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Maybe you can point me to an historical case of hyperinflation that was not due to a supply problem?, because I can't think of one. Zimbabwe and similar are us

Maybe you can point me to an historical case of hyperinflation that was not due to a supply problem?, because I can't think of one. Zimbabwe and similar are used continuously, by some people, as an example of the problem of running government deficits. That it's dishonest or ignorant.

whatshisface 9y ago
Hyperinflation can't happen without a government problem, because if they were to just do nothing the prices would reach equilibrium with the supply scarcity and then stop rising. The real question is, what happens to governments that causes them to respond to supply problems with inflationary policy? Edit: Nonexistent government is also a government problem - I didn't mean it in that way, I meant it in the sense of "problem related to government!" As for "how can you keep things running when the supply-side collapses," you could replace inflation with taxes. You could achieve the same re-assignment of value explicitly instead of implicitly: people would end up just as robbed, but the currency wouldn't have to end up devalued. (This might end up helping the economy and making people less poor in the end, since it would mean that you still get to think about your inflationary/deflationary policy decisions. Essentially nobody would choose the regressiveness/progressiveness profile of hyperinflation if given the option, and would instead probably prefer to arrange the necessary pain in some other way.)
- RobertoG 9y ago
  >"Hyperinflation can't happen without a government problem" I suppose that what you mean is that hyperinflation will stop at some point, not that it "can't happen". If you destroy the 80% of the economy what follows is hyperinflation. Never mind if you are in the gold standard, a fiat system or whatever. >"The real question is, what happens to governments that causes them to respond to supply problems with inflationary policy?" What happens is, it seems to me, obvious. You have to keep the services running, so, you have to pay people, but the money is not valuable anymore, so, you have to give more. What it seems that you are insinuating is that a country would be better off if the government would not try to keep the country running. I don't think this is the case. But I suppose that it is the real question.
- panarky 9y ago
  > Hyperinflation can't happen without a government problem Somalia hasn't had a national government in 25 years, so there's no central authority to regulate the money supply or print currency. Consequently, 98% of the bank notes in circulation are now poor-quality counterfeits, and buyers and sellers know they're fake. The market has reached an equilibrium, with a single 1000-shilling denomination that trades at approximately the cost to print it. Hyperinflation ends when the value of the currency equals the cost to print it, and when the population won't accept arbitrarily larger denominations. You don't need a government to create a useful currency. Hyperinflation can begin and end with or without a government.
- deleted 9y ago
  [deleted]
lnino 9y ago
Brazil 1980-1994. The supply problem only started when the government decided to price control everything, before that you could easily buy all you needed, only you'd need spend all your wages the day they paid you, or you'd lose 30% of it every month. Inflation got to above 5000% a year, but there was never mass starvation like in other places. For a few months people couldn't buy any kind of meat or eggs, but things went back to "normal" when the government lifted price control. Source: I lived there, never skipped a meal. But I was quite shocked the first time I saw something costing the same as it had the previous week, it was in 1994. The same happened in Venezuela, only they weren't able to control it. Inflation preceded the scarcity, and then scarcity made inflation even worse. And now they have mass starvation, no medicines etc. That's fairly typical. Government prints money, there's hyper-inflation, government tries to fix things by banning marking prices up, people stop selling and manufacturing stuff; scarcity and having to go the black-market to get food makes inflation even worse.
- lnino 9y ago
  Also note that in both cases (Venezuela and Brazil) there was no external force (war or commercial ban) that artificially reduced supply. At the time Brazil started experiencing hyper-inflation, it was already one of the world's top beef producers, still beef was up 5000% a year. Venezuela was selling it's oil at peak prices to the US when their hyper-inflation started. For a while gas was the only affordable product in the country, because the production kept pace with the money printing. There's just no explanation for inflation in Latin American countries that haven't seen a war or major natural disaster in 100 years, other than bad spending policies. The government themselves admitted that in most cases, and were able to get inflation back in track with massive cuts in spending.
  - crdoconnor 9y ago
    Hyperinflation only kicked in in Venezuela after the plunge in oil prices, but up until that point industry in Venezuela had been dying. In Brazil it followed and was mainly triggered by the 1970s energy crisis.
    - 9y ago
gus_massa 9y ago
Argentina 1989-1990. I don't remember a supply problem. The Wikipedia in English doesn't have a detailed article. Article in Spanish https://es.wikipedia.org/wiki/Hiperinflaci%C3%B3n_argentina_de_1989_y_1990 https://es.wikipedia.org/wiki/Hiperinflaci%C3%B3n_argentina_... Autotransalation: https://translate.google.com/translate?sl=es&tl=en&js=y&prev=_t&ie=UTF-8&u=https%3A%2F%2Fes.wikipedia.org%2Fwiki%2FHiperinflaci%25C3%25B3n_argentina_de_1989_y_1990&edit-text=&act=url https://translate.google.com/translate?sl=es&tl=en&js=y&prev...

