Inflation, money and marriage
June 7, 2008
Hello, This is an article I wrote for a college business class. You may find it relevant for marriages as most marriages split up over money and this is a major cause of problems with money. Hyperinflation By Robert Walker Business Math Hyperinflation is inflation growing at a very high rate in a very short time Hyperinflation: In the field of economics, the term hyperinflation is considered inflation that is beyond control. This condition is marked in which prices of goods and services increase rapidly as the currency or money loses value. Definitions vary by economists from a cumulative inflation rate over three years approaching 100% to "inflation exceeding 50% a month." hyperinflation is often reported for much shorter intervals, often per month. In extreme conditions inflation can be measured on a daily basis. The definition used by most economists is "an inflationary cycle without any tendency toward equilibrium." The cause of hyperinflation is the subject of a great deal of debate. When governments create a drastic increase in the supply of money for example by the overprinting of paper money with no backing by gold or silver and/or by a drastic debasement of coinage you will often see hyperinflation. Debasement of coins comes when you replace coins of precious metals, like gold and silver, with common base metals, like our dimes and quarters. This extreme economic condition is most often associated with wars or their aftermath, depressions, and political and/or social instability. Root causes of hyperinflation:The generally accepted main cause of hyperinflation is a extreme influx of valueless paper money or base coins, which is not supported by an increase in growth in the output of goods and/or services. The oversupply of paper money with no backing of intrinsic value, like goold or silver causes massive inflation with a complete loss of confidence in the money, like paper money which lacks intrinsic value. Intrinsic value is the value of the metal, typically a precious metal, in a coin. For example, if gold trades at a price of $886 per ounce then a coin minted from one troy ounce of fine gold would have an intrinsic value of $886. This value of gold was taken on May 31, 2008. In May of 1970 the price of gold was $35 a troy ounce. In May of 1980 the price of gold was $500 an ounce. In May of 1990 the price of gold was about $370 an ounce. If the governmental financial entity responsible for the printing of a currency allows excessive money printing andn there is no incremental increase in goods and / or services then hyperinflation usually occurs. Hyperinflation is virtually always associated with paper currency becoming worthless. A run on paper money will usually followed by a return to what is known as "hard money" or coins of precious metals or the general population would once again start to barter their goods and services.Hyperinflation ruins the purchasing power of consumers and business as well as investors. This has a tendacy to cause a run on the economy to favor extreme consumption with people hoarding real assets, such as foodstuff and precious metals like gold. Hyperinflation will drive investors out of the affected area causing an even further economic downturn. Post WWI Germany went through its worst inflation in 1923. This was partly due to the fact that the allies of WWI demanded that Germany pay war reparations that were over and above the entire net worth of the country. Germany responded to paying this debt by running the printing presses of their currency 24/7 until the money was worthless. In 1922, the highest denomination was 50,000 Mark. By 1923, the highest denomination was 100,000,000,000,000 Mark. In December of 1923 the exchange rate from marks to US dollars was 4,000,000,000,000:1. During the worst times, one U.S. dollar was equal to 80 billion Mark. In contrast the great depression in the USA was not until 1929. This was the postwar ecopnomic situation that gave rise to Adolf Hitler and the Nazi party and helped pave the way for WWII. "If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them, will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered." -Thomas Jefferson "Hyperinflation." Merriam-Webster Online Dictionary. 2008. Merriam-Webster Online. 30 May 2008
http://www.merriam-webster.com/dictionary/hyperinflation http://en.wikipedia.org/wiki/Hyperinflation
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hyperinflation, inflation, marriage, money
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