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What means hyperinflation:
Ruinously high increase (50% or more per month) in prices due to the near total collapse of a country's monetary system, rendering its currency almost worthless as a medium of exchange.
Before there is a galloping inflation, prices rise 10% or more a year.
Hyperinflation happens when a money supply increases rapidly but its supply of goods and services do not.
It can be caused by governments (excessive deficit spending), banks (excessive giving of loans) and central banks (printing excessive amounts of money, purchasing state bonds or company bonds and shares);
The beginning:
A country experiences very high and usually accelerating rates of inflation, rapidly eroding the real value of the local currency, and causing the population to minimize their holdings of local money.
The population normally switches to holding relatively stable foreign currencies.
Under such conditions, the general price level within an economy increases rapidly as the official currency quickly loses real value.
And the problem can quickly spiral because when sellers begin to believe that prices will keep going up, they keep raising prices.
Fast decrease of your money value:
Your savings in such a currency become less worth very fast.
It is not recommended to hold much value in such a currency either on bank accounts or in cash.
Keep your money in alternative currencies! But avoid any exchange-traded currencies.
The crises at the banking system:
This usually creates crises in the banking industry because deposits dwindle and withdrawals soar.
And all of these factors in turn discourage foreign investment in the currency and businesses using that currency.
Banks and lenders go bankrupt since their loans lose value and people stop making deposits.
If your bank will get close to bankruptcy, all loans will become due for repayment. This condition is written in every loan contract.
But because borrowers can not repay because it affects all banks at the same time, half-repaid houses or indebted companies are taken as pledge.
The proceeds of the sale of your assets will be far below the real value and may not cover your debt obligations.
Prepare yourself that you cannot lose anything!
Your company shares become worthless:
If you have invested in company shares of a stock exchange they will become worthless.
It is not recommended to invest there!
Further effects:
Hoarding and stockpiling create shortages of durable goods. Prepare yourself!
No import of foreign goods anymore, since the cost of foreign goods skyrocket.
Unemployment rises as companies fold, be prepared that you will lose your job!
Government tax revenues will fall and it will have trouble providing basic services.
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