Comments on: A race against inflation http://www.sokwanele.com/thisiszimbabwe/archives/570 This is Zimbabwe is Sokwanele's pro-democracy activist blog. It provides grassroots news and views from Zimbabwe. Wed, 08 Feb 2012 04:20:08 +0000 hourly 1 http://wordpress.org/?v=3.1 By: J.Guy http://www.sokwanele.com/thisiszimbabwe/archives/570/comment-page-1#comment-55149 J.Guy Fri, 18 May 2007 08:49:01 +0000 http://www.sokwanele.com/thisiszimbabwe/archives/570#comment-55149 You wrote: "I was paid my salary 4 days ago which means that I have already lost 12% of my income by the time I even began to spend it. That is 3% per day which is inflation in Zimbabwe right now, if this is annualized it will mean that anything we buy will increase over 4000 times the price in 12 months." No, it is much, much worse than 4000 times. You were paid 4 days ago. You have lost 12% already. So your dollar has shrunk to $0.88, right? Every four days what was a dollar shrinks to $0.88. So if you have a million today, it become 880,000 in four days, which become 880,000x0.88 = 774,400 four days later, which become 774,400x0.88 = 527,732 four days later again and so on. At the end of the year, 91,25 periods of 4 days have passed, and your million is reduced to: $1,000,000 x (0.88^91.25) = $8.59 In other words, what bought a million dollars' worth today will only buy $8.59 a year from now. Which means prices increased not 4000 times, but 116,400 times.<div class="comment-remix-meta"><a href="#" class="replyto" onclick="replyto('55149','J.Guy'); return false;">Reply to this comment</a> --- <a href="#" class="quote" onclick="quote('55149','J.Guy','You wrote: \"I was paid my salary 4 days ago which means that I have already lost 12% of my income by the time I even began to spend it. That is 3% per day which is inflation in Zimbabwe right now, if this is annualized it will mean that anything we buy will increase over 4000 times the price in 12 months.\"\r\n\r\nNo, it is much, much worse than 4000 times. \r\nYou were paid 4 days ago. You have lost 12% already. So your dollar has shrunk to $0.88, right? Every four days what was a dollar shrinks to $0.88. So if you have a million today, it become 880,000 in four days, which become 880,000x0.88 = 774,400 four days later, which become 774,400x0.88 = 527,732 four days later again and so on. At the end of the year, 91,25 periods of 4 days have passed, and your million is reduced to:\r\n\r\n$1,000,000 x (0.88^91.25) = $8.59\r\n\r\nIn other words, what bought a million dollars\' worth today will only buy $8.59 a year from now. Which means prices increased not 4000 times, but 116,400 times.'); return false;">Quote from this comment</a></div> You wrote: “I was paid my salary 4 days ago which means that I have already lost 12% of my income by the time I even began to spend it. That is 3% per day which is inflation in Zimbabwe right now, if this is annualized it will mean that anything we buy will increase over 4000 times the price in 12 months.”

No, it is much, much worse than 4000 times.
You were paid 4 days ago. You have lost 12% already. So your dollar has shrunk to $0.88, right? Every four days what was a dollar shrinks to $0.88. So if you have a million today, it become 880,000 in four days, which become 880,000×0.88 = 774,400 four days later, which become 774,400×0.88 = 527,732 four days later again and so on. At the end of the year, 91,25 periods of 4 days have passed, and your million is reduced to:

$1,000,000 x (0.88^91.25) = $8.59

In other words, what bought a million dollars’ worth today will only buy $8.59 a year from now. Which means prices increased not 4000 times, but 116,400 times.

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