The Achilles heel of these economies is that even though incomes are steadily rising, they are beginning from a very low (near-poverty) level. This makes these economies (and their populations) especially susceptible to soaring food prices, which is why at the same time that food prices were exploding Asian governments were meeting to discuss
This also gives us yet another glimpse at the "hyperinflationary depression" that John Williams of
The mechanics here are simple and obvious. Soaring inflation destroys incomes (in real dollars) and thus purchasing power. The collapse in purchasing power causes a direct/immediate collapse in profit margins, as businesses also face soaring costs but are unable to pass those costs along to their anemic customers.
This slowing economy causes deficits to explode higher (as we are already seeing). This leads to more money printing to fund the deficits, still more income destruction, still more profit destruction, still larger deficits. The vicious circle continues to spiral downward out of control.Meanwhile, as out-of-control money printing causes the prices for ordinary goods to spiral higher, cash-strapped consumers begin defaulting on their