One of our recent posts touched on inflation. However, did you know that there is an economic situation more dire to a country than inflation?
Yes. It is called hyperinflation. It refers to when prices of essential goods and services rise uncontrollably over a defined period. According to the World Economic Forum, inflation turns into hyperinflation when a country's monthly inflation rate increases by more than 50%.
This could happen in two of the following scenarios:
1. The government prints lots of money for public spending purposes.
2. Demand-pull inflation. This is when demand exceeds supply.
In both situations, the amount of money in circulation increases significantly, hence the value of currency plummets.
Source: World Economic Forum https://lnkd.in/dQsa7sba
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