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In the places where true hyperinflation happened in the 1970's in the West - less-developed countries - it happened for the same reason that it happened in 1922 Germany and in modern Zimbabwe, namely, that additional money was, at least in effect, handed out directly to the people (if only because paychecks got bigger at a faster and faster rate because the workers demanded it in an effort to keep up with the ever-rising prices).  If lots of new money gets handed out directly to the people, hyperinflation will result - that is completely inevitable in that case. 

But all modern Western well-developed countries have a well-developed credit system - and a well-developed central bank on top of that, running it all. 

In such societies (in Europe, too), if the central bank decides to pump more money into the system, it does so through the banks, not directly to the people - in other words, that is borrowed money. 

That can go on for a while, and in fact has done so in the recent episode, but once the economy gets saturated with debt to the point where the defaults start increasing very significantly (which is happening now), the game is up and the economy is headed down.  

All indications are that we have reached that point - we are now in the transition period between when the credit crunch hits, it hit in August 2007, and when the economy fully goes down. 

The initial down-move in the economy has happened already - but we have one more big down-move to go, and given how high the economy was driven before that happened, and given how low the economy went during the first dip from 2007-2009 as a result, I expect the next downturn to be a real doozy as people begin to realize what is really happening and react accordingly.  

They will probably cut way back even much more than they already did during the previous downturn that they really started noticing in the fall of 2008 when the stock market crashed. 

That massive cutback on the part of consumers will devastate the economy, considering that historically, in recent decades, consumer spending has been about 67% of the American economy and in the late 1990's during the stock market bubble, people spent with even more wild abandon in what I came to term a spend-a-thon when I was watching that happen, and I have seen statistics in the meantime, a few years ago, that said that consumer spending actually made it as high as probably about 90% of the American economy during that time, a statistic which I very much believe, given what I was seeing at the time.  Such a heavy orientation toward consumer spending can't be good when consumers start cutting way back, as I expect they will do in the not-too-distant future when the next downturn hits.

Note:  The government did decide to provide some money directly to the people - the stimulus payments from the American federal government in the last year or two (this was written on March 5. 2010).  But that money in America in recent times was puny in dollar amount compared to the money that the central bank was trying to pump into the system through the banks - and all of THAT money is borrowed money if it, in fact, goes out the front end of the bank at all.  That can go on for a while - and, in fact, it has done so this time, that is how the Fed kept the economy going for lo these many years since 1987, i.e., to enforce the law against recessions - but eventually the economy simply runs out of ability to continue to absorb that borrowed money effectively, since it has to be paid back, and all indications are that we have reached that point in the meantime. 


As for inflation in the advanced countries in the 1970's - which was not hyperinflation - the reason why it happened, and also the reason why it happened when it happened, is described by the Kondratieff wave, which lasts for about 50-80 years - apparently longer in modern times, there is some evidence that suggests that is due to humans living longer in modern times.  We are in the very late stage of the current cycle of the Kondratieff wave now - and in an earlier part of the cycle, which in our case happened in the 1970s, inflation was not only possible, it was likely (and if the government disconnects the currency from its precious-metals link during that time, which is a very tempting thing to do at the time, and which Nixon did in 1971 in response to the initial bout of inflation, then there will be another bout of even worse inflation, and another recession, a few years later, which happened in America in this case in the late 1970's and early 1980's). 

We are long-past that point in the current Kondratieff wave - we are now on the borderline between the plateau phase and the depression phase of the Kondratieff wave. 

(It is a little more complicated than that, due to the law against recessions and the fact that the American central bank saved the economy again during the early 2000's, but not different by much - and this website describes that issue, among other things.  Basically, the issue is that we actually transitioned from the plateau phase of the current Kondratieff wave to the depression phase in the year 2000 - but because the authorities decided to continue to enforce the law against recessions yet, and succeeded in doing so for several years yet, until 2008, we are really only transitioning from the plateau phase to the depression phase now, ten years later.  The entire decade of the 2000's has been a transition period - which means the issues have been able to continue to build up and so now the situation is more poignant than ever.)