The Story So far.....
http://www.stripperweb.com/forum/sho...d.php?t=111950
http://www.stripperweb.com/forum/sho...d.php?t=112027
http://www.stripperweb.com/forum/sho...d.php?t=112188

For simplicity, lets go back to the time when X had only Baby Sitting Services.
X's GDP = 66 Baby Sits / Day. X has around 66 coupons circulating

Next Year, half of X decide that they want to spend more time with the kids at home and not go out. They inform in the next meeting, that they are essentially retiring from this system.
Now, X's Supply is cut in half to 100
X' Demand is demand is also cut in half to 50.
The Equilibrium is now at 33

X's GDP now is 33 Baby Sits / Day and X is in a Recession.
But X has 66 coupons circulating. People offering Baby Sitting services will find out that they can double their price without affecting demand

So prices doubled, but GDP is falling. We are in Stagflation

The Young kid who was made the chairman earlier says,
"We know how to get out of recession. We just have to print coupons and everything will be OK"
So, X goes and prints 66 more coupons. Now, X has 132 coupons.

Guess what happens?
Yes the GDP can't go above 33 Baby Sits. Instead now the prices of Baby Sitting doubled even more to 4 coupons or 400%. We are at the beginning of hyperinflation

This is exactly what happened in the 80s. Till that time it was conventional wisdom, If Recession ==> Print Money

So, what really happened at X?. Because half of the population retired, X suffered a productivity shock and its capacity fell from 200 to 100

This is the exact opposite problem of Productivity gain and the solution is also the exact opposite. This is the exact time that X should take away coupons circulating

Productivity Drops ==> Capacity Drops ==> We need less money ==> Fed should reduce money circulation ==> Raise Interest Rates

When Inflation is caused by printing money, you usually get hyperinflation.

How do you detect inflation caused by printing money? You measure inflation of products that have no supply constraints.

Eg: Intel Chips, Toys, Clothes, Cars (Essentially items whose factories have excess capacity)
Look around. Have the prices of these items shown even a moderate increase? No

So, why do idiots running shady web-sites predict we may have hyper inflation?
Because they have no clue about which inflation to look for. They have no clue to look at productivity numbers and more importantly they have no clue that Feds
around the world smartened after the 1980s incident and they are much better informed as to when to print money and when not to print money.

This is the reason, Fed constantly monitors Core Inflation rates (and not Overall Inflation as Idiot web-sites mention) before deciding on Interest rates.

How is the core inflation rate moving? Not that much. Around 3-4% and expected to fall. So Fed has some breathing space to cut rates or Print Money

In Summary,
When to Print Money
i) Consumer Confidence Drops
ii) Productivity Gain
iii) GDP Gain
iv) Business Investment slows
v) Economy not operating at Full Capacity

and more importantly, when Core Inflation is within a comfortable reason. Say 3-4%

When Not to Print Money
i) Consumers are overconfident
ii) Productivity Drops
iii) Economy is operating at Over Capacity

and when Core Inflation is in the danger zone of 8%+

Next Up, Free Trade, Currencies, Globalization