Let’s drop this silly subject of imminent hyperinflation. It has been predicted for years now, and has not happened. In fact, the Fed, the EU, and many economists now say the bigger threat is deflation. The fact that one of these scaremongering posts forecasted terrible coming inflation in 2011, and the fact that average inflation only decreased since then tells us how much credibility we should assign to them.
Their fears are based on monetarism, the economic theory pushed by Milton Friedman that an increase in the money supply (M1, M2, etc.) quickly translates into inflation. However, Friedman also took into account the velocity of money–how quickly it changes hands. Because of structural changes in our banking system and people’s desire to hold on to liquid assets, velocity has slowed way down. Accordingly, though the Fed has rapidly increased the money supply in order to stimulate the economy, these structural changes have offset the stimulus, so major inflation has not occurred.
So as a school of thought, Monetarism is not dead, it simply must be properly applied. Indeed, hyperinflation may still occur some time in the distant future, but there is no sign of it now.
