> How can you avoid inflation if your productive capacity is destroyed? You can't. Uh, what? economic contraction causes deflation, not inflation. if no one h

> How can you avoid inflation if your productive capacity is destroyed? You can't. Uh, what? economic contraction causes deflation, not inflation. if no one has a job and weighs spending every cent very carefully, businesses have to cut prices in order to sell anything. Which means they have to cut what they pay everyone else, and so on. Or say if everyone loan out lots of money and now realizes that those loans are never going to be paid back, they realize that they have a lot less money than they thought they did, and that means they can't repay others, and so on. "productive capacity" being lost doesn't mean your "money" is "less and less valuable". No, it means money is extremely valuable, because you don't expect to be able to get any more of it. Everyone has a lot less money than they expected to have. It's a shortage of money, which therefore becomes more valuable. That's deflation. For example, during the Great Depression the US experienced 30% deflation. Hyperinflation where the nominal value of currency decreases by thousandsfold is always caused by inflationary finance where a treasury resorts to fund operations by simply printing money. Though that could happen because they were militarily forced to and could not collect taxes or sell bonds. Everyone has too much nominal currency relative to real valued goods and is afraid the nominal currency won't be accepted for the same amount of real value tomorrow.