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There’s been a big surge in Google searches on “hyperinflation.”
I assume the Fed’s new bond-buying program is playing a role. So, too, what’s been happening in Iran. Steve Hanke over at Cato:
Since the U.S. and E.U. first enacted sanctions against Iran, in 2010, the value of the Iranian rial (IRR) has plummeted, imposing untold misery on the Iranian people. When a currency collapses, you can be certain that other economic metrics are moving in a negative direction, too. Indeed, using new data from Iran’s foreign-exchange black market, I estimate that Iran’s monthly inflation rate has reached 69.6%. With a monthly inflation rate this high (over 50%), Iran is undoubtedly experiencing hyperinflation.
So can hyperinflation happen in America? Highly unlikely. As Matt O’Brien points out, hyperinflation is what you get when a nation has truly massive debt problems, out-of-control money printing, and economic chaos.
Right now getting the markets to buy our debt isn’t the problem. Getting enough debt for the markets to buy is the problem. Investors are so crazy to load up on Treasuries that they’re actually paying us to borrow, taking inflation into account.
Second, the United States isn’t really printing money. … Quantitative easing is usually described as “money-printing” but it’s not really. QE involves the Fed buying longer-term bonds from banks. It simply swaps one asset for another — in this case, cash for longer-term bonds.
Third, the most important difference between us and post-war Hungary or Weimar is that our roads haven’t been razed to the ground and half the country isn’t striking. It’s very difficult to have hyperinflation when you still have a functioning economy. Almost all examples of hyperinflation result from huge economic shocks that devastate an economy so much that leaders think printing money is the only solution to growth.
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