What is a hyperinflationary depression and could it happen?
By: Peter Cooper
Monday, 14 January 2013
Think Zimbabwe a moment. This is the most recent example of a hyperinflationary depression. Basically in Zimbabwe the black nationalists ejected the white farmers and replaced them with locals who could not farm, crashed the economy and started printing money. Hey presto! Rampant hyperinflation and a very depressed economy.
The problem with printing money to solve economic problems is that once started it is very hard to stop. It is always easier to print more than deal with underlying issues such as over-spending and a government-dominated economy. Democratic politicians like turkeys do not usually vote for Thanksgiving.
You could see the official concern mounting in the last minutes from the Federal Reserve’s main committee. The Fed is fully aware of the dangers of keeping interest rates too low for too long and printing money ad infinitum. But it only recently set a target of 6.5 per cent unemployment before it will rescind QE money printing, is that now in doubt?