whatshisface 9y ago

Hyperinflation can't happen without a government problem, because if they were to just do nothing the prices would reach equilibrium with the supply scarcity and then stop rising. The real question is, what happens to governments that causes them to respond to supply problems with inflationary policy? Edit: Nonexistent government is also a government problem - I didn't mean it in that way, I meant it in the sense of "problem related to government!" As for "how can you keep things running when the supply-side collapses," you could replace inflation with taxes. You could achieve the same re-assignment of value explicitly instead of implicitly: people would end up just as robbed, but the currency wouldn't have to end up devalued. (This might end up helping the economy and making people less poor in the end, since it would mean that you still get to think about your inflationary/deflationary policy decisions. Essentially nobody would choose the regressiveness/progressiveness profile of hyperinflation if given the option, and would instead probably prefer to arrange the necessary pain in some other way.)

RobertoG 9y ago
>"Hyperinflation can't happen without a government problem" I suppose that what you mean is that hyperinflation will stop at some point, not that it "can't happen". If you destroy the 80% of the economy what follows is hyperinflation. Never mind if you are in the gold standard, a fiat system or whatever. >"The real question is, what happens to governments that causes them to respond to supply problems with inflationary policy?" What happens is, it seems to me, obvious. You have to keep the services running, so, you have to pay people, but the money is not valuable anymore, so, you have to give more. What it seems that you are insinuating is that a country would be better off if the government would not try to keep the country running. I don't think this is the case. But I suppose that it is the real question.
panarky 9y ago
> Hyperinflation can't happen without a government problem Somalia hasn't had a national government in 25 years, so there's no central authority to regulate the money supply or print currency. Consequently, 98% of the bank notes in circulation are now poor-quality counterfeits, and buyers and sellers know they're fake. The market has reached an equilibrium, with a single 1000-shilling denomination that trades at approximately the cost to print it. Hyperinflation ends when the value of the currency equals the cost to print it, and when the population won't accept arbitrarily larger denominations. You don't need a government to create a useful currency. Hyperinflation can begin and end with or without a government.
deleted 9y ago
[deleted]

lnino 9y ago

Brazil 1980-1994. The supply problem only started when the government decided to price control everything, before that you could easily buy all you needed, only you'd need spend all your wages the day they paid you, or you'd lose 30% of it every month. Inflation got to above 5000% a year, but there was never mass starvation like in other places. For a few months people couldn't buy any kind of meat or eggs, but things went back to "normal" when the government lifted price control. Source: I lived there, never skipped a meal. But I was quite shocked the first time I saw something costing the same as it had the previous week, it was in 1994. The same happened in Venezuela, only they weren't able to control it. Inflation preceded the scarcity, and then scarcity made inflation even worse. And now they have mass starvation, no medicines etc. That's fairly typical. Government prints money, there's hyper-inflation, government tries to fix things by banning marking prices up, people stop selling and manufacturing stuff; scarcity and having to go the black-market to get food makes inflation even worse.

lnino 9y ago
Also note that in both cases (Venezuela and Brazil) there was no external force (war or commercial ban) that artificially reduced supply. At the time Brazil started experiencing hyper-inflation, it was already one of the world's top beef producers, still beef was up 5000% a year. Venezuela was selling it's oil at peak prices to the US when their hyper-inflation started. For a while gas was the only affordable product in the country, because the production kept pace with the money printing. There's just no explanation for inflation in Latin American countries that haven't seen a war or major natural disaster in 100 years, other than bad spending policies. The government themselves admitted that in most cases, and were able to get inflation back in track with massive cuts in spending.
- crdoconnor 9y ago
  Hyperinflation only kicked in in Venezuela after the plunge in oil prices, but up until that point industry in Venezuela had been dying. In Brazil it followed and was mainly triggered by the 1970s energy crisis.
  - 9y ago

gus_massa 9y ago

Argentina 1989-1990. I don't remember a supply problem. The Wikipedia in English doesn't have a detailed article. Article in Spanish https://es.wikipedia.org/wiki/Hiperinflaci%C3%B3n_argentina_de_1989_y_1990 https://es.wikipedia.org/wiki/Hiperinflaci%C3%B3n_argentina_... Autotransalation: https://translate.google.com/translate?sl=es&tl=en&js=y&prev=_t&ie=UTF-8&u=https%3A%2F%2Fes.wikipedia.org%2Fwiki%2FHiperinflaci%25C3%25B3n_argentina_de_1989_y_1990&edit-text=&act=url https://translate.google.com/translate?sl=es&tl=en&js=y&prev...