Jack Dorsey says hyperinflation 'will happen in the US soon.' Here are 3 reasons why he's probably wrong, according to an expert.
Here are the three kinds of events that have powered hyperinflation in the past, according to Roche.Among the direst examples of hyperinflation was Germany after World War I. The country was ravaged from losing the war, and it was forced to pay war reparations and endure a change in its government imposed by the victorious Allies. For that government — the Weimar Republic — the challenge of repaying debts and rebuilding was all but impossible.
"It was the war, regime change, fragile state of mind, foreign-denominated debts, and productive collapse that resulted in the excessive 'money printing,' collapse in the tax system, and ultimately hyperinflation," he added.Countries can also run the risk of hyperinflation when they cede monetary sovereignty, or give up exclusive control over their currency.
Regime change, while in some cases helpful in the long run, can lead to a new government being"greeted with great skepticism," Roche said. This was seen throughout Europe after World War I, as economic uncertainty tanked currencies' values.
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