# Hyperinflations and Political Crises For hyperinflations to happen we need a fiat currency and large deficits according to the [[Monetary Regimes and Inflation]]. There are also instances of high inflations with metal based currencies where the government has started to debase the currency (even in metal based currencies nminal is above intrinsic and as gold/silver is replaced with copper over time it provides a value gap for it to fall from). I noticed that some of the worst currency crises coincide with political crises, such as the american war for independence (and continentals), the us civil war (and greenbacks), the french revolution (and the paper currency put in place), venezuela more recently. I believe the underlying causes of deficits and political crisis in [[Structural Demographic Theory]], political unrest in [[Carlotta Perez]]'s techno-economic cycles, and monetary crises are related to one another. In simple terms I think that high inflations (a crisis of money rather than supply shortages, or demand booms) are one outlet of political crisis. The other being debt deflations. A developing political crisis will in part be the result of high debt and deficits but also be a cause for it. As shown in the [[Structural Demographic Theory]] the initial rise in gov't debt is the result of demographic trends and marginalization of segments of the population, but the high resulting debt also puts constraints on the government. They are unable to cope with the developing crisis. If they have no control over the money supply (gold/foreign currency) then they must default, but if they do they can debase the metal or monetize the debt triggering a loss of confidence. High inflations and debt defaults are the result of no longer being able to do anything to combat the political crisis, thus fully letting the cat out of the bag. To test this hypothesis I would need to look at the set of high- and [[How Inflation Works|Hyperinflations]] and the political/demographic conditions at the time, and then also look at the set of SDT cases and what happened with the currencies following the crises. The implications for the United States would be that the dollar could face a hyper-inflationary scenario. ## Related - [[Revolutions]] - [[Structural Demographic Theory]] - [[Technological Revolutions and Financial Capital]] - [[How Inflation Works|Inflation]]