Blaming hyperinflation on money creation is like blaming the camel’s broken back on only the final straw. Stop hyperventilating and learn about the rest of the straw pile, and the many years the animal was pushed far beyond its capacity. This post has many sources describing the reality of several historical hyperinflations, and the years and decades of troubles endured by each country, long before any large-denominated bills were issued.
Basically, the idea that these historical hyperinflations were caused exclusively by the government creating too much money, is true in an extremely narrow (definitional) sense, but requires ignoring the dramatic, and often years-long circumstances that led up to it.
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This post was last updated November 26, 2021.
Disclaimer: I have studied MMT since February of 2018. I’m not an economist or academic and I don’t speak for the MMT project. The information in this post is my best understanding but I don’t assert it to be perfectly accurate. In order to ensure accuracy, you should rely on the expert sources linked throughout. If you have feedback to improve this post, please get in touch.
Sources to learn about the reality of hyperinflation.
- Weimar Germany in the 1920s:
- The 2020 paper by Phil Armstrong and Warren Mosler (hosted by the Gower Initiative): Weimar Republic Hyperinflation through a Modern Monetary Theory Lens
- 2012 post by Matthew O’Brien, The Hyperinflation Hype: Why the U.S. Can Never Be Weimar
- Hyperinflation and the Weimar Republic: The Real Story with Maxximilian Seijo (video)
- Zimbabwe (hyperinflation in 2007):
- Bill Mitchell’s 2009 post, Zimbabwe for hyperventilators 101 (look particularly at the section entitled “Zimbabwe …”)
- Clint Ballinger’s 2020 post Airplane crashes aren’t “hyperlandings”: Notes on Zimbabwe
- Brazil (1980-1993): 2009 paper by G. Tullio (a1) and M. Ronci, Brazilian Inflation from 1980 to 1993: Causes, Consequences and Dynamics
- A realistic look at various other historical hyperinflations: James Montier’s 2013 paper, Hyperinflations, Hysteria, and False Memories
- Venezuela: 2019 post by Fadhel Kaboub, Why Government Spending Can’t Turn the U.S. Into Venezuela
- May 2021 U.K.-centered post by Jon Stepek, What is hyperinflation and could it happen here?
Are you seriously going to blame the mouse, who happened to be the last one in the boat, for the boat having sunk?
(With thanks to Andrew Chirgwin)