Editing Hyperinflation (section)

==Definition==
[[File:Argentina Inflation.webp|thumb|upright=1.4|{{center|Argentina monthly inflation of over 50% in 1989 and 1990}}
{{legend|#F69F68|Year-over-year inflation|outline=#F27200}}
{{legend-line|red solid 3px|M2 money supply increases year over year<!--hyphens only needed for prepositive use-->}}
{{legend|#00A2FF|Month-over-month inflation|outline=#00A2FF}}
]]
In 1956, [[Columbia University]] economics professor [[Phillip D. Cagan|Phillip Cagan]] wrote ''The Monetary Dynamics of Hyperinflation'', often regarded as the first serious study of hyperinflation and its effects<ref name="On Cagan">{{cite book |url=https://books.google.com/books?id=GBnqoV6eMCQC&q=Hyperinflation |title=The Four Ends of the Greek Hyperinflation of 1941–1946 |page=10 |first=Michael R. |last=Palairet |publisher=Museum Tusculanum Press |year=2000 |isbn=9788772895826 |access-date=27 June 2015 |archive-url=https://web.archive.org/web/20151110050111/https://books.google.com/books?id=GBnqoV6eMCQC&printsec=frontcover&dq=Hyperinflation&sa=X&ei=E2SDVITBDoWEPN7hgZAG&redir_esc=y#v=onepage&q=Cagan&f=false |archive-date=10 November 2015 |url-status=live }}</ref> (though ''The Economics of Inflation'' by C. Bresciani-Turroni on the German hyperinflation was published in Italian in 1931<ref>{{cite journal|last=Robinson|first=Joan|date=1 January 1938|title=Review of The Economics of Inflation|jstor=2225440|journal=The Economic Journal|volume=48|issue=191|pages=507–513|doi=10.2307/2225440}}</ref>). In this work, Cagan defined a hyperinflationary episode as starting in the month that the monthly inflation rate exceeds 50%, and as ending when the monthly inflation rate drops below 50% and stays that way for at least a year.<ref name="Hyper">{{cite book |first=Phillip D. |last=Cagan |author-link=Phillip Cagan |chapter=The Monetary Dynamics of Hyperinflation |editor-first=Milton |editor-last=Friedman |editor-link=Milton Friedman |title=Studies in the Quantity Theory of Money |location=Chicago |publisher=University of Chicago Press |year=1956}}</ref> Economists usually follow Cagan's description that hyperinflation occurs when the monthly inflation rate exceeds 50% (accumulating to a yearly increase of 12,874.63%, or an increase by a factor of 129.7463).<ref name="On Cagan"/>

The [[International Accounting Standards Board]] has issued guidance on accounting rules in a hyperinflationary environment. It does not establish an absolute rule on when hyperinflation arises, but instead lists factors that indicate the existence of hyperinflation:<ref>{{cite web |url=http://www.iasplus.com/en/standards/standard28 |title=IAS 29 – Financial Reporting in Hyperinflationary Economies |access-date=10 April 2012 |author=International Accounting Standards |publisher=IASB |archive-url=https://web.archive.org/web/20120404011354/http://www.iasplus.com/en/standards/standard28/ |archive-date=4 April 2012 |url-status=live }}</ref>
* The general population prefers to keep its wealth in non-monetary assets or in a relatively stable foreign currency. Amounts of local currency held are immediately invested to maintain purchasing power;
* The general population regards monetary amounts not in terms of the local currency but in terms of a relatively stable foreign currency. Prices may be quoted in that currency;
* Sales and purchases on credit take place at prices that compensate for the expected loss of purchasing power during the credit period, even if the period is short;
* Interest rates, wages, and prices are linked to a price index; and
* The cumulative inflation rate over three years approaches, or exceeds, 100%.