When The Clock Strikes Midnight…
And Money Turns Back Into The Paper It Is — Post #9
Remember the guy in Post #6 who created notes that didn’t represent actual value? Well if he creates too many, the money will eventually inflate and have less purchasing power.
Let’s imagine that for years, you buy coffee on your way to work. It costs $2.
One day, you go into the shop and it costs $2.02 for coffee. Not because the barista is trying to screw with you, but because the cups cost more to make. This is fine. The coffee is only 2 cents more and you make $50 a day so no big deal.
The next day you go in and the price is $2.05 because the price of coffee beans increased.
The next day, $2.10, milk costs more.
At the end of the month, a coffee costs $2.50. This is inflation, and it usually happens slowly over years, allowing people to adjust.
If however, the next day your coffee costs $750, that would be an example of hyperinflation. Your dollar now has far less purchasing power than it did before. Not only that but it is trending toward representing only the paper that it is.
Hyperinflation is happening now in Venezuela. It happened in Germany during WW1. It happened in Zimbabwe until 2008. Remember in post 2 when I said the most important characteristic of money is trust? The above are all examples of trust vanishing.
This is post #9. The others are located here.
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