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Historically however, it seems that hyperinflation has been the more prevalent cause of economic woes, e.g. currency collapse, loss of people's life savings, et
by kqr2 18y ago
Historically however, it seems that hyperinflation has been the more prevalent cause of economic woes, e.g. currency collapse, loss of people's life savings, etc. than hyperdeflation.
There doesn't appear to be an upper limit to hyperinflation (e.g. trillions of Zimbabwe dollars for a loaf of bread) whereas oil even in a deflationary environment shouldn't go below 0.
Personally, I am worried about the hyperinflation scenario and hope the government doesn't cause an overcorrection by its recent measures.
- nostrademons 18y agoHyperinflation causes more visible woes, because it's pretty obviously painful when your cash is worth 1/10th what it was yesterday. Deflation only causes that sort of visible pain when there're mass layoffs and bank failures, like in the Great Depression. However, in terms of lost opportunity cost, deflation is far worse. It encourages people not to invest, because they earn better returns on their cash than on productive projects. So the society stagnates. Think of the Dark Ages - a whole millenia lost, where nothing much happened. From everything I've read, it wasn't really a time of misery - people had enough to eat, they survived. But nothing much happened. If the Roman Empire had continued, even with its inflationary tendencies, we might've seen the industrial revolution a millenia earlier, and be writing these comments in 1008 instead of 2008.