Talk:Hyperinflation/Archive 3

Lack of understanding of the cause of hyperinflation

"The main cause of hyperinflation is a massive and rapid increase in the amount of money that is not supported by a corresponding growth in the output of goods and services. This results in an imbalance between the supply and demand for the money (including currency and bank deposits), accompanied by a complete loss of confidence in the money"

This is simply not true, the fact is that in countries with hyperinflation, the printing presses aren't able to keep up with the DEMAND for paper money.

The driving force of hyperinflation is an unwarranted expansion of credit, usually by the central bank.

In 1920's Germany the discount window of the State bank was open to most businessmen.

When the government decided to end inflation they closed the discount window to businessmen and inflation quickly subsided.

Hyperinflation occurred because the government wanted it to happen. It was a deliberate policy decision.

In the financial crisis in the US in 2008 the FED briefly opened the discount window to entities other than member banks.

This provided liquidity to an economic system that was having liquidity disappear. Done judiciously this prevented the crisis from becoming worse. Jimmyreno (talk) 04:53, 24 February 2011 (UTC)jimmyreno

I modified the paragraph you objected to to clarify that inflation of bank credit and deposits are just as important as inflation of paper currency. Greensburger (talk) 06:18, 24 February 2011 (UTC)

To clarify a point - in economics the supply of money ALWAYS equal the demand for money. it's a variation of "supply = damand" That is basic economics. The Weimar hyperinflation was as bad as it was because the people running the German Central Bank kept claiming that the economy needed more money to run and kept on printing ever increasing numbers of marks. The other basic principle to keep in mind is that an increase in the supply of a good will result in a drop in its price. The more of it around the less it is worth. That principle also applies to money, which most certainly will lose value if the supply is increases a trillion fold.71.184.188.254 (talk) 19:01, 29 December 2011 (UTC)

Why go to great lengths to explain a very simple concept? The theory of supply and demand states that modifications to price will alter volumes at offer and volumes demanded so that for any given supply forces and demand forces, there should always be a point in the middle which is a price stability attractor. As a side note, a lot of the bad economics in the world reifies that price balance point by assuming that it is a specific target, rather than just the balance of current forces. A decrease in price is supposed to decrease the amount offered and increase the amount desired. This allows any shift in volume to be rebalanced by market forces. In general, this holds up, but there are a few examples where it doesn't. The most famous, of course, are hyperdeflation and hyperinflation. If a nation as a whole has a work population that is living very close to it's fixed costs, then any reductions in wages will cause income to fall below fixed costs. This means that rather than having the normal effect of decreasing the supply of labor on the market, these wage reductions actually *increase* the amount of labor on the market. The simple physics rule goes, when the forces stop pointing in opposition and start pointing in the same direction, the result is, you move FAST!. There is, of course another balance point you can reach when the most marginalized workers have lost their homes and there place in society, then you can reach a more normal equilibrium among the participants that are left. Similarly, when a country has certain "required imports", eg. factories for some essentials got bombed, or when they have foreign debt payments, eg. Reparations for war, then you have a fixed number of dollars foreign currency you have to raise every month. If you are using a large portion of your budget meeting that, then you are in the uncomfortable position where if the price of the foreign currencies is high and you cannot get as many foreign dollars from your allotted budget, the increase in price actually *increases* the amount of local dollars you spend on foreign currency. Recall that the law of supply and demand says that if the price goes up then we are supposed to want less of it. Once again, as any freshman physics student can tell you, when all the forces point in the same direction, the result is, you move, VERY FAST!. This is really just basic math.98.198.203.106 (talk) 04:55, 14 September 2012 (UTC)

Slight Changes to "Examples" topic

I sometimes encounter those who think they might come out ahead in hyperinflation. Suggest adding after-effect to Germany 1923 showing effects documented in Ferguson (1975, 2010): Late 1924 government decrees called for partial restoration of government bonds (2-1/2%, delayed until ww-1 reparation paid) partial restoration of mortgages and other debt (25% in 1925 -- if not paid off early, effectively multiplying mortgage balance of 5 years before by 25,000,000,000,000) (see Ferguson, p226-7)

Generally, it also needs to be more clear that food supplies -- especially in cities -- become very tight as farmers stop selling for worthless cash, and unemployment skyrockets, once hyperinflation becomes established. Government benefits may fade to nothing before receipt.

Also, in the italicized section about the USA avoiding hyperinflation with close calls in the Civil and Revolutionary wars, it would be appropriate to mention that the Confederacy also sharply inflated - trading at 10:1 against the greenback as early as 1863 Skb999 (talk) 09:11, 22 November 2010 (UTC)

I have been thinking in adding/changing in the "Overall impact" of inflation just under the heading on the country, to demonstrate the chain of currency devaluations over their time in hyperinflation. Maybe also include the current exchange rate (if applicable).

For example, for Angola it could looks like this:

Angola

Impact: 1 Kwanzas (AOA) = 1,000,000 Kwanzas Reajustados (AOR) = 1,000,000,000 (Novo) Kwanzas (AON/AOK)
Exchange rate: 1 USD = 90.00 AOA (February 2010)
Angola went through its worst inflation from 1991 to 1995. In early 1991, the highest denomination was 50,000 kwanzas. By 1994, it was 500,000 kwanzas. In the 1995 currency reform, 1 kwanza reajustado was exchanged for 1,000 kwanzas. The highest denomination in 1995 was 5,000,000 kwanzas reajustados. In the 1999 currency reform, 1 new kwanza was exchanged for 1,000,000 kwanzas reajustados.

Of course, the text explaining the currency change remains (include links to the actual note from Ron Wise's site?) I'd like to know people's opinion/objection about this Rubycored (talk) 11:02, 2 February 2010 (UTC)

The story about the hyperinflation in Chile is wrong.

