Francis Schutte

How Vietnam is Coping with Hyper-Inflation

re. Total registered FDI over over $ 45 bn.
The remark of Thang Lee puzzled me and I made some research on the matter. The result is very interesting.
Milton Friedman wrote the early stages of a hyperinflation (Weimar, US civil war) were accompanied by a huge speculative influx of foreign capital. This momentarily can stabilize the equity and credit markets. It is to be seen as a result of false signals given by the Fractional Reserve Banking and the resulting misallocatin of funds. However, after the initial benefit, the influx of foreign capital helped to destabilize the system. At first, foreigners are persuaded that it would subsequently appreciate. However, as the inflation goes on. expectations are reversed, the inflow of capital replaced by an outflow, and the currency depreciates more rapidly.

How Vietnam is Coping with Hyper-Inflation

Unlike in some communist countries, in the western world, like every body (even foreigners) with a driver's licence is allowed to drive a car, we have is a constitutional right of freedom of speech.
It is very hard to call the down leg of a stock market that comes down from a top of 1100 to 434 in only 10 months' time, a correction. In a similar way, it is very hard not to design an official inflation figure of 27 % as Hyperinflation, knowing that adding food, energy and other items would even push up this figure higher. Nothing goes up or comes down in a straight line, not even (hyper)inflation figures.

How Vietnam is Coping with Hyper-Inflation

Enter your comment hereVietnam Suspends Gold Imports, Follows FDR's Great Depression Lead - July 04, 2008 - It seems Vietnam just borrowed a page from the U.S. financial-history books - by suspending all gold imports in June. This marks the first time a Southeast Asian country has ever barred gold imports during skyrocketing inflation, soaring interest rates and an overvalued currency - the Vietnamese dong.

How Vietnam is Coping with Hyper-Inflation

Question: if things are so good in Vietnam, why is the inflation rate 27% (hyperinflation as defined by economists)? why can Vietnamese no longer buy Gold ? and why did the stock market come down from a level of almost 1200 to a level of 450/434 ?

How Vietnam is Coping with Hyper-Inflation

The last part of the chart is for some reason - incorrect - The index slipped shortly below the 400 and is now 450. Thanks for the remark.