Over on Medium, we’ve been working on a series of articles on the dangers of reparations and inflation as they related to the rise of Adolf Hitler. Unfortunately, as is the case with many things about the Just Third Way, people see a word used in an unexpected or unfamiliar way and immediately assume they Know All About It . . . especially when they know little or nothing. They bring their own baggage to the discussion and nothing on Earth is going to shake them loose from their preconceptions, especially not empirical evidence, or logical consistency.
This is sometimes known as “the Political Brain” or being what a Southern Lady of our acquaintance called a “bastuhd . . . the self-made kind,” but ultimately it doesn’t matter whether they’re self-made or can sue the manufacturer, it’s a frustrating situation when all you’re trying to do is inform, not persuade. To the sort of person who fears truth if it comes into conflict with his (or her) opinion, or even just on general principles, the Just Third Way of Economic Personalism is terrifying as anything else that can be supported with objective truth instead of subjective opinion.
All this leads into a brief discussion on what we mean by “hyperinflation.” We recently participated in a discussion with a former official of the Federal Reserve, and this individual used hyperinflation as a synonym for a high rate of inflation, as did almost everyone else in the discussion. This is the generally understood meaning of the term. As it states in virtually all dictionaries and the “Investopedia” —
What Is Hyperinflation?
Hyperinflation is a term to describe rapid, excessive, and out-of-control general price increases in an economy. While inflation measures the pace of rising prices for goods and services, hyperinflation is rapidly rising inflation, typically measuring more than 50% per month.
Although hyperinflation is a rare event for developed economies, it has occurred many times throughout history in countries such as China, Germany, Russia, Hungary, and Georgia.
For some reason Austria is left out, and it is a puzzle why this definition of hyperinflation limits it to developed countries, but it doesn’t really matter. At least within the context of the Just Third Way of Economic Personalism, we define hyperinflation differently.
Hyperinflation is not merely a high rate of inflation. In Economic Personalism we define it as the extremely rare instance in which the price level is rising faster than the money supply can be increased. “Normal” demand-pull inflation is when the price level reacts to too much money and rises in response. Hyperinflation is when the money supply reacts to the price level and the money supply can’t keep up with the increase in the price level. Hyperinflation is therefore analogous to what happens when you divide any number (except zero) by zero: reason breaks down and what you get is an “irrational number.” The value of the currency approaches zero and people require more currency than exists to be able to purchase goods and services as the price level rises by the minute.
Of course, if you try to use that definition on your next economics exam, it will be marked wrong (and you’ll really win friends and influence people if you try to use the correct definitions of the different categories of banks), but that doesn’t mean it’s wrong, only that your economics professor isn’t aware of the work of the interfaith Center for Economic and Social Justice.
In the Economic Democracy Act, CESJ proposes monetary and tax reforms that would preclude any foreseeable instance of hyperinflation, and quite possibly most demand-pull inflation. You can’t get rid of it entirely, of course, for some demand-pull inflation results from changing consumer wants and needs, and thus the diversion of money from some products to others, but where the demand-pull inflation is due to the artificial creation of demand in the form of new money being pumped into an economy, it should halt it in its tracks.
#30#
