Comment by tatsuke95 | Hacker News Reader

Comment by tatsuke95 | Hacker News Reader

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>"I hear this argument a lot, but no nation that we know of has ever collapsed because of deflation, right?"

And which have collapsed from inflation? None, directly. Hyperinflation (and deflation) is an effect of an economy collapsing. Not a cause.

From Wiki: "Hyperinflation is often associated with wars, their aftermath, sociopolitical upheavals, or other crises that make it difficult for the government to tax the population, as a sudden and sharp decrease in tax revenue coupled with a strong effort to maintain the status quo can be a direct trigger of hyperinflation."

Note "decrease in tax revenue". Economic crisis > deflation > country can't pay the bills > hyper-inflates currency.

A curious retelling of history.

The Weimar Republic intentionally inflated their currency to reduce the WW1 reparations payments, which got out of control and reduced the value of the Mark to nothing.

Inflationary policies collapsed the tax base due to destroying the ability of the economy to function normally, not the other way around.

This is easily shown by the fact that as soon as the Weimar Republic re-introduced an asset-backed stable currency, the economic problems improved greatly, though there were deflationary periods after that caused by the massive economic upheaval.

>A curious retelling of history.

By you, perhaps.

Economic crisis, couldn't pay the bills, so they inflated the currency. Just like I said. Are you really going to argue that there was no war or aftermath, social upheaval or other crisis (like, say, debilitating war reparations) that led to hyperinflation? Crisis comes first.

So often Wiemar Germany is trotted out as the example of what can happen when the government prints excessively. "It can happen to you! Wheel-barrows full of money to buy bread!" The reality, the country and its economy was in shambles. Not because of inflation.

Your turn: point to an economy that was happily chugging along, and hyperinflation came out of nowhere and took it down.

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