3 ms·

Zimbabwe, Venezuela, Germany... all modern examples of hyperinflation where the root cause was primarily through excessive money printing to fund debts/deficit

Zimbabwe, Venezuela, Germany... all modern examples of hyperinflation where the root cause was primarily through excessive money printing to fund debts/deficit spending. There are other causes as well of course, but excessive printing seems the common thread between all of them. I agree that an inflationary mindset is psychological and contributes, but without an increased money supply, people are constrained in how much they can spend. E.g. how could a loaf of bread ever sell for 1000 USD without printed money? Nobody could afford those prices. I doubt increased velocity of money alone is enough to sustain hyperinflation. Assuming velocity within the bounds of realism. Wages would have to rise significantly, creating a wage price spiral.

nostrademons 5y ago
Root cause yes, but that's not what sustains the inflation. Inflation is sparked by an increase in the money supply. Hyperinflation is what happens when rising prices then trigger an increase in the velocity of money. The government has control of money supply but not velocity, which is why hyperinflation is essentially impossible to stop without abandoning the currency once it gets started. The concrete manifestation of an increase in money velocity is things like people running out to the store to spend money as soon as they get paid; wages getting set month-to-month or even day-to-day rather than annually; prices not being posted, and instead being set as you walk in the store; and zeros being added to dollar bills. The wage/price spiral is not a separate thing; it's the concrete manifestation of the abstract model of money velocity increasing.