Steve Hanke is a maverick free-market economist who for decades has tirelessly advised de-socializing and developing countries against following the disastrous monetary and fiscal policies foisted on them in exchange for bailouts by international bureaucracies like the IMF and World Bank. Hanke’s latest efforts have been directed toward debunking inflation statistics fabricated by governments of developing countries that are trying to cover up the consequences of their highly inflationary or even hyper-inflationary monetary policies. Such official statistics, of course, are accepted and parroted by the media and the aforementioned international bureaucracies. Hanke gives the following example:
In many cases, governments fabricate inflation statistics to hide their economic problems. In the extreme, countries simply stop reporting inflation data. This was the case in Zimbabwe, a country that recorded the world’s second-highest hyperinflation. Results of research determined that Zimbabwe’s hyperinflation peaked in mid-November 2008, at a monthly rate of 7.96 × 1010% — roughly 8 followed by 10 zeros.
But, the Mugabe government stopped reporting inflation data in July 2008, when the peak monthly inflation rate was “only” 2,600%. Unfortunately, these official July 2008 data are still used in press reports and by venerable institutions like the International Monetary Fund. There is, of course, a “little” problem. The hyperinflation actually peaked at monthly rate 30 million times higher than the official peak inflation rate. The true peak of Zimbabwe’s hyperinflation occurred 3.5 months after the government’s last release of official inflation data.
Many countries have followed this course — failing to report any usable monetary data and neglecting to report inflation data in a timely and replicable manner. Those data that are reported are often deceptive, if not completely fabricated. Yes, official economic data from countries with troubled currencies often amount to nothing more than “lying statistics” and should be treated as such.
To address this problem Hanke has started The Troubled Currencies Project under the joint auspices of the Cato Institute and Johns Hopkins University. The project collects data on black market exchange rates and then applies the purchasing power parity theory, which links exchange rates with price levels, to more accurately estimate rates of inflation for troubled currencies. The project currently includes Argentina, Iran, North Korea, Syria, and Venezuela and will update the data and estimates on a regular basis. In the current chart that appears on its site, Syria reports an official annual inflation rate of 36.43% while the rate estimated from the movement of black market exchange rates is 336.50%; the respective inflation rates for Venezuela are 35.24% and 240.10%.
