What Is Hyperinflation ?
Hyperinflation is what, in layman terms can be called as the economic equivalent of doomsday. Modern societies have become more and more accustomed to having inflation in their daily lives. This has been the case ever since the world went off the gold standard at the Bretten Woods Conference and almost all countries worldwide accepted fiat currencies as being the basis of their monetary system.
The popular view is that inflation is a harmless byproduct of the modern monetary system. Hyperinflation, as some economists describe is this very same harmless inflation on steroids. It is nothing but a result of rising rates of inflation for multiple years.
Hyperinflation is a grim reminder as to how inflation can wreck havoc on a monetary system and bring about its complete breakdown overnight! In this article, we will have a look at this interesting phenomenon. You can obtain a more detailed explanation from the following video.
The economic definition of hyperinflation is defined in terms of percentages and figures. This definition is interesting to read but to the average person they appear like big numbers. The average person is unable to fathom what hyperinflation really means until they are asked to imagine the following scenes:
Now, once again read the words complete breakdown of monetary system and understand this is what the world looks like when this economic cancer of hyperinflation wrecks havoc. There is no such thing as normal life during the period of hyperinflation. Everything about life becomes bizarre and unreal.
Consequences of Hyperinflation
Now since we know a fair bit about what hyperinflation really means, lets look at the consequences that hyperinflation is capable of causing in our daily lives:
Major Currencies in Crisis: Another common misconception is that hyperinflation affects only economies in decline or those economies which are badly managed. This isnt the complete truth. The first real known case of hyperinflation was observed in the Roman Empire and it began when the empire was at its helm bringing the whole system down. There have been many more cases in recorded history wherein major empires have been brought down by hyperinflation.
If we look at the current scenario, almost all world currencies i.e. the dollar, the pound, the yen and the Swiss franc are dangerously close to a hyperinflationary spiral. It would not be farfetched to think that one or all of these currencies could soon face a major crisis.
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