Devaluing the Dollar
“The historical episodes of hyperinflation that we know of consisted of rapidly falling money demand alongside rapidly rising money supply. In general terms, what tends to happen is that after many years of persistently high monetary inflation, people begin to anticipate future monetary inflation. That is, people begin to factor the effects of the expected future increases in the money supply into today’s prices, causing prices to rise faster than the money supply. This creates a perceived shortage of money, which the central bank addresses by boosting the money supply. But this only reinforces the public’s fears of future currency depreciation, so prices begin to rise even faster. The feedback loop continues until the currency becomes completely worthless or until the central bank stops the expansion of the money supply.” Read more.
Devaluing the Dollar
Steve Saville
GoldSeek, Septermber 21, 2010.
Image by Boaz Yiftach / FreeDigitalPhotos.net.
