Deflation always precedes hyperinflation, with the most recent example of hyperinflation is the 2007 - 2009 Zimbabwe experience, and the Weimer Republic hyperinflation in the 1920's.. Although inflation and hyperinflation have similar traits as both entails rising prices, hyperinflation is in reality a currency collapse scenario, a situation when people lose confidence in a fiat currency and they all rush to exchange their fast depreciating with tangible goods.
Zimbabwe's economic disaster was built on terrible economic policy.
- Government spending was out of control.
- Foreign debts mounting.
- And then the government of Zimbabwe tried to solve its problems by turning on the printing presses.
Sound familiar? yes of course, it is now happening in the US and others in tandem. Here is how hyperinflation looked like in Zimbabwe.
Here is Weimer Hyperinflationary Experience
Deflation precedes hyperinflationary collapse with declining Velocity ff Money. Once panic sets in the velocity of Money starts rising. Here below is the current trend in the Velocity of Money in the US, and it is still in a downtrend.
Current US Financial Situation
Link to related article: http://www.safehaven.com/article/27471/tedbits-newsletter-october-2012-volume-1
Gold's performance during hyperinflationary collapse.
Link to gold-related article: http://www.fool.com/investing/general/2013/01/03/statistically-speaking-this-is-the-best-gold-miner.aspx
