What Causes Hyperinflation and What To Do To Prepare For It
Money For the Rest of Us
J. David Stein
4.5 • 1.4K Ratings
🗓️ 19 February 2020
⏱️ 27 minutes
🧾️ Download transcript
Summary
What factors lead to hyperinflation, why it is so devastating, how hyperinflation can be overcome and what can individuals do to be prepared for hyperinflation.
Topics covered include:
- What causes inflation and how do central banks manage it.
- How the causes of hyperinflation differ from more normal levels of inflation.
- What is the biggest challenge of living in a country with hyperinflation.
- How Zimbabwe and other countries were able to overcome hyperinflation and how Venezuela is slowly taking steps to combat hyperinflation.
- Why Zimbabwe is again experiencing high inflation.
- How individuals can protect against inflation.
- What individuals can do to prepare for hyperinflation in case it comes.
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Transcript
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| 0:00.0 | Welcome to Money for the rest of us. This is a personal finance show on money, how it works, how to |
| 0:06.8 | invest it and how to live without worrying about it. I'm your host David Stein today's |
| 0:11.6 | episode 287. It's titled, What Causes Hyper Inflation |
| 0:17.7 | and How to End It? Hyper inflation, the rapid increase in prices with inflation rates over 50% per month, can |
| 0:30.8 | destroy an economy. We're seeing that in Venezuela today. We saw it in Zimbabwe in 2008, |
| 0:41.5 | 2009, and potentially again in 2020 in Zimbabwe. |
| 0:50.0 | In this episode, we're going to look at what causes hyper-inflation and we'll see that it's very different |
| 0:56.4 | from the type of inflation that we're used to, be it low or high. |
| 1:02.2 | Hyper-inflation is a completely different level of inflation, |
| 1:08.0 | and to survive it is very different than what we would do |
| 1:12.0 | in just combating normal inflation. |
| 1:15.0 | First, as I mentioned, inflation measures the rise in prices over time. |
| 1:21.0 | The prices of food, housing, clothes, health care recreation, and other goods and services. |
| 1:30.0 | The more of those prices are increasing the greater the rate of inflation. |
| 1:35.0 | Government statistical agencies around the world measure inflation by using what is |
| 1:40.4 | known as a reference basket. They look at a basket of goods and services. |
| 1:46.2 | In the U.S. the Bureau of Labor Statistics calculates inflation as measured by the U.S. Consumer |
| 1:52.1 | Price Index by looking at the price changes |
| 1:55.2 | in over 200 categories of goods and services. |
| 2:00.0 | Inflation can only occur if businesses charge more to their customers for their products. |
| 2:06.0 | A business will sometimes raise their prices if they see that their costs are rising and then they try to pass on those costs to their |
| 2:16.7 | customers so that the business maintains the same level of profitability, that their |
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