8 Ways to Prepare and Protect Your Money
8 Ways to Prepare and Protect Your Money
Experts Explain Hyperinflation and 8 Ways to Prepare and Protect Your Money
September 27, 2022 Financial Pilgrimage
Imagine a world where money is worth practically nothing, and the costs of goods increase rapidly, doubling and tripling day after day. This situation might sound like a fictitious movie plot, but it has happened many times before in our world. It’s called hyperinflation, and it can wreak economic devastation on people.
Right now, the increasing prices of goods and services across the board have already stretched people’s budgets. That’s just called inflation. But during hyperinflation, things would get dramatically worse. While the odds of this happening in the U.S. are small, there is no better time to get your financial house in order.
Financial planners and experts share their best tips and personal finance advice to prepare for any economic scenario, including hyperinflation.
But First, What is Hyperinflation?
Inflation can signal that an economy is growing and demand for goods and services is rising. However, hyperinflation is not just about high growth in the cost of goods.
“The biggest misconception about hyperinflation is that we’re in it now,” said Mike O’Leary, co-host of early retirement and frugal living podcast Friends on FIRE. “Economists typically define hyperinflation as a month-on-month increase of 50% or more. We’re currently experiencing an uncomfortable but fairly normal inflationary cycle.”
Why Does Hyperinflation Occur?
Hyperinflation is complex. There are many reasons why hyperinflation could occur. Every country’s economy is different and has its own unique path that could lead them down into this nightmare scenario.
However, common underlying causes of hyperinflation include:
A rapid increase in the supply of money without a currency backing such as gold
A rapid rise in the demand for goods and services
In the past, some governments have rapidly increased the money supply by printing money. Hyperinflation occurs when excess money is rapidly added to an economy, such as Brazil’s 1995 hyperinflation. From 1985 to 1994 prices rose by a mind-boggling 184,901,570,954.39%.
Common Hyperinflation Misconceptions
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