'Happy times are here' as inflation runs wild
Santiago (July 14): With an inflation rate of 20 per cent-plus a month (which amounts to about 900 per cent a year), Chileans with a strong instinct for survival are in no doubt about the best hedge against inflation.
The emphasis is on scarce imported goods - cars, motorcycles, hi-fi equipment and typewriters. A provident middle class family will have all its liquid capital tied up in this way, reckoning that even a small sum left in the bank overnight is money lost. Better, in fact, to spend the day's surplus in a restaurant or nightclub than to allow it to lie idle.
In 1969, a family saloon - say a Volvo - would have cost 13,000 escudos in Chile. In a reasonable state of upkeep that same car can today fetch more than 20 million escudos in the second-hand market - enough to start a small business, or provide sufficient funds to quit the country in an emergency.
Unhampered by price restraints, and armed with wondrous arrays of consumer durables (mostly for barter), Chile's entrepreneurial class are enjoying a bonanza. In the great flight from paper money, business deals are completed at speed, and there appears to be no limit to the variety of trading. In a single day a small-time businessman might find himself a broker for textiles, cattle, television sets and chickens. The important thing is not to go to bed with money in your pockets. Chile's large elite of small-time wheeler-dealers have created a superficial atmosphere of 'happy times are here again.'