A short thread on "hyperinflation" - which Sri Lanka is NOT facing - and how we can avoid it.
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#SriLankaEconomicCrisis #IMFNow
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#SriLankaEconomicCrisis #IMFNow
Hyperinflation isn't an exact term, but the most useful definitions are of inflation that keeps rising faster and faster.
Eg- 50% monthly increase in prices in successive months without really stopping.
Our equivalent rise is closer to 2-3%, very different.
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Eg- 50% monthly increase in prices in successive months without really stopping.
Our equivalent rise is closer to 2-3%, very different.
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Hyperinflation is if a Rs. 100 loaf of bread in Dec 21, is 150 in Jan 22, 225 in Feb, 337.5 in Mar, ~ 500 in Apr etc - leading to the Dec 22 price being ~13000!
We are clearly far away from it being that bad.
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We are clearly far away from it being that bad.
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But what causes hyperinflation? The answer is actually easy - every country that has had hyperinflation has had a single common factor.
Printing money more more and keeping interest rates low, even after inflation starts to rise.
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Printing money more more and keeping interest rates low, even after inflation starts to rise.
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Hyperinflation sucks. It kills so many businesses, creates massive unemployment, makes life extremely difficult with insane shortages AND insane prices.
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So we need to stop printing money, stop keeping rates low now that inflation is rising - and take these steps fast.
1 part of this has begun (rate increases), but now the money printing has to stop. I'm broadly confident it will.
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1 part of this has begun (rate increases), but now the money printing has to stop. I'm broadly confident it will.
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