Friday, April 8, 2011

A nice piece on hyperinflation

Harrison offers a clear explanation of hyperinflation that augments the reading from R&R that we are doing for Tuesday.  I also thought his clear statement of his ideological leanings coupled with his notion that facts and data may lead to different conclusions was both refreshing and worthy of being emulated.
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2 comments:

  1. MARKApril 8, 2011 at 10:10 AM

    From: The Keiser Report video

    “Hyper inflation is a political action. It has nothing to do with the printing of money. The reality is that it occurs with specific circumstances. Those circumstances are political, that is a loss in the faith of the currency, tax evasion, foreign currency liabilities by the central government, and some sort of loss of productive assets. Those are the preconditions of hyperinflation. You don’t get it just by printing money. But, you certainly can get currency debasement, but you don’t get hyperinflation.” --Ed Harrison

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  2. Chris DendrinosApril 8, 2011 at 5:29 PM

    Interesting article. I like the argument that Hyperinflation is not the cause of just one situation. From the book "This Time is Different" Rogoff describes three thresholds that must be breached for the crisis to occur. You must have an out of control inflation crisis (annual inflation greater than 20%), currency debasement and a currency crash (depreciation of a currency relative to the dollar by 15% or more). It seems like Rogoff agrees with exactly what Mark's quote by Ed Harrison does. Such a situation is extremely rare there has to be a perfect storm.

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