Why can’t hyperinflation be fixed by creating a new currency? or just stop printing?
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It *can* be stopped by making a new currency! Brazil did it in the 1990s with the [Plano Real.](https://en.m.wikipedia.org/wiki/Plano_Real)
If you are asking why they don’t do this with the US dollar, lots of reasons. One, it’s kind of an option of last resort, and they don’t feel the current situation is that dire. Two, it would knock a lot of confidence out of the US currency. The dollar is still the most popular currency in the world. To get rid of it would be a little like changing the name Twitter to X. It would confuse everyone and they would probably switch to something else. Three, it would undoubtably be incredibly expensive to make the transition.
As for why not print less money? You can, but the US has bills to pay. So while that would slow inflation, it would come at the cost of tanking the US credit rating, shutting down a lot of government services, and potentially crashing the economy.
So that’s why they tend to use interest rates to fix the situation. It’s a slow solution, but with far less impactful side effects.
Do you know what hyperinflation is? Don’t just use a term without understanding its meaning.
If hyperinflation can be fixed, it wouldn’t have devolved into hyperinflation in the first place. Hyperinflation is first and foremost GOVERNMENT FAILURE. It is a symptom that a government has no longer got the confidence of the citizens and is pursuing a reckless fiscal and monetary policy. So the problem here is, if anyone was smart enough in government, there wouldn’t be hyperinflation in the first place. And if they’re still in power, and not smart, they won’t be able to fix it anyway since they’re incompetent.
So the first step to fixing hyperinflation is to replace the government. All other steps are secondary in a practical sense. The person who set the house on fire isn’t going to be the person you trust to put out that fire even if you give them fire extinguishers.
Hyperinflation starts because a government is unwilling to make difficult choices. They print money to avoid the unpopular cuts necessary to address their problems.
If the people in charge understood that there’s no such thing as a “free lunch”, they wouldn’t have the massive inflation problem in the first place.
Creating a new currency doesnt solve the problem, your’re just completing the destruction that inflation caused.
destroying your old currency wipes out all savers (old people, responsible citizens).
The currency itself has no inherent value, fiat currencies are backed by the trust in government and economic stability of the country. To fix hyperinflation you need to fix the economy, making a new currency just shifts the problems to a new currency.
It’s kind of like if there was a shady business that was shut down because it was ripping people off, if this person started a new business with a new name it doesn’t mean that they are now trustworthy or have a good product
>Why can’t hyperinflation be fixed by creating a new currency?
That IS how they fixed a lot of cases of hyperinflation. There are some problems with that, like telling everyone the cash they’re getting paid with today is going to be literally worthless in 6 months once you get done printing the new one. Or how once you have a new currency, everyone knows you’re just going to start printing more and more and eventually “fix it”.
>or just stop printing?
Bingo. This is the real solution. BUT, usually the governments that are printing money are doing so because they need to pay people. And it doesn’t just magically fix everything instantly. There’s lag. People have to adjust their expectations and clam down.
The US federal government would be almost completely non-functional if they had to suddenly have a balanced budget. Even if they had a couple years to plan.
Because as much as the ‘very important people’ who do economics like to treat their field with the same importance as the hard sciences, the reality is that much of economics is based on collective belief. Take the classic: Money is worth something because we *believe* it’s worth something.
Ultimately, there’s a bunch of very serious people using very serious sounding made up words to try and instill confidence in a Frankenstein’s Monster of a system, that’s really just a hodgepodge of mathematical theorems mixed together with human behavior.
Hyperinflation can be fixed in any number of ways, but the linchpin of the whole thing is to re-establish a collective belief in the currency.
The biggest problem with hyper inflation isn’t money being printed. It’s corporations demanding more money to pay their shareholders at the expense of the common people. If a new currency were to suddenly appear to “fix” it, corporations would just instantly cause the same problem for the same reason.
Stopping the printer does stop inflation. But to do that you need to cut government spending and in case of hyperinflation its almost all covered from printer. And its not so easy to stop all government spending.
Inflation is a form of taxation, you take the value out of the currency in circulation and shift it into state coffers. Hyperinflation happens when you try to keep taxing when there is nothing more left to take.
Quite a few countries have fixed their inflation through creating a new currency, actually.
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