The story about the hyperinflation in Chile is wrong. The inflation was only 163% under Aliende in 1972 and more than doubled to 375% during the first year of the Pinochet’s rule. The neoliberal experiment failed and Milton Friedman was invited in Chile to save it by requesting even more free market, privatization and restriction of the state functions. Despite the strictest adherence to the neoliberal policies, the economy of Chile crashed and faced hyperinflation once more in 1982. Then, Pinochet broke up with the strict neoliberalism and dismissed the economic advisers and ministers educated in the Friedman’s Chicago school. Only then the Chilean economy saw growth.

See Naomi Klein “The shock doctrine” Penguin Books (2008) p.75 —Preceding unsigned comment added by 195.96.247.10 (talk) 15:37, 11 February 2010 (UTC)

Naomi Klein likes to ignore the fact that most of Pinochet's economic growth came prior to 1982. The crisis between 1980 and 1984 was mostly caused by a massive drop in copper and other commodity prices from the late 70s to early 80s. — Preceding unsigned comment added by 24.107.137.167 (talk) 03:46, 25 July 2013 (UTC)

Indonesia

Indonesia really ought to have its own section; overall inflation was on the order of 1:1,000,000 over a span of very roughly 40 years. There were two currency revaluations during this period. Most people with any amount of cash moved it into US Dollars. —Preceding unsigned comment added by 68.38.92.91 (talk) 13:52, 21 September 2010 (UTC)

Archives

Since talk sections were all jumbled up, I finished 2007 archive and created 2008-2009 archive. There may be a few unsettled issues in either, so if you decide to do a thorough rewrite it might be worth it to check. This is likely to be a hot topic in the future, so someone improving this article would be great. CarolMooreDC (talk) 13:41, 3 October 2010 (UTC)

Hyperinflation and the currency

There were multiple problems here. I fixed some of them.

The first bulleted paragraph described "100,000,000,000,000" as "100 thousand million", with a ref explaining that 1 long billion = 1 short trillion. But 100,000,000,000,000 is a million million on either scale. I fixed the text.

The ref seems more confusing than helpful. It might be useful, if the article were to explain that this bill was called 100 billion in Germany, but the article uses short scale throughout and refers to the bill as 100 trillion. Anyway, I couldn't think of how to make it better, so I left it.

The second bulleted paragraph breaks from the short scale to talk about "hundred million billion pengő" and "one milliard b.-pengő" without any explanation that these are long billions. Again, this is confusing, but I couldn't think of a good solution (the bills actually have the words "billion pengo" on them, so you can't just call it "trillion" the way the previous paragraph does with the papiermark), so I didn't fix it.

The second bulleted paragraph also said that the 100,000,000,000,000 Z$ had "the greatest number of zeros shown." But at least one other note, the 500,000,000,000,000 YUO, had the same number of zeros, was larger overall, and preceded the Zimbabwe note by over a decade, so it's disingenuous to give the credit (such as it is…) to the Z$. See Banknotes of the Yugoslav dinar, under the section "1993 dinar". (Note that that article uses long scale, so it's called 500 billion instead of trillion.) This notes was issued on 23 Dec 1993 and withdrawn with the fifth revaluation on 1 Jan 1994, so it didn't even last two weeks (the whole YUO currency only lasted 3 months), but it was circulated. I fixed this one by changing the sentence to refer to both notes. --99.175.102.94 (talk) 07:40, 2 November 2010 (UTC)

Do there exist 500,000,000,000,000 YUO note?I know only a 500,000,000,000 YUO note. —Preceding unsigned comment added by 163.20.233.131 (talk) 00:28, 13 December 2010 (UTC)

Bosnia 2005

Hyperinflation is met with drastic remedies, such as imposing the shock therapy of slashing government expenditures or altering the currency basis.

An example of the latter occurred in Bosnia and Herzegovina in 2005, when the central bank was allowed to print only as much money as it had in foreign currency reserves.

The second sentence above makes no sense because the premise is wrong - BiH did not experience "hyperinflation" at any point in 2005. At the end of that year they introduced value-added tax which, combined with imported fuel price increases, caused an inflation spike, but one measured in larger single digits, per [1][2]. This can't qualify as an example of hyperinflation. --Joy [shallot] (talk) 01:31, 29 December 2010 (UTC)

Where is Turkey?

Who deleted Turkey? Böri (talk) 11:03, 11 April 2011 (UTC)

Same question. That was one of the leading modern examples in hyperinflation Energon (talk) —Preceding undated comment added 16:39, 23 September 2011 (UTC).

Percentages in formulae

You don't have to divide by 100 because the original inflation rate is percents == hunderdths. If you do divide by hundred, you have to add a percent sign. 67.194.199.224 (talk) 04:21, 21 July 2011 (UTC)

Context? You multiply by 100 to get percent, not divide... maybe the comment just said it backward?98.198.203.106 (talk) 04:58, 14 September 2012 (UTC)

A lot of Contradictions

For Example:

• Germany: "In 1923, the rate of inflation hit 3.25 × 106 percent per month (prices double every two days)." vs: "Germany German Papiermark October 1923 29,500% 20.87% 3.7 days" (Table of worst Infaltions)
• Is an Inflation Rate of 445% in 1984 actually Hyper Inflation ? They managed to get away with it.
• Zimbawe: "Prof. Hanke’s HHIZ measure indicated that the inflation peaked at an annual rate of 89.7 sextillion percent (89,700,000,000,000,000,000,000%) in mid-November 2008." The Table give different figures yer again.

--Arcudaki (talk) 09:51, 26 September 2011 (UTC) Debt is more than fixed rate borrowing. For example inflation linked debt and inflation linked pensions. Hyper inflation does not get a government off these debts. As fast as it inflates the debts get bigger. The article needs to distinguish between fixed rate borrowing, and inflation linked debts — Preceding unsigned comment added by 66.249.93.233 (talk) 21:15, 17 February 2014 (UTC)

Verification of Soviet involvement in Hungary's 1945/'46 hyperinflation?

