What is Capital Account Convertibility and How it Affects a Country
April 3, 2025
What is Capital Account Convertibility ? Capital Account Convertibility means that the currency of a country can be converted into foreign exchange without any controls or restrictions. In other words, Indians can convert their Rupees into Dollars or Euros and Vice Versa without any restrictions placed on them. The reason why it is called capital…
The global financial system is in the middle of a manufactured boom. Earlier, the economies would boom on their own based on the underlying fundamentals. However, in the present scenario, the boom is 100% manufactured by central bankers that are using every trick in the book and some more to create the perception that the…
The 24/7 Real Time Global Marketplace Makes Firms Live for the Moment The present global marketplace as well as regional and nations marketplaces are uber competitive and in addition, dominated and driven by rapidly changing market conditions where short term thinking triumphs and the scenario is complicated with the incessant buzz of 24/7 news cycles…
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 it’s 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.
Now since we know a fair bit about what hyperinflation really means, let’s 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 isn’t 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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