It is a busy week in the School and yesterday we hosted Dr Johan van den Heever of the SA Reserve Bank.
Johan gave an interesting talk on inflation and hyperinflation. He explained that inflation is a monetary phenomenon – other forces may start a hyperinflation episode, but it is money creation that fuels it. He explained episodes of government-driven hyperinflation, cases where it was caused by giving credit to parastatals and banking-sector driven hyperinflation.
The recent example of hyperinflation in Zimbabwe (and the 50 billion Zim dollar note that he bought along) made the point very clearly.