HYPERINFLATION

Date

In the 1970s and 1980s, I was living in Brazil, but spent a fair amount of time in Argentina. Hyperinflation was rife in both countries. For a while prices were changing prices 3x a day in Argentina. They used to use sticker guns in those days; a product that was on a store shelf more than a few days would have a stack of stickers a few millimeters thick.

Hyperinflation makes thinking about pricing hard for both consumers and vendors. The value of a product is constantly changing, usually faster than it can be calculated. The reason to pay any particular price is not “that’s what its worth” but rather “my money is losing value by the minute and the price will be higher in a couple hours.” Sellers, in turn, are trying to guess buyers’ expectations and how to deal with threats (or actions) from the government to freeze prices despite the fact that the government kept doing things that devalued the currency.

That sort of stress creates real damage. Kudos to the Fed for finally doing something, however small. Pity it came after they did this:

More
articles

type your search