Venezuela is suffering from the ravages of hyperinflation.
Alas, the word “hyperinflation” is thrown around carelessly and misused
frequently in the financial press. Indeed, the debasement of language in the
popular press has gone to such lengths that the word “hyperinflation” has
almost lost its meaning. So, just what is the definition of this oft-misused
word? The convention adopted in the scientific literature is to classify an
inflation as a hyperinflation if the monthly inflation rate exceeds 50%. This
definition was adopted in 1956, after Phillip Cagan published his seminal
analysis of hyperinflation, which appeared in a book, edited by Milton
Friedman, Studies in the Quantity Theory of Money. More…
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