Hyperinflation Essay Example | Topics and Well Written Essays - 1000 words

Hyperinflation - Essay Example There is great debate regarding the growth of money supply as the cause of the inflation. According to the large section of the economists, there is a strong correlation between the inflation and growth in the money supply. In that case, hyperinflation can be considered as the ultimate case of the money supply growth over the intensification in the production of the domestic goods and services. The reason behind the excess growth of money supply is relatively higher spending of money by the government in comparison to the collection of the taxes and charges. It further leads to the printing of more money to bridge the gap between the expenditures and the revenues. This excess creation of the money by the government is the root of increment of the demand in the economy which directly enhances the price level. Besides that surplus money supply can generate demand for the imported products instead of having a constraint in the foreign currency supply. Eventually it results in depreciati ng the local currency (Web Archieve, â€Å"Hyperinflation: Causes, Cures†). It has already been discussed that the paper is focused on the economy of Zimbabwe. Therefore, an in-depth analysis of the cause of hyperinflation in the nation and its effect will be demonstrated in the paper, but prior to that the global history of hyperinflation is exhibited below in a tabular format. In the above exhibited table the worst hyperinflations in the countries has been exhibited. Simultaneously, it also demonstrated a comparative analysis of the chosen country and the other countries in the world. Zimbabwe experienced hyperinflation for the first time in the 21st century. In this paper, it has been intended to produce the reliable record of the hyperinflation in Zimbabwe, which has been considered as the second highest inflation in the world history and one of the worst economic conditions in the world. Zimbabwe contravened the hyperinflation benchmark first in