1. When
Money
Dies

2. Inflation
Cause - Printing money faster than
new goods and services are created
Effect - Rising prices

3. Does money
create wealth?

4. More Money
Make more stuff
Raise prices

5. Big Mac =
10 SR
1 SR =
1/10 of a
Big Mac

6. =
1 SR =1/10 of a Big Mac

7. Money Supply
Central Bank - SAMA

8. Dr. Fahad Al Mubarak
Chairman of the Board
Governor
Saudi Arabia Monetary
Agency
SAMA

10. 5. Greece, Oct. 1944
Highest monthly inflation: 13,800%
Prices doubled every 4.3 days

11. 4. Germany, Oct. 1923
Highest monthly inflation: 29,500%
Prices doubled every: 3.7 days

12. A 1000 Mark banknote, over-stamped in red with
"Eine Milliarde Mark" long scale (1,000,000,000 mark),
issued in Germany during the hyperinflation of 1923

13. 3.Yugoslavia, Jan. 1994
Highest monthly inflation: 313,000,000%
Prices doubled every: 1.4 days

14. 1. Hungary 1946
Highest monthly inflation: 13,600,000,000,000,000%
Prices doubled every: 15.6 hours

16. 2. Zimbabwe, Nov. 2008
Highest monthly inflation: 79,600,000,000%
Prices doubled every: 24.7 hours

23. 1833 - 1932 $18.94 to $20.69

24. $1,600 80x
Lost 98.75% of value relative to gold in 80 Years

25. Money Demand
Liquid
Credit Cards
ATMs

26. Money Demand
Opportunity Cost
Potential Profit

27. Quantity Theory
of Money
The quantity of
money determines
its value
Milton Friedman
(1912 - 2006)

28. 2.00
Money
1.50
Supply
Value of
1.00
Money
0.50
Money
Demand
0
1 10 20 30 40 50
Quantity of Money

29. How to get an
A
on Exam 4

31. 2.00
Money
1.50
Supply
Value of
1.00
Money
0.50
Money
Demand
0
1 10 20 30 40 50
Quantity of Money

32. The Life of a Riyal
18 months

33. Quantity Equation
M xV = P x Q
M = Money
V = Velocity
P = Price
Q = Output

34. Government
Spending
Tax
Borrow
Print

35. Inflation Tax
When the government
prints more money,
anyone who has
money loses wealth

36. Inflation
Winners - Borrowers
Losers - Lenders

37. Nominal = Real + Inflation
N=R+I
If you know two you can
calculate the other one
If N = 12 and R = 10,
what is I?

38. Formulas
N=R+I
RR = 1÷ MM
RR = 1÷ MM

39. Facts
Saudi Reserve Ratio: 7%
Saudi ORR: 2%
Saudi Money Supply Growth: 12%
Saudi Inflation Rate: 3.9%
Country with recent hyperinflation: Zimbabwe
Country with recent bank run: Cyprus