How do countries end up with worthless currency? Like countries who’s dollar bills lie on the ground or are burned for warmth because it has no purchase power anymore
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None of the responses seem to describe the process itself. Imagine you know that your money will be worth only 80% of its current value next month. So, you want to spend it now, or at least exchange it for some other more stable currency like dollars or laundry detergent. That means there’s extra demand (compared to what it would be otherwise), so people selling things raise their prices so they don’t run out of inventory 2 hours into the day (and because money is useful much more now rather than later, and to profit more). Prices going up is what inflation _is_.
So why can’t it just go up a stable 25% up every month? Basically, because the worse inflation is, the more people want to do things causing extra inflation, like exchanging it – your money becomes worth 70% next month, which only accelerates the process. A severe drop in the supply of goods can cause hyperinflation; the government printing boatloads of new money is not necessary but it certainly doesn’t help.
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