The section of the post-WW2 Hungarian hyperinflation contains this claim:

Some historians believe* that this hyperinflation was purposely started by trained Russian Marxists in order to destroy the Hungarian middle and upper classes.

The link* (http://heindorffhus.motivsamler.dk/shoebox/frame-HungaryInflation01.htm) is an article by the librarian, Peter Kr. H. Bech, of the Danish Philately Club Library (http://kpk.dk/biblioteket), and is not referenced, nor does it seem to be a scholarly work. It is also concerned with philately rather than currency (the hyperinflation is used to explain the rising value of Hungarian stamps; not surprising considering the author), and as such it simply claims:

For the "Russification" of Hungary, the Russian Army sent specially trained, fanatic Marxists, who were particularly educated in the destruction of national economies, as well as pacification of anyone they considered or identified as enemies of the Soviet system. Their first goal was to ruin the middle and upper classes, and they achieved by constant impression of banknotes, so that money lost its value. Little by little the population had to sell all their possessions in order to have enough money to pay for the absolute basics for survival. Eventually the income tax payment certificates "Adópengö" came into use in order to avoid too many zero's. This unhappy practice influenced also the postage rates that raised not less than 27 times during the period 1st May 1945 - 24th July 1946.

That's it; no sources, no references, nothing. As currently sourced this is definitely NOT a work of 'a historian', but an unverified claim made by a philatelist(!)

It would appear that the claim on the website is based on an article (Ungarns inflation 1945 - 46) in Nordisk Filatelistisk Tidsskrift (Nordic Philately Magasine), 2000, No. 1, pp. 23 (see: http://kpk.dk/system/files/Index%20NFT%201960%20-%202010.pdf pp. 11, search for 'bech'). Not exactly where I would expect seminal economic/political history research to be published, although Mr. Bech may have had secondary sources in this original article.

However, unless someone can provide verifiable sources for this claim, I would advise its removal.

As it currently stands it is not 'some historians' , but rather 'one philatelist' who 'believes' ...

Mojowiha (talk) 20:06, 28 October 2011 (UTC)

Update: It would seem that Mr. Bech's phrasing bears some similarity to an article (The Hungarian Hyperinflation and Stabilization of 1945-1946) by William A. Bomberger and Gail E. Makinen, and published in Journal of Political Economy, Vol. 91, No. 5, Oct., 1983 (http://www.jstor.org/stable/1837370?seq=7), see pp. 806-807:

The officials of the central bank continually warned the Allied Control Commission of the consequences of this policy. The Soviets, who dominated the Commission, turned a deaf ear to these warnings, which led some to conclude that the hyperinflation was designed to achieve a political objective - the destruction of the middle class.(9)

(9) The Hungarian central bank was nominally independent of the central government. Article 50 of its statutes forbade granting direct credit to the state. This statute was suspended before World War II and remained suspended during the hyperinflation. On May 7, 1946, the government extended its direct control over the central bank through a decree giving it the power to appoint a commissioner who was to ensure that the work of the bank accorded with the laws of the land, the general economic interests of the country, and the government's credit and foreign exchange policy. The powers of the commissioner were so broad that he became, in effect, the central banker.

It is unfortunately not clear from which of their sources (see pp. 823-824) the authors draw their claim.

Mojowiha (talk) 20:33, 28 October 2011 (UTC)

In addition to a reference, shouldn't a mechanism be provided as well? To me, this sounds about as valid as a story of someone who hates consumer00ism, so they conspire to make cheeseburgers greasy and give Americans health problems. Or for a more humorous version, see "The Adventures of Isabel" by Ogden Nash. I fail to see any connection between marxists wanting the collapse of the middle class (assuming they want that, which I think is pretty contestable) and marxists actually having leverage to cause the collapse of the middle class.

Since no one have provided any substantiation of Soviet instigation of the 1945-'46 Hungarian hyperinflation, I've simply deleted the claim.

Mojowiha (talk) 19:10, 23 September 2012 (UTC)

Criticism of the official view

I have removed the following paragraph because: (1) it does not pertain to the factual description of the section describing hiper/high inflation processes. (2) Lacks factual accuracy and is highly subjective [for instance, inflation reached 55.7% in 1951 during Peron's presidency, 123.6% in 1959, 182.9% in 1975, 444% in 1976...]; (3) the impact of political orientation on actual inflation rates is an extremely controversial and highly disputed topic, and its inclussion in a factual section is misleading; (4) the claim that a given economic policy was intended to "create chaos" is entirely subjective and cannot be sustained with appropriate documentation; (5) Professor Escudé is not an expert on hiperinflation, and his alleged remark has little relation with the topic at hand. In other words, the paragraph is misplaced, is not supported by the data, is highly subjective, and presents highly controversial topics as facts. I consider that it must be removed entirely. — Preceding unsigned comment added by Atamola (talk • contribs) 09:12, 15 March 2012 (UTC)

− Ellen Brown, author of Web of Debt, admits that the left-oriented policy that Argentina had had since 1947, when Juan Peron came to power, did actually create inflation. But the inflation did not become a national crisis until during the eight years that followed Peron's death in 1974. During these years the inflation rose to 206 percent, due to a "deliberate radical devaluation of the currency of the new government, along with a 175 percent increase in oil prices". This devaluation was, as she sees it, done with the hidden purpose of destabilizing the economy (to create a chaos). And it was, in any case, not caused by a sudden and massive increase in the printing of money by the government. She also cites Professor Escudé who writes that this devaluation led both to "the astronomical high inflation" and "to the spread of a speculative financial system that became a hallmark of Argentina's financial life".

New Cato paper on hyperinfaltion

This new paper out of Cato should be utilized to provide data on various episodes of hyperinflation. — Preceding unsigned comment added by 72.89.152.209 (talk) 18:00, 15 August 2012 (UTC)

Debate regarding the Hanke-Krus table.

Cagan´s defintion of hyperinflation, namely 50% monthly inflation, is not the generally accepted definition. The Hanke - Krus table of world hyperinflations is thus not a valid study. It does not include hyperinflation in Turkey and Venezuela.

