http://www.cato-at-liberty.org/hyperinflation-has-arrived-in-iran/ Posted by Steve H. Hanke Since the U.S. and E.U. first enacted sanctions against Iran, in 2010, the value of the Iranian rial (IRR) has plummeted, imposing untold misery on the Iranian people. When a currency collapses, you can be certain that other economic metrics are moving in a negative direction, too. Indeed, using new data from Iran's foreign-exchange black market, I estimate that Iran's monthly inflation rate has reached 69.6%. With a monthly inflation rate this high (over 50%), Iran is undoubtedly experiencing hyperinflation. When President Obama signed the Comprehensive Iran Sanctions, Accountability, and Divestment Act, in July 2010, the official Iranian rial-U.S. dollar exchange rate was very close to the black-market rate. But, as the accompanying chart shows, the official and black-market rates have increasingly diverged since July 2010. This decline began to accelerate last month, when Iranians witnessed a dramatic 9.65% drop in the value of the rial, over the course of a single weekend (8-10 September 2012). The free-fall has continued since then. On 2 October 2012, the black-market exchange rate reached 35,000 IRR/USD a rate which reflects a 65% decline in the rial, relative to the U.S. dollar. The rial's death spiral is wiping out the currency's purchasing power. In consequence, Iran is now experiencing a devastating increase in prices hyperinflation. As Nicholas Krus and I document in our recent Cato Working Paper, World Hyperinflations, there have been 57 documented cases of hyperinflation in history, the most recent of which was North Korea's 2009-11 hyperinflation. That said, North Korea's hyperinflation did not come close to the magnitudes reached in the recent, second-highest hyperinflation in the world, that of Zimbabwe, in 2008, nor has Iran's hyperinflation at least not yet.
That is a terrible thing for the citizens of Iran, let's hope that it doesn't get worse. No sanctions are worth subjecting an entire country to such devastation.
Yet another proof that one cant run a Shariah compliant state with Shariah non-compliant money. They can print any holy Islamic places on their notes, but paper was, is, and will always be paper. Return to real money.
