EABH hat dies direkt geteilt
Chief Economist/Head of Research at LBBW || Senior Fellow SOAS University of London 🟨🟦. Personal Views only/Hier Privatmeinung
📈Freshly returning from a full-day conference in Budapest 🇭🇺 on #hyperinflation. Many fascinating details about past episodes over the centuries. 🚀 I argue that hyperinflation episodes have become less frequent for three reasons: 1️⃣ the world was a less tumultuous place during the past three decades. Very high inflation happens usually in countries going through social turmoil or outright breakup. Think of successor states of Yugoslavia or the Soviet Union. But also #Zimbabwe 🇿🇼 , #Venezuela 🇻🇪 or #Sudan 🇸🇩. Will it last? The world is once more becoming a less safe place. 2️⃣ much progress has been made in terms of transparency (better data compilation and debt management processes) and early warning price signals (bond prices, floating exchange rates, sovereign ratings etc.). This makes it harder for governments to dig an economic policy hole so deep that hyperinflation may result. 3️⃣ more independent central banks and generally open capital accounts act as insurance against unsustainable fiscal or monetary adventures. Thankfully, the Cassandras predicting in 2022 and 2023 a return to very high and sustained inflation have been proven wrong. But risks always linger. Understanding how hyperinflations start and feed upon themselves helps preventing societies from falling into a time-inconsistency trap than can lead to economic devastation and to political nightmares. Thank you to EABH and Hungary’s central bank for you lt. splendid organization and overwhelming hospitality.