The IASB´s defintion of hyperinflation, namely cumulative inflation of 100% over three years, is the valid definition followed by all accountants world wide.

I think the Hanke-Krus table should be replaced with a table including Turkey and Venezuela.

ShinyEarRing (talk) 15:40, 12 September 2012 (UTC)

I doubt the IASB defined hyperinflation as cumulative inflation of 100% over three years.

See this Wikipedia article, Hyperinflation: Definitions. "The cumulative inflation rate over three years is approaching, or exceeds, 100%." It is stated in IAS 29, Par. 3 (e). You can confirm it for yourself in IAS 29 here. All the millions of accountants in the world know that. PricewaterhouseCoopers published a statement on the internet in 2009 that Venezuela then had just entered into hyperinflation, i.e., cumulative inflation of 100% over three years. Venezuela has been in hyperinflation in 2010, 2011 and is not currently at 100% cumulative inflation only at 92.7% cumulative inflation over three years, but, I was informed yesterday by the President of the Venezuelan Institute of Chartered Accountants that companies in Venezuela are still implementing IAS 29 Financial Reporting in Hyperinflationary Economies which they started in 2009. Small businesses in Venezuela implement the same rules in terms of Section 31 of the IFRS for Small Businesses which also state the rule of 100% cumulative inflation over three years. I can give you the link to confirm that too, if you want. Most people know that Venezuela has been in hyperinflation since 2009. Most people know that Turkey was in hyperinflation in the early 2000´s when their cumulative inflation was more than 100% over three years. They also implemented IAS 29 because of that. Any of the more than 140 countries in the world that implement IFRS would state that its country is in hyperinflation when cumulative inflation over three years equals or exceeds or approaches 100% and it would be obliged to implement IAS 29 because it complies with IFRS. There is abslutely no doubt about the IASB 100% cumulative inflation over three years rule. The generally accepted definition of hyperinflation in the real world today is the IASB definition, not the Cagan definition. This would be confirmed by millions of accountants worldwide.ShinyEarRing (talk) 15:17, 15 September 2012 (UTC)

That would be doubling of prices over three years which is equivalent to 26% per year compounded, which is less than 2% per month compounded. Businesses would factor that 2% into their monthly price increases, and unions would demand wage increases of 2% per month, and banks would have to pay more than 2% per month interest to attract deposits, but that is not hyperinflation. Maybe the IASB meant 100% per year if that rate continued for at least 3 years, i.e. not a one-year crisis. Doubling of prices each year is 6% per month compounded. Severe inflation yes, but not hyperinflation.

Hyperinflation implies a rapid increase in monetary velocity, because wage earners spend their income the same day they are paid and businesses keep their books in a stable-value currency or commodity, just as Zimbabwe business was conducted in US dollars and not in zim dollars. In a hyperinflation, refusal to accept the devalued currency becomes widespread, which would not happen if the inflation rate were only 2% per month. This article needs a reliable source for a definition that is consistent with real world hyperinflations. Greensburger (talk) 17:30, 13 September 2012 (UTC)

Here is the reliable source (International Financial Reporting Standards)for a definition that is consistent with real world hyperinflations, namely the IASB´s definition of hyperinflation being equal or approaching 100% cumulative inflation over three years: IAS 29 Financial Reporting in Hyperinflationary Economies, Par. 3 (e) "The cumulative inflation rate over three years is approaching, or exceeds, 100%."ShinyEarRing (talk) 15:33, 15 September 2012 (UTC)

Cagan´s definition has not been implemented by any company or government since April 1989, the date the IASB authorized IAS 29. It will NEVER be used by any company or government in the future. All companies and all governments today follow the IASB´s definition. It is thus very clear that the IASB´s definition is the generally accepted defintion of hyperinflation.

I suggest the Hanke-Krus table be removed from the article. I am absolutely sure there is a Wikipedia rule to quote and to follow to do this. I just don´t have the time to look for the rule. ShinyEarRing (talk) 09:27, 17 September 2012 (UTC)

Hyperinflation obviously has multiple definitions. When looking at the academic literature, you will clearly find a multitude of papers using Cagan's definition. However, as you note, many businesses use an alternative definition. The fact that multiple definitions exist should be clearly stated in this page. Thus, I would argue for two separate sections. One with episodes under Cagan's definition, and one with episodes under an alternative definition. One thing that does concern me, however, is the extreme number of episodes that have existed under the IASB definition. Hundreds more would have to be added to this page. Nkrus1 (talk) 11:45, 17 September 2012 (UTC)

Mr Krus, thank you for your response. I agree that a "multitude" (a hundred or so) of academics use Cagan's definition. However, tens of millions of accountants and 140 plus countries only use the IASB´s definition. You cannot deny that Cagan´s definition has never been used in practice since 1989 and will NEVER be used in practice. And, Mr Krus, it is not "many" businesses that use the IASB´s definition: ALL businesses in hyperinflationary countries use and have to use the IASB definition when they are in hyperinflation.

The fact that two main definitions exist is already clearly stated in this page. The two sections you suggest is simply an attempt to give credibility to the very limited academic view. Only a hundred or so academics would be interested in the academic view when it is taken into acccount that tens of millions of accountants and all businesses implement the IASB´s definition during hyperinflation. Millions of people are interested in the IASB´s definition.

Mr Krus, you are not an accountant and maybe do not understand the very destructive effect, not of inflation or hyperinflation, but the implementation of the stable measuring unit assumption on constant real value non-monetary items, e.g. companies´ equity not backed by the equivalent REAL value of net assets as this assumption forms part of the Historical Cost Accounting model during low, high and hyperinflation. Accountants know that companies capital and invested profits (their equity) are being eroded by the HCA model. They think it is being done by inflation. However, it is being done by the stable measuring unit assumption, not inflation. Inflation is always and everywhere a monetary phenomenon as Milton Friedman so famously stated more than fifty years ago. Inflation and deflation have no effect on the real value of non-monetary items. They only affect money and other monetary items.

