Re: Money Supply - Question

On Nov 26, 9:54 pm, mmount <mmo...@xxxxxxxxxx> wrote:
Hello,

If the money supply of a nation became suddenly increased by a large
number of times, then would a economic collapse really occur. For
example if the US bombed Russia with Russian money, then would Russia
suffer an economic collapse. Would people instead substitute their
ordinary money for some other type of money.

Thank you,

Mathew Enoch Mount
mmo...@xxxxxxxxxx


It is possible but it would take massive amounts. Similar things
happened in Russia, Brazil, and Germany. If the money supply expands
way too fast and inflation is massive like, 1000%, then the monetary
system breaks down and people result to barter or another currency.
During the hyperinflation in Brazil, I believe it was Brazil, people
were reported to exchange their currency for dollars when ever they
got it. Prices were rapidly increasing some much so that holding your
currency could mean it couldn't buy anything in the next few hours
because prices have already increased. People accepted dollars at a
pretty constant rate.

During the Weimar Republic after Germany created a lot of money to pay
war debts, factories shut down several times a day, paid workers and
let them go buy goods because the prices would rise so much that the
pay would not buy goods at the end of the day. Yes this could happen.
Just bombing a country with money is unlikely to do it. Breaking into
their networks and increasing the money in banks could easily do it.
You could add trillions in seconds where dropping currency would not
be likely to ever add that much. Cyberterrorism is a real threat and
fortunately banks and the Fed take it seriously.

.

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