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by tqi 1655 days ago
Many here have pointed out that the difference between 6.2% and normal inflation is not meaningful for businesses. And that makes sense.

I'm curious what if anything companies/founders could do in the event of actual hyperinflation?

1 comments

In practice, what they do is feed the hyperinflation, by raising prices too frequently, because there's hyperinflation, which causes... more hyperinflation. The whole reason anybody needs a wheelbarrow full of cash to buy a loaf of bread is because the price is spiraling out of control. And, it spirals out of control because all the sellers of goods get caught up in the fever of rising prices.

The only thing that ends hyperinflation is a return to rationality, which is generally brought about by some sort of market crash. In 1994, Brazil used a different tactic, though: they scrapped their old, inflating currency, and created a new one, which they simply told the people was stable and not hyperinflating[0]. What it really was was a profound demonstration of the fact that microeconomics is really a strange branch of applied psychology.

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[0]: https://en.wikipedia.org/wiki/Plano_Real

That makes sense, and is very interesting to read about.

My question was actually more about the practical / ops side of this. What would large companies (especially large corps like Apple or Facebook) do with their stockpiles of cash on hand?