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Monday, January 06, 2014

Hyperinflation Explained in Many Different Ways

 http://howfiatdies.blogspot.com/2013/09/hyperinflation-explained-in-many.html

Hyperinflation is part of the experimental data that any good economic theory should be able to explain.   There are many different economic schools of thought and they often have very different views of hyperinflation.  I am trying to collect as many different explanations here as I can.  I think it is fun to be able to understand this problem from many different angles.  If you know of any other explanations, then please post them in the comments.  A good explanation should account for the sudden arrival of hyperinflation, that it often accelerates,  that it can go on for years, that it is very hard to stop, but that sometimes it is stopped by balancing the government budget.
The biggest flaw in most people's understanding of hyperinflation is that they think if we have low inflation now we are safe for a long time.  As you read through each explanation, try to imagine how fast things could switch from low inflation to hyperinflation.

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