You are concerned about the "extreme" number of incidences under the IASB´s defintion. That is for cumulative inflation of 100 percent over three years (26 percent inflation for three years in a row) in terms of IAS 29 Financial Reporting in Hyperinflationary Economies. However, the IASB has voted unanimously in May 2012 to submit the replacement of IAS 29 to research after the Argentinean Accounting Federation submitted a proposal in the form of a draft IFRS éntitled IFRS 'X' INFLATION to the IASB in 2010 in which they proposed action to be taken, not at 100 percent, but at 26 per cent cumulative inflation over three years or at 10 percent inflation per annum. They understand the damage being done to the economy because of the erosion of companies´ capital by the HCA model (not inflation or hyperinflation). This is not called hyperinflation, but high inflation. The Argentinean Federation´s proposal has been comprehensively amended in January 2012 to IFRS 'X' CAPITAL MAINTENANCE IN UNITS OF CONSTANT PURCHASING POWER in another proposal changing the core principle of the draft IFRS from INFLATION to CAPITAL MAINTENANCE IN UNITS OF CONSTANT PURCHASING POWER under which the stable measuring unit assumption is never implemented. This is described in detail in Chater 12 in the book CONSTANT ITEM PURCHASING POWER ACCOUNTING per IFRS. Hyperinflation only erodes the real value of money and other monetary items during hyerinflation. The stable measuring unit assumption erodes the real value of constant real value non-monetary items (e.g. equity) not backed by the equivalent REAL value of net asstes during hyperinflation. The IASB´s defintion of hyperinflation would become irrelavant under a future replacement of IAS 29 requiring capital maintenance in units of constant purchasing power at 10 percent per annum or 26 percent cumulative inflation over three years.ShinyEarRing (talk) 13:20, 21 September 2012 (UTC)

Obviously the IASB´s definition is only applicable to hyperinflation as from 1 April 1989, the date IAS 29 was authorized.ShinyEarRing (talk) 13:40, 21 September 2012 (UTC)

I am in favour of one table in two time periods: (1) the existing Hanke-Krus table based on Cagan´s definition till 31 March 1989 and (2) the IASB´s definition as from 1 April 1989, the date IAS 29 was authorized.ShinyEarRing (talk) 13:46, 21 September 2012 (UTC)

This would add the well-recorded, well-pubilicised and government-treated hyperinflations in Turkey and Venezuela to the table. ShinyEarRing (talk) 14:04, 21 September 2012 (UTC)

Thank you for your very useful knowledge on the IASB's definition. Regardless, I still feel that there should be two separate sections for the episodes of hyperinflation; one using Cagan's definition, and one using the IASB's definition. The simple fact is that both definitions are used and accepted by different fields. Cagan's definition may only be used in the academic field, but it is still used and thus should be included in this page. I see no reason to delete the useful information the table brings.

On that note, I see great benefit in trying to find all cases of hyperinflation under the IASB's definition. It may be a daunting task, but I am happy to contribute as much time as I can towards the pursuit of this knowledge.Nkrus1 (talk) 16:23, 21 September 2012 (UTC)

I previously indicated that I support, for practical reasons, the inclusion of your table (which I agree brings useful information to this article), provided it includes episodes of hyperinflation defined in terms of the IASB´s definition as from 1 April 1989, the date IAS 29 was authorized. I realize you would not, on a scientific basis, be able to accept a single table based on two different definitions.

From a scientific point of view, I agree with your view that there should be two separate sections for the episodes of hyperinflation; one using Cagan's definition, and one using the IASB's definition. It would further high-light the very destructive effect of having implemented traditional Historical Cost Accounting, namely the stable measuring unit assumption, over the past 3000 years.

Once the IASB authorizes the replacement IFRS for IAS 29 in six or eight years´ time, an accounting change at 100 percent cumulative inflation over three years would fall away: the accounting change would be required at 10 per cent annual inflation or 26 percent cumulative inflation over three years. The advent of hyperinflation in terms of the IASB´s definition would thus not be the threshold for corrective accounting measures.ShinyEarRing (talk) 14:16, 22 September 2012 (UTC)

Where is Iran?

Where is the record of my wretched country? — Preceding unsigned comment added by 217.218.67.253 (talk) 15:56, 31 October 2012 (UTC)

Issues with the definition and disclaimering

I just removed 12k of "According to Cagan" from the article. I also restructured the lede.

Regarding the lede, I think it's best to start with a general definition of IASB before going into the specifics of what the IASB defines it as. As noted elsewhere in the article, economists use hyperinflation as a term in other meaning that the definition of it for accounting purposes.

Second, the IASB does not regard 100% annual inflation as an absolute. It's noted in the article that that's one of the indicators on inflation but not the only one, and that inflation approaching 100% can be classified as hyperinflation.

Finally, adding the "Cagan's currently not generally accepted definition" to the start of so many sections, before the inflation statistics are given, creates the appearance that we're using Cagan's definition of inflation in compiling the statistics, not just his definition of hyperinflation.

