| John Burns - 1/30/2015 14:29
Can I say it any more clear? Inflation and hyperinflation are two completely different things. Inflation, depending on how it is interpreted, is either a general rise in prices or in the older terms is an increase in the money supply. Hyperinflation is a loss of confidence in the currency, where people will no longer hold the currency as a store of value.
While different, they are *not* completely different. It is not a black & white thing. It is most likely an exponential curve - but it is probably continuous. Even with substantial inflation, but nothing that can be called hyperinflation, there is some loss of confidence in the currency. It is a positive feedback loop. It is not linear. The faster prices go up, the more confidence is lost in the currency. This leads to spending money faster and faster (before it loses even more value), and this leads to the currency losing even more value, which leads to a further loss of confidence, which leads to . . . It is the velocity of the money rather than only the quantity. When it reaches the vertical part of the exponential curve, it can be called hyperinflation. But, they are *not* completely different things. It's simply where on the curve you are. |
John - inflation/deflation - probably one after the other
