I just read an interesting piece on the escalation of inflation in Iran by Steve Hanke. Steve’s Iran piece is interesting enough, but in his article he has a reference a to his recent Cato working paper on “World Hyperinflations”. Nicholas Krus is co-author of the paper.
I haven’t read the paper yet, but the abstract certainly makes me want to read it:
“This chapter supplies, for the first time, a table that contains all 56 episodes of hyperinflation, including several which had previously gone unreported. The Hyperinflation Table is compiled in a systematic and uniform way. Most importantly, it meets the replicability test. It utilizes clean and consistent inflation metrics, indicates the start and end dates of each episode, identifies the month of peak hyperinflation, and signifies the currency that was in circulation, as well as the method used to calculate inflation rates.”
Even though some – especially some internet Austrians in US – worry about the danger of hyperinflation in the US and Europe I rather think that the risk in the euro zone and partly in the US is deflation than hyperinflation. However, there are countries in the world today where hyperinflation is a real risk. Steve of course gives the example of Iran. I would also be quite worried about inflation getting seriously out of control in Venezuela and Argentina.
So what is worse hyperinflation or (demand) deflation? Well, both are the result of serious monetary policy mistakes and both have devastating impact on the economies hit by it. Germany experienced both within a 10 year period from 1923-1933 and we know how that ended.
PS The 1923 German hyperinflation is documented in Adam Fergusson’s 1975 book “When Money Dies”.