CRACK-UP BOOM — THE END OF A CURRENCY REGIME
DOI:
https://doi.org/10.52195/pm.v21i2.969Abstract
the Western economies and impressive price rallies taking place on the financial markets over the past few years, one expression surfaced once again: “Crack-Up Boom”. Oftentimes with a pessimistic undertone, people have been warning of the next Crack-Up Boom being around the corner.1 However, a more precise definition of what exactly the Crack-Up Boom is about, was usually not given. This paper seeks to seize the opportunity and explore the meaning of the term Crack-Up Boom. In order to do so, this paper first takes a closer look at the phenomenon of inflation, its cause and effects as well as its calculated nature. The second chapter examines prices. In contrast to inflation, prices are an observable and measurable phenomenon in the economy, providing the market participants with an important framework for action. A necessary condition for prices to be measured, is the existence of a unit of account. Thus, in the third chapter, the concept of currency as an ephemeral form of money is explored. Upon the realization that currencies have a finite life span, in chapter four and five we will examine the phenomenon of hyperinflation — the most spectacular symptom of a dying currency triggered by an artificial credit expansion. Finally, after exploring inflation, prices and currency in economic terms we conclude in the sixth chapter with a definition of the Crack-Up Boom as a breakdown in a currency regime.
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