what is hyperdeflation 
hyperdeflation is an extremely large and relatively quick level of deflation in an economy understanding hyperdeflationhyperdeflation occurs when the purchasing power of currency rises drastically in a relatively short period of time this increase results in debts being more pronounced as the real value of goods and services increases and the value of the currency falls if hyperdeflation were to occur it would have severe economic consequences as people would forgo making a purchase today when they know it will be much cheaper to buy it tomorrow or the day after or the day after and so spending and investment will grind to a halt hyperdeflation is quite rare and can be contrasted with the still rare but more common periods of hyperinflation where prices rise rapidly as the purchasing power of currency falls steeply hyperdeflation is more or less a theoretical term and there is no exact measure of the difference between it and deflation however hyperdeflation like deflation can lead to a deflationary spiral in which a deflationary environment leads to lower production lower wages and lower demand and thus lower price levels this scenario creates a feedback loop that continues until an outside force the government for example steps in the united states has experienced severe periods of deflation following the civil war and world war i 1 some economists believe that the financial crisis of 2007 2009 brought on a period of deflation in the united states 2 japan entered a severe period of deflation that has been ongoing since the 1990s 3deflationary spiralwhile hyperdeflation is rare deflation by itself can lead to pernicious negative feedback loops a deflationary spiral is a downward price reaction to an economic crisis leading to lower production lower wages decreased demand and still lower prices these events often occur during a period of severe economic crisis such as the great depression deflation occurs when general price levels decline as opposed to inflation which is when general price levels rise when deflation occurs central banks and monetary authorities can enact expansionary monetary policies to spur demand and economic growth if monetary policy efforts fail however due to greater than anticipated weakness in the economy or because target interest rates are already zero or close to zero a deflationary spiral may occur even with an expansionary monetary policy in place such a spiral amounts to a vicious circle where a chain of events reinforces an initial problem example of hyperdeflationunlike hyperinflation there are scant few documented real world examples of hyperdeflation in history recently however the world has seen the emergence of cryptocurrency a decentralized digital currency that works through a blockchain or public transaction ledger bitcoin created in 2009 was the first digital currency and remains the most well known many observers have labeled its recent volatility as an unprecedented example of hyperdeflation some cryptocurrency experts and economists label its rising prices as a bubble noting that the currency has long term prospects however they also point out the possibility that deflation will occur by design the number of new coins decreases each year but demand for bitcoin is growing this dynamic may lead to the digital economy entering a deflationary period since no centralized banking system or federal reserve equivalent oversees the currency no intervention policies will be set into motion furthermore bitcoin cannot be dropped and picked up by a fortunate passerby if one loses their personal key they lose the money and the money is effectively pulled out of circulation additionally there is a high level of wealth concentration among bitcoin holders meaning there is a relatively small number of users who can sell or more importantly to this scenario not sell with rising value comes more incentive to buy and hoard bitcoin which only increases the price and further decreases supply this situation could hypothetically lead to a real world occurrence of hyperdeflation 