Jack Dorsey, founder of Twitter and Square, says the sudden surge consumers have seen in food and gas prices could just be the beginning.
Dorsey, late Friday, took to Twitter to warn, “Hyperinflation is going to change everything. It’s happening.”
The especially bearish tweet by Dorsey follows Friday’s concession by Federal Reserve Chairman Jerome Powell that increased inflation could run “well into next year.” The Fed is likely to pull back from the measures it has taken over the past 18 months to assist the economy through the pandemic, which many now point to as a reason for the increase in prices.
Dorsey, in a follow-up tweet, noted that an inflation rate of 16% was possible in the U.S. and globally. Not everyone agreed, however.
Steve Hanke, an economist at Johns Hopkins, took Dorsey to task for his tweet, saying, “There have been 62 certified hyperinflations in world history. At present, no country is experiencing hyperinflation. @jack should know better than to tweet irresponsible public statements.”
And U.S. Treasury Secretary Janet Yellen said she expects inflation to fall to acceptable levels in the second half of 2022. “On a 12-month basis, the inflation rate will remain high into next year because of what’s already happened. But I expect improvement…by the middle to end of next year, second half of next year,” she told CNN.
Hyperinflation is when the price of goods and services increase uncontrollably for a sustained period of time. The technical definition of the term, though, sets a high threshold, with price increases of anywhere from 50% per month to 1,000% per year. It typically occurs only under very specific circumstances, such as after a war or when a currency breaks up.
To put it into context, a $2 cup of coffee with a 2% inflation rate would cost $2.04. With hyperinflation of 1,000%, that cup would cost $22. A $3.50 gallon of milk would soar to $38.50. And rent on a $2,000 per month two-bedroom apartment would skyrocket to $22,000.
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