Thursday, February 21, 2008

So you're worried about a recession?

Heard on Marketplace Morning Report (NPR) this morning:

Worst inflation in the world:

1: Zimbabwe - 100,000% inflation (and this is supposed to be a conservative guess)

2: Iraq - 60% inflation

somewhere down the list: U.S. - 3 to 4% inflation

Two things:

1. Do we have better tools to measure inflation? I remember history teachers using analogies for post-WWI German inflation like "People could save money by wallpapering their walls in German currency". Was Germany as bad as modern Zimbabwe, or was it only 90,000% inflation? Maybe 1,000,000% inflation?

2. Once it gets to 100,000% inflation is it even worth quantifying? I don't think I can wrap my brain around 100,000% inflation (and I have a good education and a high standard of living - two things that would be imperative for comprehending or at least empathizing with such a situation). We should probably go back to analogies.