Hyperinflation

Generali

AFAIK, there is no economic definition of 'hyperinflation' unlike say 'recession'* or 'unemployed'** so what would be your definition of hyperinflation and, preferably, why?

I'll let you know mine in a bit. Firstly I'd be interested in others' thoughts first and secondly I'm off to bed in a sec.







*2 consecutive quarters of negative GDP growth
**Not working but wanting to and actively looking for employment

System

Double figures.

(I don't really know, throwing it out there, if you don't like it, throw it right back!)

Generali

Joeskeppi wrote: »

Double figures.

(I don't really know, throwing it out there, if you don't like it, throw it right back!)

As in 10% or 99%?

I'm really interested to know, this isn't a trick question.

I've seen what I think was hyperinflation in Yugoslavia in the mid-80s on a beach holiday there.

Really2

I would have said over 50% (Honest Gov but more like YOY)

But I will go with what these guys say.
http://www.businessdictionary.com/definition/hyperinflation.html

Ruinously high increase (50 percent or more per month) in prices due to the near total collapse of a country's monetary system, rendering its currency almost worthless as a medium of exchange. Although hyperinflation is caused mainly by excessive deficit spending (financed by printing more money) by a government, some economists believe that social breakdown leads to hyperinflation (not vice versa), and that its roots lie in political rather than economic causes. The longest lasting (15 months) hyperinflation occurred in Germany between August 1922 and November 1923 (in the aftermath of first World War) during which prices rose at an average rate of 322 percent per month, and sometimes doubled or even trebled in a single day.

I was in a debate the other day and was told our deficit is not a problem and we should carry on spending and a government can carry on printing?
It can, but at a very high cost for everyone.

drc

Isn't it when you go to buy something and while you are standing at the till waiting to pay, the price suddenly doubles and it now costs £4282 to buy a loaf of bread rather than £2141?

System

Generali wrote: »

As in 10% or 99%?

I'm really interested to know, this isn't a trick question.

I've seen what I think was hyperinflation in Yugoslavia in the mid-80s on a beach holiday there.

Hah fair point, I was thinking in the teens.

Would it be relative for each country? One country's hyperinflation might be BAU for another perhaps?

System

Well I was miles out.

http://en.wikipedia.org/wiki/Hyperinflation

Definitions used vary from the International Accounting Standards Board's a cumulative inflation rate over three years approaching 100% (26% per annum compounded for three years in a row) to Cagan's (1956) "inflation exceeding 50% a month." [2] As a rule of thumb, normal monthly and annual low inflation and deflation are reported per month, while under hyperinflation the general price level could rise by 5 or 10% or even much more every day.

nicko33

between inflation and hyper-inflation, shouldn't there be something like super-inflation?

Maybe something like
if prices double in 1-2 years, that's super-inflation
if prices double in a quarter or less, that's hyper-inflation

michaels

I would have thought it should refer to a period when individuals decline to hold fiat currency due to the costs from its reduction in value and add in a secondary term about price changes being so rapid that relative prices are frequently incorrectly aligned (eg salary is sufficient at the start of the month but not by the end).

I still don't see it as a problem, underlying inflation is afaik about 1.8% at the moment which is where it would rapidly return to if the New Years VAT rise were cancelled.

purch

It is actually spelled Hyperboleinflation.

As in hugely exaggerated scaremongering by those with little real understanding of what they are talking about !!!

ash28

Generali wrote: »

As in 10% or 99%?

I'm really interested to know, this isn't a trick question.

I've seen what I think was hyperinflation in Yugoslavia in the mid-80s on a beach holiday there.

I think the Yugoslavian infaltion of the 1980s was pretty bad but I think what they experienced in the 1990s was worse.

The Weimar Republic saw inflation of 320% a month - Hungary saw inflation of 19000% a month in 1945/6 prices tripled every day.

For me that's hyperinflation - I experienced high inflation here in the 1970s when it peaked at 25% or similar - but that's just high inflation - IMHO.

50% a month will do for me - if you buy something for a £1 on Dec 23rd this year it will cost you £130 on Dec 23rd next year. The mind boggles

The printing presses must be running flat out for that to happen,