What happens when inflation gets out of control?
There are three stages of out-of-control inflation:
Phase 1: Initially, the government increases the money supply, and the subsequent price increases are considered temporary. This is because the onset of inflation often takes the opportunity of an extraordinary expenditure, and the public's demand for cash balances will increase.
Phase 2: Then, inflation enters the second stage, and people's demand for cash balances begins to decline, because the rate of price increases has exceeded the rate of monetary expansion, and people will feel a shortage of money instead.
(This is the situation in the real estate market before, the rate of house price increases has exceeded the rate of monetary expansion, and people generally feel that they are short of money.)
Phase 3: Finally, inflation ushered in the third stage, and the public's psychology was no longer to buy earlier, but to immediately flee from money to physical objects or any goods, and people's demand for cash balances was almost zero. This stage can be summarized in four words: currency collapse.
