#super inflation

[naiamaree]

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super mario super inflation

[taiwantalk]

Sudden realization note: recalled once during a documentary series about china, a part about currency suddenly struck a nerve.

It said something about how people during mao’s time in the ‘60s, would race to spend their money that they had earned the day before because the ccp currency could be dramatically lowered by the late afternoon!

now think rubles and crypto. panic in unstable currency (essentially is token or voucher) situations drove chinese people to spend that worthless currency as soon as possible, which means, more useless currency get thrown back into the economy, nobody would keep them, and all the most affordable goods would be quickly consumed.

bad currency drives rapid simultaneous spending and speculation in a vicious cycle. so the bad currency could continue to devalue and nobody would want to keep inventory of goods that nobody can afford.

So crypto cannot ever become useful currency except for people who want to gamble on speculation and then rapidly convert them to fiat currency.

By this reasoning, ccp chinese currency could soon reach that point.

it’s a very simple nature of currency. when a currency cannot hold its value within a day, people would panic and spend it asap or else it’s too scary & insecure to hold it and can cause super inflation & recession.

businesses would be better off bartering goods with each other than selling. just like crypto, imagine selling things cheap and earned a large revenue of currency which devalues by next day morning.

[hamilcas]

I just convinced my Economics teacher to buy $60 worth of uncirculated Zimbabwean money from 2008 off eBay.

We’re talking when Zimbabwe had a super inflation in 2008 and circulated $100,000,000,000,000 dollar notes.

The school’s getting one. It arrives next week.

This is my legacy.

[plasticoctopus]

I found it　

[michaelyeung-blog]

The Super Inflation

"

If I ask you “What is the value of the apple?” you might answer me 50 cents. But how did you come up with this value? “That is the price I pay for an apple yesterday at Vons.” But how did Vons set the price? We can get the answer back in the ancient time.

Before money was invented, people use gold and silver to trade for commodities. And before people learn to use gold and silver as a median to trade for goods, they exchange. For example, we are willing to use one apple to trade for one orange, one orange to trade for 5 eggs. This is the way of how we value our goods, and nowadays we transform it into the price we pay in the supermarket. From this we know that each good has a price that is correlated to another good. Once we know that the value of goods are comparative, it is obvious to tell that the bills we are using nowadays is just a median, well, more accurately just a piece of paper.

In my last blog post, I have mentioned that whether the government should print as much currency as they can to satisfy our needs, the answer is no. Printing currency doesn’t increase our wealth, it will decrease the value of currency we have on hand. Infinity currency means there are cash bills everywhere and people are willing to pay a higher price for a single good since they have tons of cash, this will lead to a super inflation.

What is a Super Inflation? Let me give you an example. Right after WWII, Hungary has a rate of inflation of 4.19 × 1016 percent per month (price double every hour). That means that you life-saving will be eaten up by the super inflation and you can only buy an apple with that amount of money. This is not very likely to happen in the states but if we cannot clear our huge debt, the only way for the government to pay the bill is to print huge amount of money and it will lead to a huge inflation. The only thing that can overcome the inflation is gold and silver, because their intrinsic value is always there. So that is why it is important to have a gold standard system, but should we go back to gold standard system at this point? My answer is no. The currency we have is way much bigger than the amount of gold we had and it is impossible to re-link them together unless we depressed the dollar in a very large rate which is a huge impact to our recovering economy. We need some policies to solve our huge debt as soon as possible, nor we might not survive from the crisis this time.