"High" inflation is what happens when a government needs money badly but can't acquire more debt. The final option is to just print money. Once there is a precedent of printing money it will be considered a valid policy tool and abused shortly after to expand the government budget. Printing money is actually extracting value from the existing economy. E.g. when you double the amount of money in circulation through printing you essentially steal 50% of value from the rest of the population.
What follows is that people lose trust in the currency and convert their currency into assets that cannot be taken away. This is hyperinflation. The "currency based" economy shrinks and there is less wealth to extract from it. Since there are a lot of fixed government expenses the amount of money that needs to be printed grows exponentially.
I$ = inflation dollar
The economy = the part of the economy that still uses I$
Inflation dollars are equivalent to dollars (I$ = $) in the beginning.
The economy is worth $1000 and has I$1000.
Government doubles money supply by printing I$2000. (100% inflation)
The economy is worth $1000 and has I$2000. I$ = $0.5.
$500 worth of value has been extracted but it circulates in the economy.
Hyperinflation begins: People start losing trust and put half their wealth into gold or something else.
The economy is now worth $500 and has I$2000. I$ = $0.25.
The government still wants to extract $500 of value out of the economy so they need to print money at a much faster rate than before.
Government quadruples money supply by printing I$6000. (300% inflation)
The economy is now worth $500 and has I$8000. I$ = $0.0625.
$375 worth of value has been extracted.
More people stop using the currency which means the economy shrinks again forcing the government to become even more aggressive.
Right now the central banks are following strategies that eventually demand every penny back that they have handed out. If inflation happens they can easily reverse their policies.
What follows is that people lose trust in the currency and convert their currency into assets that cannot be taken away. This is hyperinflation. The "currency based" economy shrinks and there is less wealth to extract from it. Since there are a lot of fixed government expenses the amount of money that needs to be printed grows exponentially.
I$ = inflation dollar
The economy = the part of the economy that still uses I$
Inflation dollars are equivalent to dollars (I$ = $) in the beginning.
The economy is worth $1000 and has I$1000.
Government doubles money supply by printing I$2000. (100% inflation)
The economy is worth $1000 and has I$2000. I$ = $0.5.
$500 worth of value has been extracted but it circulates in the economy.
Hyperinflation begins: People start losing trust and put half their wealth into gold or something else.
The economy is now worth $500 and has I$2000. I$ = $0.25.
The government still wants to extract $500 of value out of the economy so they need to print money at a much faster rate than before.
Government quadruples money supply by printing I$6000. (300% inflation)
The economy is now worth $500 and has I$8000. I$ = $0.0625.
$375 worth of value has been extracted.
More people stop using the currency which means the economy shrinks again forcing the government to become even more aggressive.
Right now the central banks are following strategies that eventually demand every penny back that they have handed out. If inflation happens they can easily reverse their policies.