Hyperinflation in Syria

September 8, 2013

You may recall that the head of Argentina’s central bank stated: “It is totally false to say that the issue [of money] generates inflation.” Macroeconomics is as much art as science, but you have to give us this one, it’s one of the few things we know for sure. The causality (and yes, we know the causality here) goes this way: large government deficits (wars raise government expenses, reduce revenue) -> are financed by printing money (anyone buying Syrian bonds these days?) -> inflation.  Andrew Sullivan’s post (link via MR) shows inflation of about 200% per year. Another thing we know: these things sometimes explode. 200% can turn into 1000% or even 10,000% very quickly.

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