I understand that inflation and recession are part of the natural “lifecycle”, if you will, of an economy, but hyperinflation just seems so outlandish.
In: Economics
Hyperinflation happens when there is a near total loss of confidence in a country’s currency and/or the central bank’s ability to maintain the currency’s value. Typically, this happen for one of two reasons:
– The monetary supply increases too quickly. If the central bank just starts printing money to buy goods or pay off debts, then the value of the currency will drop quickly
– There is a massive decrease in the availability of most goods. If a particularly strict trade embargo happens to a country that relies heavily on imports, it could cause prices to increase quickly.
Inflation can get out of hand by printing money to get over short term difficulties, by continuing to import goods that can’t realistically be paid for, by having international debt that can’t be serviced due to exchange rate fluctuations. https://youtu.be/-dnKdCwCw8o
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