seashore wrote:10% is quite a high interest rate. I didn't realize it was that much.
Firstly it isn't a "Interest rate" It's 10% INFLATION
which has a completely different meaning and the concept is COMPLETELY different to "interest rate".
seashore wrote: Most of the world's currencies are experiencing high inflation right now
Most world currencies are not experiencing inflation, SOME are experiencing DEVALUATION
, fast becoming FIAT
currencies, i.e. less buying power. The countries that have good credit ratings and are not "printing" paper money with which to counter their recession have strong currencies, and hence benign inflation.
Paper money can become worthless due to a governments mismanagement of MONETARY and FISCAL policies, i.e. a FIAT economy.
(the US$ was one of the last currencies to delink from the "Gold Standard" in the "Bretton Woods" agreement in 1971).
(see link for Bretton Woods agreementhttp://en.wikipedia.org/wiki/B ... ods_system
seashore wrote:so I guess the change isn't that extreme, relatively.
Please read up on some fundamentals before sprouting rubbish.
Because paper money is NOT linked to a valuable commodity, e.g. gold, it doesn't have intrinsic value. Paper money has "value" based on primarily a countries Monetary Policy, Fiscal Policy, Deposit Interest Rates, Debt to GDP ratio, and the countries ability to repay its debt. All of these are summarised by the credit rating of a country, (AAA, or A+, or BBB, or B+, etc.). Mauritian money has some value right now but future value will depend on the Mauritian Reserve Bank retaining it's current rating internationally, that "International Rating" is worth it's weight in gold, (pardon the pun). If Monetary and Fiscal policies are good then Interest rates on deposits is a major factor contributing to the strength of a currency. Mauritius inflation is at 10% because the Mauritian reserve bank has allowed deposit interest rates to DECREASE so as to devalue the Mauritian rupee relative to its main export trading partners which are primarily the UK, Europe, South Africa, and the US, they have in turn devalued their currencies, BUT... Mauritius IMPORTS from China and India (strong currencies), plus, the price of commodities is at a all time high, the year on year increase was 24%, this disparity between expensive imports and lower export revenue is the primary source of inflation for Mauritius, then factor in the price gouging by the greedy middle men in Mauritius which Joe mentioned above.
(go here for trade balance http://www.gov.mu/portal/site/cso/menui ... 8a0208a0c/
For the governments bullshit version of inflation go here http://www.gov.mu/portal/goc/cso/ei664/toc.htm
Note how they use the term "weighted index", this is official speak for "we have manipulated the constants to suit ourselves", also note what the basket of goods is comprised of that they base their inflation on. Note also that those weighted constants have smoothed over the 10% increase in electricity from December 2010 and January 2011, in short, the government manipulated the official CPI to suit itself so as to not allienate it's voter base, but anyone with half a brain and a 20 cent calculater can determine for themselves what their real inflation is, that's if they bother to put down the beer and ignore that silly sport where a white ball is kicked around by sultry overpaid teenagers.
All paper money is based on the "Manure Standard", it's just the smell which differs.
Commodities should be regarded as a alternative currency which is used as a safe haven by "Investors" so as to retain the value of a portfolio and to counteract the effects of currency devaluation (when world reserve currencies devaluate, scarce commodities appreciate). When a country resorts to "FIAT policies" with which to try and balance its books it risks rendering its paper money worthless and this cycle of devaluation could lead to hyper inflation, (Germany pre WWII, and currently Zimbabwe).
Coins will always have some value as they are made from a metal (commodity) which always has value, the scarcer the commodity that the coin is made from the higher the value of the coin.
The first instance of recorded inflation occurred during Roman times. When the Romans were running out of funds (gold) due to all their expensive wars they decided to "stretch" their gold reserves, they diluted the gold coins with a cheap metal, once people realised that the so called new gold coins weren't pure gold any more the price of goods went up, i.e. one sheep = two news coins = one old coin, and voila INFLATION, hence the reason why folks would bite a gold coin as a means of authentication.
The Americans are now in a similar position to which the Romans were then, the parallels are stark, and we all know what happened to the Roman Empire....