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What Is Hyperinflation?

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Hyperinflation refers to rapid and out-of-control price increases in the economy which can reach levels of 50% per month in some cases. Basic inflation in the U.S. is calculated by the Consumer Price Index (CPI) and averages about 2% per year according to the Bureau of Labor Statistics.

But several business leaders and economists have taken to social media to debate whether the economy is headed for hyperinflation. Jack Dorsey, CEO of Twitter  (TWTR) - Get Twitter, Inc. Report recently tweeted, “Hyperinflation is going to change everything. It’s happening.” He followed up noting that an inflation rate of 16% was possible in the U.S. and globally.

Cathie Wood, CEO of Ark Invest, responded to Dorsey with, “Now we believe that three sources of deflation will overcome the supply chain-induced inflation that is wreaking havoc on the global economy. Two sources are secular, or long term, and one is cyclical. Technologically enabled innovation is deflationary and the most potent source." Wood added, “When costs and prices decline, velocity and disinflation - if not deflation - follow. If consumers and businesses believe that prices will fall in the future, they will wait to buy buy goods and services, pushing the velocity of money down."

Tesla  (TSLA) - Get Tesla Inc Report CEO Elon Musk commented on Wood's statements with, "I don't know in the long term, but in the short term we are seeing strong inflationary pressure."

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