Hyperinflation refers to an extremely rapid and uncontrollable increase in the general price level of goods and services in an economy, typically exceeding 50% per month. It erodes the real value of money, leading to a collapse in purchasing power, loss of savings, and severe economic instability.

At the core of hyperinflation lies an excessive increase in the money supply without corresponding growth in production. When a government prints more currency to finance deficits or repay debt, it floods the economy with money. As demand outpaces supply, prices begin to rise sharply, and the cycle feeds on itself ó people rush to spend money before it loses further value, pushing prices even higher.

Historical examples include Germanyís Weimar Republic (1920s), Zimbabwe (2000s), and Venezuela (2010s), where currencies became virtually worthless. In such cases, daily transactions become chaotic as consumers lose confidence in the currency and shift to foreign money, bartering, or digital assets for stability.

Hyperinflation has devastating effects on the economy. It destroys savings, reduces real wages, discourages investment, and disrupts business operations. Fixed-income earners and pensioners suffer the most, as their incomes fail to keep pace with rising costs. Additionally, government revenues fall in real terms, worsening fiscal deficits and creating a vicious cycle of economic decline.

To control hyperinflation, policymakers typically implement monetary reforms such as reducing money supply, introducing a new currency, restoring central bank independence, and implementing fiscal discipline. International assistance or pegging the local currency to a stable foreign one may also be used to restore confidence.

In summary, hyperinflation represents the extreme end of inflationary pressures, underscoring the importance of sound monetary and fiscal policies to maintain economic stability and preserve the value of money.