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Strategies & Market Trends : The coming US dollar crisis
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To: Real Man who wrote (1158)9/27/2007 1:14:47 AM
From: RockyBalboa   of 71456
 
In the monetary model, hyperinflation is a positive feedback cycle of rapid monetary expansion.

It has the same cause as all other inflation: money-issuing bodies, central or otherwise, produce currency to pay spiralling costs, often from lax fiscal policy, or the mounting costs of warfare.

When businesspeople perceive that the issuer is committed to a policy of rapid currency expansion, they mark up prices to cover the expected decay in the currency's value. The issuer must then accelerate its expansion to cover these prices, which pushes the currency value down even faster than before.
According to this model the issuer cannot "win" and the only solution is to abruptly stop expanding the currency
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