DEFINITION of 'Hyperdeflation'

An extremely large and relatively quick level of deflation in an economy. Hyperdeflation occurs when the general price level of goods or services in an economy falls drastically in a short period of time, causing the real value of a currency to actually increase in that time. This increase results in debts being more pronounced as the real value increases and the value of the currency falls.

BREAKING DOWN 'Hyperdeflation'

While there are no official definitions of what price levels must fall to and how quickly for deflation to be defined as hyperdeflation, generally hyperdeflation can lead to a deflationary spiral in which a deflationary environment leads to lower production, lower wages and demand, and thus lower price levels, continuing until an outside force (government for example) steps in.

  1. Inflation

    The rate at which the general level of prices for goods and services ...
  2. Deflation

    A general decline in prices, often caused by a reduction in the ...
  3. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise ...
  4. Inflationary Psychology

    A state of mind that leads consumers to spend more quickly in ...
  5. Disinflation

    A slowing in the rate of price inflation. Disinflation is used ...
  6. Equilibrium

    The state in which market supply and demand balance each other ...
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