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Grim game Israelis have their hands full, pockets empty, trying to stay ahead of inflation by Carl Alpert HAIFA — If prices go up monthly at an average of around seven percent that’s an annual inflation rate of between 70 and 80 percent. And that’s the situation in Israel today. It is difficult for those not living under such conditions to realize how daily life is affected, and how all our conceptions of savings, economy and standards are changed as a result. If a businessman (or a bank) makes a loan of 1L. 1,000 and the money is repaid a year later, the IL. 1,000 which comes back now has a purchasing power about 70 percent less, because prices have in the interim gone up by that much. Therefore if the bank charges an interest rate of 70 percent (for a one year loan) that rate is not at all usurious. It barely serves to cover the value of the capital,loan in terms of purchasing power. An Israeli who puts 1L. 1,000 under his mattress, for a rainy day, finds that his saving has become eroded and a year later will buy only 25 or 30 percent of what it would have bought 12 months earlier. When prices go up that rapidly how do salaried people live? Very simple: practically all salaries and wages are linked automatically to the Cost of Living Index. When the index goes up, salaries rise almost to the same extent. The annual lag between the two is usually more than made up by labor negotiations which extract rises on the basic salary, on which the subsequent automatic increases are thereafter based. All that extra money paid out in salaries is immediately spent by the recipients. Who wants to save cash \fhen it shrinks so rapidly? And the pouring of that money into circulation creates a vast consumer demand that at once makes prices rise, which in turn triggers off a new set of automatic wage increases. The biggest employer of all is the government, and when it has to pay out billions more in wages—it has no choice but to print the funds required. Don’t people save at all? Sure, but they put their money into investments that are “linked." That’s the magic word. Most are linked to the Cost of Living. Government bonds are linked, so a IL. 1,000 bond bought this year is automatically worth, say, IL. 1,800 in a year. With government support the banks offer special savings plans, the most popular of which at the moment operates as follows: the Israeli deposits IL, 90,000 in the “120 Savings Plan.” The bank gives him a bonus gift of 21 percent (IL. 18,900) so his savings account is at once worth IL. 108,900 on the day he opens it. It will earn only around 3 percent interest but the whole thing the deposit, plus the bonus plus the accumulating interest are all linked to the Cost of Living. The value of the deposit may rise in value annually by 70or 50 or 90 percent or by whatever the index rise is for that year. The catch is that the account is frozen for a full six years. If the Israeli breaks the freeze by withdrawing his money he loses the bonus, and even the linkage is figured on only a part of his saving. There’s another way Israelis can save: to keep their money in foreign currency. Those who earn dollars may keep them on deposit in dollars, and when they need money, cash them in at whatever the exchange rate is on that day. In October 1977, a dollar bought 10 Israel Pounds. Today a dollar will buy 24 Pounds. Some Israelis have tried the local stock market, and though many burned their fingers, there’s still a lot of loose money going into stocks. The latter are not “linked” to anything, but their speculative value is supposed to boom with inflation. It doesn't always do so, however. It’s a grim game that the average Israeli citizen plays, trying to keep ahead of the game. And the name of the game is inflation. TRY US! • IMPORTED CHEESE • TEA • CANDY • • FRENCH BREAD • DELICACIES* • FRESH SOUP • CHIPS • COLD DRINKS • GAZPACH0 • TASTY SANDWICHES • • DELICIOUS CHEESE CAKE • • CHOCOLATE OR CARROT CAKE • • LEMON OR CHOCOLATE CHEESE VILLA*’ (DESSERT) 636-B552 TOCO HILLS SHOPPING CENTER ctieeseuiLin EASTERN ONION EASTERN ONION EASTERNJQNION V m > c EASTERN ONION X / SEND A SONG SUNG BY A SINGING MESSENGER rr / & (404)231-1891 X / X UJ ^ Send a message to celebrate O H Get Well, Anniversary, Birthday, 1 l ove You, Welcome, Bon Voyage. c/> Wedding, Divorce, 1 Hate You, Graduation, Retirement, Engagement, < w First Baby, Holidays, Bar Mitzvahs, etc. Belly Grams Adult Pupperty Unusual Gifts / NOINO NH31SV3 NOINO NH31SV3 NOINO NHJ1SVJ COUNTRY FRENC H RESTAURANT & LOUNGE ENCLOSED CAFE TERRACE FREE PARKING FRENCH FOLK SONGS FEATURING A DOUBLE SIOED WOOD BURNING FIREPLACE FOR YOUR DINING PLEASURE Dinner Mon. thru Sat Lunch Mon. Thru Fri. 325-6963-4 MASTER CHARGE VISA AMERICAN EXPRESS 2345 CHESHIRE BRIDGE RD — IN CHESHIRE SQUARE *V NEXT TO I 85 r City Wide Blood Drive 120th Consecutive Quarterly Blood Drive SPONSORED BY ATLANTA POST 112 JEWISH WAR FULTON VETERANS & LADIES AUXILIARY Sunday, August 5th, 1979 9 a.m. — 2 p.m. at Ahavath Achixn Synagogue 600 Peachtree Battle Avenue N. W. Continental breakfast will be served to all donors Give a pint of Mood in honor of our 30 years of service to the Red Cross Blood Bank. Jewish War Veterans extends thanks to the following co-sponsors for their help and participation. Jerry H. Fields, Coordinator Congregation Shearith Israel R e d Devils Congregation Or VeShalom Ahavath Achim Synagogue American Legion Posts 233 & 77 TJ 1 ' Temple Congregation Beth Jacob B’nai B’rith Lodges Elliott Goldberg, Chairman, Jewish War Veterans Julia Butler, Chairman, J.W.V. Auxiliary Paid for by The Charity Fund of th« Mark Frank*! Atlanta Fast 112 Jsuiljh War Veterans Contributions to this blood program eon be moiled to the J.W.V. / Fulton Lodge Blood Bank F. O. Bom 4974, Atlanta, Georgla 30701 £ MASONIC LODGE NO. 216 F&AM Page 9 THE SOUTHERN ISRAELITE August 3, 1979