October 4, 2012
IRAN ON THE VERGE OF HYPERINFLATION. “Hyperinflation is destabilizing in all sorts of other ways–it quickly becomes impossible to buy foreign exchange, and therefore, to buy imports; contracts become hellish to write; investment is practically impossible; and the sheer administrative difficulty of acquiring and handling enough cash becomes ever-more problematic. In Germany, it’s really true that people used wheelbarrows to car their pocket change around, and housewives really used to run to the factory gates at lunch so they could get their husband’s paycheck and spend it immediately–waiting until evening would have meant losing an appreciable amount of purchasing power. In effect, effort that used to be put into productive labor instead becomes focused on getting and spending money as quickly as possible.”
Bernanke, take note.