Hyperinflations Are Caused by the Financing of Huge Public Budget Deficits Through Money Creation

In this section it will be demonstrated by looking at 12 hyperinflations that they have all been caused by the financing of huge public budget deficits through money creation. . . .

The figures demonstrate clearly that deficits amounting to 40 per cent or more of expenditures cannot be maintained. They lead to high and hyperinflations, reforms stabilising the value of money or in total currency substitution leading to the same result. . . .

The examples of both Germany and Bolivia suggest that at least deficits of about 30 per cent or more of gross domestic product are not maintainable since they imply hyperinflations.

--Peter Bernholz, Monetary Regimes and Inflation: History, Economic and Political Relationships (Cheltenham, UK: Edward Elgar Publishing, 2003), 69, 71.