For those reasons, I think we need to step back and look at the restructuring of the article in pieces. That's why I've reverted to the previous status quo, and even though I'm not proposing the changes, I'm opening discussion. —C.Fred (talk) 15:32, 17 May 2014 (UTC)

This is from C.Fred´s talk Page: Cagan´s definition of hyperinflation is not followed by any government. 147 governments today follow the IASB definition. This is verified and referenced in the article. MonteDaCunca (talk) 15:02, 17 May 2014 (UTC)

@MonteDaCunca: What's the difference between Cagan's methodology for defining inflation and the IASB one?~

@C.Fred): "Cagan defined in his book hyperinflation as starting in the month that the monthly inflation rate exceeds 50%, and as ending when the monthly inflation rate drops below 50% and stays that way for at least a year" per the WP article. Cagan wrote his book in 1956. This is since 1989 followed by no government in the world economy. Not even Venezuela today. The IAS's definition: "The cumulative inflation rate over three years approaches, or exceeds, 100%" comes to about 2.5% inflation per month, or 26% annual inflation for 3 years in a row. Cagan´s definition comes to about 13 000% inflation per annum. A massive difference. No governmement follows that. The IASB's definition is followed by 147 governments: all the governments that implement IFRS - according to PwC, referenced in the article. This issue is very clear. MonteDaCunca (talk) 15:21, 17 May 2014 (UTC) — Preceding unsigned comment added by MonteDaCunca (talk • contribs)

@C.Fred: C.Fred Or anyone else, please name one government that follows Cagan´s definition today. MonteDaCunca (talk) 15:45, 17 May 2014 (UTC)

@C.Fred: C.Fred I predict we will find there is nothing to discuss: No government in the world follows Cagan's definition, while 147 governments (all the governments implementing IFRS issued by the IASB) follow the IASB´s definition which logically makes it the generally accepted definition of hyperinflation. So, what is the discussion about then? MonteDaCunca (talk) 15:50, 17 May 2014 (UTC)

No government in the world today follows Cagan´s definition. It is thus totally unjustifiable to base almost the entire article on Cagan´s definition which is not followed by any Government.MonteDaCunca (talk) 16:07, 17 May 2014 (UTC)

Since it is notable that Cagan's definition is not followed by any government today, the definition and content about his book should justifiably only be mentioned in the History part of the article. The detailed description of Cagan's definition should be removed from the DEFINITIONS section since it is not currently notable anymore. No current analysis of hyperinflation in the article should be based on Cagan's definition since it is not currently used by any government. Cagan´s definition is not valid for current analysis of hyperinflation - also, especially, not in this article.MonteDaCunca (talk) 16:33, 17 May 2014 (UTC)

@MonteDaCunca:, @C.Fred:--Whether Cagan is accepted or not, the country-specific sections now look silly and awkward. Why not lead the entire country section with a note that says something like "The methodology used to calculate hyperinflation in the countries marked with an asterisks below was based on a definition by Cagan that is not generally accepted any more." Or something like that? Or use the new methodology to calculate it for each country and be done. Or put the data in using both methodologies? Right now though the article is confusion. If Cagan isn't used, why have the country listed at all? Or is this page being used to make an argument only economists, and not people reading an encyclopedia, care about? Prof. Mc (talk) 13:40, 18 May 2014 (UTC)

@Prof. Mc: You stated: "Or use the new methodology to calculate it for each country and be done." That is an enormous project that no-one has yet done. It would involve many other countries besides the ones listed and it would take a long time to complete.

@Prof. Mc: You stated: "If Cagan isn't used, why have the country listed at all?" You also stated: "Or is this page being used to make an argument only economists, and not people reading an encyclopedia, care about?" You have correctly identified the real reason for the prominence given to Cagan's definition. Cagan's definition is only used by maybe a handful of economists in academia. No government uses it since 1989. No government in the world would today accept it to wait for 50% per month or 13 000% per annum inflation before declaring that their economy is in hyperinflation. The reason why someone/a group is trying to present Cagan´s definition in the article as the generally accepted definition of hyperinflation, is because most probably the world´s most important expert regarding hyperinflation, Prof. Steve Hanke, from Johns Hopkins University, refuses to accept the IASB's definition. He is the most important academic dealing with hyperinflation. He, with Nicholas Krus, one of his students/assistants developed the Hanke-Krus World Hyperinflation Table that appears in the article. This table is based on Cagan´s definition. The list of countries shown in the article that experienced hyperinflation, with the start, end and highest month, is based 100% on this table. The list was added to the article only after the Hanke-Krus table was added to the article or at the same time. That is not a list of countries that have experienced hyperinflation in terms of the generally accepted (IASB) definition of hyperinflation. So, that is the reason why, although no government follows Cagan's definition, all those countries (100% copied from the Hanke-Krus Table) are listed - most probably by someone in Prof. Hanke's team (he has a "Bull Team" of students helping him promote his ideas) at Johns Hopkins University (impossible to tell on WP). Your statement: "Or is this page being used to make an argument only economists, and not people reading an encyclopedia, care about?" thus hits the nail on the head. That is why and by whom this article is being used to wrongly present Cagan's definition as the generally accepted definition of hyperinflation, when in fact, it has been superseded since 1989 by the IASB´s definition, so much so that today 147 governments (basically the entire world economy) follow the IASB´s definition. No government follows Cagan's definition. Congratulations, Prof. Mc, you are a very astute WP editor. MonteDaCunca (talk) 18:11, 18 May 2014 (UTC)

You still haven't explained how inflation is calculated differently by Cagan. I know that Cagan has a different threshold; however, a lot of the countries listed look close enough (80–90%) to be worth mentioning on the list. There are few instances—interwar Germany, Brazil, and Zimbabwe—that probably warrant a mention whether they meet the IASB definition of hyperinflation or not.

But if we're putting such emphasis on the accounting definition of hyperinflation, does the FASB (US) define hyperinflation, and if so, how? I can't think of a percentage mentioned in the textbooks when they talk about the monetary unit concept. —C.Fred (talk) 16:48, 18 May 2014 (UTC)

