Money Crashers: Hyperinflation

Money Crashers recently recruited me to write an article they wanted turned around in a big hurry. Earlier this week, Jack Dorsey — chief Twit at Twitter and occupant of the corner office at Square — tweeted that the hyperinflation was coming "soon" to the U.S. and would “change everything.” This, apparently, caused a big enough stir that the editors thought we'd better cash in on it quickly with an article about hyperinflation.

In my piece, I cover how economists define hyperinflation, some notable examples from world history, what causes it, and what it can do to the economy. I use a hypothetical example to illustrate how out-of-control price growth in the U.S., could affect spending and saving, debt, businesses, investments, and government spending. (Short version: it's very, very bad.)

So does that mean it's time to panic and put everything into Bitcoin, as Jack suggests? Absolutely not. The modest inflation we're seeing at the moment — about 5% over the past year — is certainly higher than it's been in the past couple of decades, but it's far from the highest it's been in my lifetime, and it's not even remotely like the nightmare scenario of hyperinflation. And there's been essentially nothing to indicate that's about to change.

Yes, inflation is rising, and yes, there are things you can do to protect yourself from it. (I've already covered some of them in previous articles.) But hyperinflation is not, repeat not, happening now, and is not remotely likely to happen in the near future. Get a grip, Jack.

Hyperinflation - Definition, Cause, What Happens to Investments and Debt