Hyperdeflation

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Inflationary Psychology

    A state of mind that leads consumers to spend more quickly in ...
  2. Deflation

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

    A slowing in the rate of price inflation. Disinflation is used ...
  4. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise ...
  5. Inflation

    The rate at which the general level of prices for goods and services ...
  6. LIBOR

    LIBOR or ICE LIBOR (previously BBA LIBOR) is a benchmark rate ...
Related Articles
  1. Forces Behind Interest Rates
    Economics

    Forces Behind Interest Rates

  2. Do Deflationary Shocks Help Or Hurt ...
    Economics

    Do Deflationary Shocks Help Or Hurt ...

  3. Curbing The Effects Of Inflation
    Bonds & Fixed Income

    Curbing The Effects Of Inflation

  4. What You Should Know About Inflation
    Economics

    What You Should Know About Inflation

comments powered by Disqus
Hot Definitions
  1. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  2. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  3. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  4. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  5. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  6. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
Trading Center