@C.Fred: You stated: "You still haven't explained how inflation is calculated differently by Cagan." There is generally only one way to calculate inflation when CPI information is available: the difference in the CPI over a specific time period. I don´t think I stated that Cagan calculated inflation differently. Cagan's 1956 definition of hyperinflation is different from the IASB's definition in 1989: Cagan's is at a very much higher level: In 1956, Phillip Cagan defined hyperinflation in his book The Monetary Dynamics of Hyperinflation as starting in the month that the monthly inflation rate exceeds 50%, and as ending when the monthly inflation rate drops below 50% and stays that way for at least a year." 50% inflation per month comes to about 13 000% per annum. The IASB defined hyperinflation in 1989 as: "The cumulative inflation rate over three years approaches, or exceeds, 100%." That is equal to 26% annual inflation for three years in a row. There is a devastating difference between 26% annual inflation and 13 000% annual inflation. In the same way the monthly inflation rates under the two methods demonstrates the enormous difference: The IASB´s definition is about 2.5% per month while Cagan's is 50% per month. Cagan's level is at a very destructive rate. No government follows Cagan's outdated definition. The IASB's definition is followed by the 147 government in the world that implement IFRS, basically the whole world economy since 1989. The list of countries in the article is 100% copied from the Hanke-Krus Hyperinflation List which appears in the article which is based on Cagan's superseded definition. Basically the whole article is based on Cagan's superseded definition.MonteDaCunca (talk) 11:09, 19 May 2014 (UTC)

@C.Fred:, You've indented your paragraph as if it's a reply to me. However I believe your points are addressing something MonteDaCunca wrote. My point was that MonteDaCunca's additions to the page make it look awkward, and it seems the page edits are being used to make an argument. Prof. Mc (talk) 16:57, 18 May 2014 (UTC)

@C.Fred: The FASB and the SEC follow the IASB´s definition. Although the US has not formally or officially adopted IFRS, there was a specific Convergence Project between IFRS and US GAAP and today the latter are very closely converged with IFRS. Convergence between the two is so far advanced that the "convergence" project is sort of not important now at the IASB and FASB. PricewaterhouseCoopers in their formal list of 147 countries, (see article) actually include the US as a country that applies IFRS when it is not formally (100%) the case. I know for a fact that when Venezuela entered into hyperinflation in 2009 - in terms of the IASB´s definition - American multinationals operating in Venezuela started applying US GAAP requirements for hyperinflationary countries which is IAS 29 under IFRS. I know there is a specific SEC task force with a fancy name continuously monitoring countries in hyperinflation that uses the IASB's definition. MonteDaCunca (talk) 18:40, 18 May 2014 (UTC)

@Prof. Mc: @C.Fred: The EXAMPLES OF HIGH INFLATION section in the article is also wrongly based on Cagan's definition, obviously added by the same academic(s)/person/group from Johns Hopkins University/the Hanke-Krus Hyperinflation Table. MonteDaCunca (talk) 19:54, 18 May 2014 (UTC)

This whole article needs to be corrected to remove the superseded Cagan definition bias. A big job. MonteDaCunca (talk) 22:04, 18 May 2014 (UTC)

Note: MonteDaCunca (talk · contribs) is a sock of banned user PennySeven (talk · contribs). LK (talk) 08:17, 20 May 2014 (UTC)

I am not a sockpuppet. MonteDaCunca (talk) 13:09, 20 May 2014 (UTC)

Lawrencekhoo now moved the article back to 1956. It is now simply about The History of Hyperinflation As Seen In 1956. And theres is nothing anyone can do about it except Lawrencekhoo. Lawrencekhoo or anyone else please name one - only one - government - that today follows Cagan's definition of hyperinflation. MonteDaCunca (talk) 16:08, 20 May 2014 (UTC)

Removed new lead paragraph, not in harmony with rest of article

Please find consensus regarding how to present Hyperinflation definition.Jonpatterns (talk) 17:06, 20 May 2014 (UTC)

This article is based on Cagan´s 1956 definition of hyperinflation. 147 countries (practically the entire world economy) that adopted International Financial Reporting Standards follow the International Accounting Standard Board's 1989 definition.

Subsections 4 Examples of hyperinflation, 5 Examples of high inflation and 6 Most severe hyperinflations in world history and 7 Units of inflation, as well as the Hanke-Krus Hyperinflation Table are actually based on Cagan's definition. Practically the entire article, with the exception of the mention of the IASB´s definition in Definitions, is based on Cagan's definition. This is notable and verifiable. It must be pointed out to readers. It is also notable and verifiable (see above) that 147 countries (basically the whole world economy) follow the IASB´s definition. This does not appear in the article at the moment. I suggest the statement above should be reverted back into the lead paragraph. MonteDaCunca (talk) 17:21, 20 May 2014 (UTC)

References

It is clear that this article fails WP:NPOV and if presented in its entirety today for the first time, it would be speedily deleted because it fails WP:NPOV MonteDaCunca (talk) 17:27, 20 May 2014 (UTC)

Thanks for the reply. It may be worth using WP:RfC to get a broader range of opinions on how to present the different definitions of hyperinflation.Jonpatterns (talk) 18:13, 20 May 2014 (UTC)

Yeah, I'm not sure if I think Cagan's definition should be on the page, but I am worried that it was completely removed without consensus. Fleetham (talk) 19:20, 20 May 2014 (UTC)

Cagan's definition was never removed from the Definitions section. Please state the date when it was removed from the Definitions section and by which editor.

The other sections - 4 to 7 - very clearly based on Cagan's definition (which has been superseded since 1989 by the IASB's definition as the generally accepted definition) were removed since they currently still do not comply with WP:NPOV. The information in those sections was copied from the Hanke-Krus Hyperinflation Table in the case of Section 4 that lists 39 subparagraphs. Sections 4 to 7 should be clearly marked as based on Cagan's superseded (outdated) definition. It should also be prominently stated in the article that the IASB's definition is being followed by 147 governments implementing IFRS - basically the whole world economy - since 1989 and that it is the generally accepted definition of hyperinflation. It should also be prominently stated that not a single government follows Cagan's definition since 1989. MonteDaCunca (talk) 19:52, 20 May 2014 (UTC)

— Preceding unsigned comment added by MonteDaCunca (talk • contribs) 19:48, 20 May 2014 (UTC)

For those who are interested, I've start an SPI case on MonteDaCunca here: Wikipedia:Sockpuppet investigations/PennySeven. Please contribute there if you have evidence. Thank you, LK (talk) 07:49, 21 May 2014 (UTC)

Cagan´s definition is the generally accepted definition in the world economy.

