Which is worse Hyperinflation or Deflation? (user search)
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  Which is worse Hyperinflation or Deflation? (search mode)
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Author Topic: Which is worse Hyperinflation or Deflation?  (Read 8411 times)
True Federalist (진정한 연방 주의자)
Ernest
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« on: April 22, 2014, 12:04:27 AM »

Well deflation isn't bad so Hyperinflation.

Deflation certainly is bad, but it doesn't destroy an economy like hyperinflation does.
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True Federalist (진정한 연방 주의자)
Ernest
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« Reply #1 on: April 22, 2014, 08:14:54 PM »

I'm no economist, but couldn't deflation be cured by printing more money?
Depends on what you mean by "printing more money".  A one time infusion of money tends to simply be added to savings or used to pay down debt during periods of deflation unless one is so poor that spending was already below bare minimum levels.  The basic psychology of "the economy is uncertain, therefore I need to be cautious and not spend" is not affected by such things.  That's why the most useless part of the 2001 tax law was the one time tax rebate as it went almost exclusively to people who could afford to either put it into savings or use it to pay down debt, and that's what most people did with it .

If it weren't for the lengthy period of QE that's been going on as a stealth means of constantly printing money, we'd be in deflation right now.  I don't like the constant QE, but it has been necessary not as a cure, but as a means of alleviating the symptoms until our economy gets better.
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True Federalist (진정한 연방 주의자)
Ernest
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« Reply #2 on: April 24, 2014, 03:36:49 PM »

Hyperinflation doesn't just mean above average inflation. The standard definition used is at least a 50% increase a month.

Upon some research it appears Italy in the 80s had inflation at a rate of a bit over 20% a year. That's pretty bad, but not hyperinflation.

Ah, mine was a semantic mistake then. I had no idea hyperinflation was supposed to be so hyper.

If we compare things that are comparable (that would mean a -33%/month deflation or so, which of course isn't very realistic), deflation remains worse though.

Except for bitcoins, and then only if you accept them as being a real currency, I don't think there has ever been an example of hyperdeflation.  Indeed, I fail to see how a broadly circulating currency could have such a thing happen to it.
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