![empires of the undergrowth split stacks empires of the undergrowth split stacks](https://i.imgur.com/C7nEdnw.jpg)
High priced items - Pay money into rare collectibles. Money gets taken out of circulation, funneled into fees. Few examples:įees - paying a certain amount of in-game currency to access part of world. This reduces inflation so the ~in-game economy~ can stabilize. Sinks reduce inflation: In video games, there are different sinks that exist in order to take currency out. I wrote about this a bit last week: How does excess escape in an economic structure? I think crypto, VC, etc actually serves a really important role here in this consumer-oriented society. We have various sinks that exist throughout the economy which act as absorption tools for the money we do have floating around. I also think that there are certain sinks in the United States that contribute to this. Rich people have a LOT of money (and they spend less, hold more). Regime changes generally coinciding with civil war or social upheaval.Īs you can see in the above graph, money isn’t moving through the economy in the same way. Large foreign denominated debts that require domestic money printing. Losing a war that results in money printing to fund the effort. Hyperinflation tends to occur around hugely disruptive geopolitical events: They had to revalue their currency, paid some reparations, and reinstated government bonds. Germany ended up essentially re-doing their currency to the Rentenmark, which was backed by bonds indexed to gold. The connectors have to play the game in order for the game to work. Hyperinflation only “works” when the money is considered usable - once farmers, the people who feed us, strike, game over. The loop was broken when farmers stopped accepting money for food.
![empires of the undergrowth split stacks empires of the undergrowth split stacks](https://static.wikia.nocookie.net/empires-of-the-undergrowth/images/3/3a/Upgrading.png)
German people realized that their money was rapidly losing value, they tried to spend it quickly, which led to increased monetary velocity, leading to higher prices -> a huge feedback loop. They issued bonds and simply created more money!!! to try to fix. Tax revenues fell to zero because the government was illegitimate in the eyes of its people. People started taking out loans - might as well buy a physical place to stay (hard assets) with depreciating currency and get your debt inflated away.īut the war debts kept coming. In nominal terms, people were happy (for a bit) - the stock market “ tripled” (until it fell 97% in 1922) They were printing in order to manage that - inflation was a policy to pay for war.Įverything is fine: Inflation was fine w politicians because it kept unemployment low. The Treaty of Versailles imposed a huge debt on them that could be paid only in (1) gold or (2) foreign currency. Weimar had decided to fund the war through borrowing and were saddled with a massive amount of debt when they lost.