Cagan´s definition is the generally accepted definition in the world economy.

The IASB's definition is not used in the world economy.

See Section 4, 5, 6 and 7.

This is very clear that this article is based on Cagan´s definition. The IASB's definition is not used at all. It should be removed. No-one uses the IASB's definition. 78.130.81.221 (talk) 19:03, 27 May 2014 (UTC)

The 'definitions' section doesn't only have to include the main general definition, but other well-known meanings of the term too, hence the section name being in the plural form. If you want to state that one meaning is the "generally accepted" one, feel free to do so, but you must include a source. Thanks BZTMPS ★ · (talk? contribs?) 19:13, 27 May 2014 (UTC)

BZTMPS ★ Thank you for your reply. The source is the article: the Hanke-Krus Hyperinflation Table is based on Cagan´s definition.

Section 4 is based on Cagan's definition: 100% copied from the Hanke-Krus Table.

Section 5 is based on Cagan's definition.

Section 6 is based on Cagan's definition.

Section 7 is based on Cagan's definition.

The Hanke-Krus Hyperinflation Table is based on Cagan´s definition. The table is itself externally linked in the article. Please see the table. Prof Steve Hanke is the number one expert in the world on hyperinflation. See the external links on his article page. That should surely be more than enough external sources for the fact that Cagan's definition is the generally accepted definition of hyperinflation because Prof Steve Hanke uses it as shown in the table and in all the sub-sections in the article. This clearly demonstrates the external sources that there is no doubt that Cagan's definition is the generally accepted definition of hyperinflation. All governments follow Cagan´s definition. 78.130.81.221 (talk) 19:29, 27 May 2014 (UTC)

I have posted an SPI case here: Wikipedia:Sockpuppet_investigations/MonteDaCunca, though I've probably posted it incorrectly. Either way, it's clear that the same person has returned. Prof. Mc (talk) 19:11, 27 May 2014 (UTC)

There is absolutely no doubt that Phillip Cagan's 1956 definition of hyperinflation being inflation in excess of 50% per month is the generally accepted of hyperinflation in the world economy because it is being used by Prof Steve Hanke from Johns Hopkins University. He is the world's number one expert on hyperinflation. He personally stopped 11 hyperinflations in the world economy over the last 20 years or so. No-one uses the IASB's definition. Everybody uses Cagan's definition, especially Prof Hanke, the world´s number one expert on hyperinflation. There is thus no doubt which is the generally accepted definition of hyperinflation in the world economy. 78.130.81.221 (talk) 19:59, 27 May 2014 (UTC)

I rather doubt economists working on hyperinflation are so scarce that a single person's use would make a definition "generally accepted". That said, I have provided a reliable, scholarly source (not Hanke) which confirms both that "modern hyperinflationary theory developed out of a seminal paper of 1956 by Philip Cagan" and that "most theoretical papers on hyperinflation follow a similar approach". Regarding Odereiugif's comments, I'm not aware of any country using any definition of hyperinflation (nor did the article make a claim to that effect). Using IFRS accounting does not imply the formal acceptance of the "100% over three years" definition of hyperinflation, and a source on the spread of IFRS is irrelevant unless it explicitly discusses hyperinflation. See WP:SYN. Huon (talk) 21:26, 6 December 2014 (UTC)

This discussion is not going to resolve anything. Why? Because Huon does not wait for consensus. He/she simply makes changes without consensus. So, it is 100% sure that this discussion will go nowhere. Huon even removed citation requests without providing the citations. He/she should be banned for that.

This issue will never be resolved because no-one will ever even try to answer the following question: Please state the name of one country that today follows Cagan´s definition? It is impossible to state the name of a country that today follows Cagan´s definition. Why? Because no country follows Cagan´s definition today.

Huon, please state the name of one country that follows Cagan´s definition today? Odereiugif (talk) 21:39, 6 December 2014 (UTC)

Huon, you do understand English. You are not a baby. I did not ask you about economists´ use of the definition of hyperinflation. I asked you about the use by any country of Cagan´s definition. Please supply the name of one country that uses Cagan´s definition today. When you do not know the name of one country that uses Cagan´s definition since it is impossible to know that name since no country uses Cagan´s definition today, then any reasonable person would simply admit that no country uses Cagan´s definition today since that is a fact and the status quo. Everybody except you know that. I thus ask you again, Huon, please tell me the name of one country that uses Cagan´s definition of hyperinflation. Huon, I am not asking you about what economists use: I am asking you to tell me the name of one country that uses Cagan´s definition. Huon, again I ask you very formally here on Wikipedia: please name one country that uses Cagan´s definition of hyperinflation today. Thank you for taking part in this discussion. Odereiugif (talk) 22:02, 6 December 2014 (UTC)

I answered the question both above and at my talk page: I don't know of any country using any definition of hyperinflation. But that's irrelevant since the article doesn't say countries use a particular definition of hyperinflation. If you know of a reliable published source that says that no country uses Cagan's definition, please go ahead and present it. If you cannot do that, the article should say neither that countries use Cagan's definition, nor that they don't use Cagan's definition.

Also, I provided a reliable, scholarly source in place of the "citation needed" tags I removed. I quoted it above. You, on the other hand, removed well-sourced content; I didn't see you wait for consensus to do that, either. Huon (talk) 22:18, 6 December 2014 (UTC)

Just a reminder: This page is regularly trolled by sockpuppets of PennySeven (banned for disruption a few years ago). If you see anyone behaving non-collaboratively while pushing to reject the hyperinflation is >50% per month definition in favor of hyperinflation is >100% over 3 years, it's likely a sock of PennySeven, as only confirmed socks of PennySeven have ever pushed such a view here. If you see a new editor like that, especially if they show WP:IDIDNTHEARTHAT behavior, I suggest reverting per WP:DENY and filing a report at WP:SPI. LK (talk) 08:06, 10 January 2015 (UTC)