The scary word that will bring a country down to its knee is hyperinflation. Let us define it and discuss how it happens.
Hyperinflation comes from the root word inflation, which means an increase in the price of goods or services. So, hyperinflation means a tremendous and extreme increase in the price of goods or services over time or in other words devaluation of currency (aka fiat money).
So, how hyperinflation come about? More accurately how the devaluation of currency come about?
This occurs when the money supply becomes more than the money intrinsic reserve backing. The higher the ratio, the more worthless the currency. That's why the magic printing press will quench everyone thirst of money but it would increase the ratio and make it more worthless.
So, sensible governments need to be careful with the magic printing press. But why? Gomen decided to use their magic printing press...hey presto...the answer is....mounting debt, corruption and crony capitalism.
Now, we go to the topic of hyperinflation.
Say, hyperinflation occurred. We will study those who benefit and
lost from it and how detrimental it is to the nation.
Group of people that benefit from hyperinflation
A. Farmer
B. Debtor
C. Bond seller
D. MBO
E. House owner
F. Gold owner
G. Gasoline owner and intermediaries
H. Underground economy and black market
I. Foreign Currency
J. Stock especially plantation and property
Group of people that lost from hyperinflation
A. Saving in bank
B. Pensioner
C. Bondholder
D. Lenders
E. Banks
F. Insurance policyholder with local investment link
Detrimental effects of hyperinflation
A. Food and medical shortage, starvation and spread of infectious and vector bound diseases.
B. Rioting, robbing, and ransom
C. Suicidal
D. Social unrest
E. Anarchy
F. Marshal law, compulsory acquisition of civilian rights and property...eg. military control or junta.
G. Revolution, war and social uprising
H. Political unrest
I. The collapse of a nation
J. Brain drain
K. Flight of capital to other countries
L. Massive unemployment
Hyperinflation was so bad during the Wilmar Republic in Germany in 1929 that cigarettes start to be the new currency.
"Fate favored those who are prepared"
God bless us.
"Father, Let your' will be done."
Yours sincerely,
Dr Lion.
Hyperinflation comes from the root word inflation, which means an increase in the price of goods or services. So, hyperinflation means a tremendous and extreme increase in the price of goods or services over time or in other words devaluation of currency (aka fiat money).
So, how hyperinflation come about? More accurately how the devaluation of currency come about?
This occurs when the money supply becomes more than the money intrinsic reserve backing. The higher the ratio, the more worthless the currency. That's why the magic printing press will quench everyone thirst of money but it would increase the ratio and make it more worthless.
So, sensible governments need to be careful with the magic printing press. But why? Gomen decided to use their magic printing press...hey presto...the answer is....mounting debt, corruption and crony capitalism.
Now, we go to the topic of hyperinflation.
Say, hyperinflation occurred. We will study those who benefit and
lost from it and how detrimental it is to the nation.
Group of people that benefit from hyperinflation
A. Farmer
B. Debtor
C. Bond seller
D. MBO
E. House owner
F. Gold owner
G. Gasoline owner and intermediaries
H. Underground economy and black market
I. Foreign Currency
J. Stock especially plantation and property
Group of people that lost from hyperinflation
A. Saving in bank
B. Pensioner
C. Bondholder
D. Lenders
E. Banks
F. Insurance policyholder with local investment link
Detrimental effects of hyperinflation
A. Food and medical shortage, starvation and spread of infectious and vector bound diseases.
B. Rioting, robbing, and ransom
C. Suicidal
D. Social unrest
E. Anarchy
F. Marshal law, compulsory acquisition of civilian rights and property...eg. military control or junta.
G. Revolution, war and social uprising
H. Political unrest
I. The collapse of a nation
J. Brain drain
K. Flight of capital to other countries
L. Massive unemployment
Hyperinflation was so bad during the Wilmar Republic in Germany in 1929 that cigarettes start to be the new currency.
"Fate favored those who are prepared"
God bless us.
"Father, Let your' will be done."
Yours sincerely,
Dr Lion.
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