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Paul Meli
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"Paul: It takes an awfully big collapse in production *by itself* to cause a big inflation." Agreed but I said "also" meaning that printing money *by itself* is not under normal conditions enough to cause a hyper-inflation. Weimar? Zimbabwe? I think those two are examples of hyper-inflations caused mainly by sharp contractions in productivity exacerbated by high debt in a foreign currency. Printing money as a desperation response just drove the final nail in the coffin. I think "printing money" is mentioned too often in the same sentence as hyper-inflation when in fact most episodes of printing money haven't come to that. Anyway, what do you consider worse, hyper-inflation or deflation.
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"Most cases of hyperinflation that come to mind are where the central bank either couldn't or wouldn't control the money supply, because they couldn't or wouldn't control the deficit." Didn't most cases of hyperinflation also include a collapse in production and/or debt in a foreign currency (or gold)?
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Nov 18, 2011