 10.8% but it is at least 25% and rising rapidly. Brazil is up to an official 5% but real rates are at least double that. Uruguay is running an official rate of 9%.
I lived in South America when another such inflationary cycle was going on. Each nation is trying to boost exports by making their money cheaper (devaluation by printing). The others have to devalue their currency in order to keep pace in the MERCOSUR economic market. Eventually, they end up knocking off 3 or 6 zeros and starting over.
All of those predicting the collapse of the dollar need to understand that the dollar is going to look even stronger as this plays out—as others inflate, percentage wise, more than the FED. No currency is strong—it’s just a relative race to the bottom, but it won’t happen all that fast (at least in the US).

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