[Retric]

Considering the terrible tax / spending policy and massive amounts of money being printed at the time I have my doubts the energy crisis was nearly as important as you suggest.

Also of note the inflation rate in 1991 was very close to the 1970, and 1976 rate of six percent. So spiking to up another 6% to 12% percent briefly was clearly related, but 1/2 of that total was directly from failed policy.

http://www.frbsf.org/education/publications/doctor-econ/2003...

PS: Another way to look at it was the oil crisis created a price spike, which poor monetary policy turned into increased inflation.

[crdoconnor]

>Considering the terrible tax / spending policy and massive amounts of money being printed at the time I have my doubts the energy crisis was nearly as important as you suggest.

The inflation spikes that happened all around the world at that time in other countries that also experienced the 1970s oil crisis should clue you in.

That's not to say that the hyperinflation might have been avoided if the Brazilian military dictatorship spent a little less at the time. But this was still mainly cost push inflation, not demand pull inflation.

[Retric]

First off hyperinflation is when "monthly inflation rate exceeds 50%", US monthly inflation was ~1% though this time period. http://en.wikipedia.org/wiki/Hyperinflation So, clearly the US never had anything close to hyperinflation even with the oil shocks.

Second, a ~6% annual inflation spike due to increased oil prices is significant. But, the US baseline inflation rate from 1970-1990 was ~6% so the oil shocks at most explained 50% of US inflation.

For a country to turn a ~0.5% monthy shock into 50% monthly price increase means something else is clearly very wrong with their economy.

[crdoconnor]

>First off hyperinflation is when "monthly inflation rate exceeds 50%"

This was always an arbitrary definition that never really touched on the actual mechanism - the positive feedback that causes inflation to feed upon itself and increase exponentially when spending is > the capacity of the economy.

>clearly the US never had anything close to hyperinflation even with the oil shocks.

Clearly. Which is why I used the term "inflation spike" and not "hyperinflation".

I'm sure there have probably been some economies that have gotten close to the hyperinflation trigger point without realizing it, though (not America, however).

>For a country to turn a ~0.5% monthy shock into 50% monthly price increase means something else is clearly very wrong with their economy.

It means that their economy was probably spending at close to full capacity already and they were heavily dependent upon oil imports. This exposed them to the supply shock, but still, without the supply shock, the hyperinflation trigger point would probably have been avoided.

"Wrong" is a normative judgement. You wouldn't use it to describe physical phenomena. Why would you use it to describe economic phenomena?