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While inflation is a monetary phenomenon I think hyperinflation is mostly a psychological phenomenon characterized by a lack of confidence in a currency. Fiscal
by JanisL 5y ago
While inflation is a monetary phenomenon I think hyperinflation is mostly a psychological phenomenon characterized by a lack of confidence in a currency. Fiscal policy changes could certainly change confidence or so could a number of other things.
- adam_arthur 5y agoThere's definitely a strong psychological component to inflation. And an inflationary mindset is probably needed for hyperinflation to materialize. But I think increasing money supply is a necessary component for hyperinflation as well. At least, in all modern examples of hyperinflation I've reviewed, there has always been a component of monetizing the debt/deficit. Are there examples of hyperinflation where the money supply was largely fixed? I would be very curious/interested in that.
- JanisL 5y agoI feel like when currencies are abandoned there's a de-facto hyperinflation involved in the old currency if looked at from the exchange rates involved. Perhaps there's been examples of currency replacement in the past that have been driven by non-economic factors?