Hyperinflation

When inflation is said to have taken place, it means that the value of a country’s currency has decreased. This can be due to a number of factors. For instance, if the government has more notes printed in order to address a shortage in the nation’s money supply, devaluation of the currency takes place. Fluctuations in the foreign exchange market can also bring about inflation.

However, when the situation gets much worse, it may reach a point in which it may be considered hyperinflation. If, for example, there is a rate at which inflation is expected to occur but it takes place at a much faster rate and to a greater extent than this, then the condition may be described as hyperinflation. The problem with identifying hyperinflation is that there is no actual standard or numerical value that qualifies a situation for this classification. Deciding on whether hyperinflation is taking place or not is therefore considered as a subjective activity. Of course, there are certain situations in which most experts will not be able to deny that hyperinflation is indeed taking place. For instance, if the rate of inflation has risen by more than a hundred percent within a relatively short period of time, then most people will agree that this is extreme enough to be considered hyperinflation.

Inflation in itself can already cause some difficulty to individuals. In cases of hyperinflation, this pressure increases dramatically, because it will very likely mean that the purchasing power of the public has gone down to such a great degree. It may be very difficult for salaries to be increased in order to match the value which the original amount of money used to have.

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