does fiat money lead to hyperinflation 
there s always the possibility of hyperinflation when a country prints its own currency but most developed countries have experienced only moderate bouts of inflation a low level of inflation is seen as a positive driver of economic growth and investment because it encourages people to put their money to work rather than have it sit idle and lose purchasing power over time having a relatively strong and stable currency isn t only a mandate of most modern central banks a rapidly devalued currency is harmful to trade and in obtaining financing it s unclear whether hyperinflation is caused by the runaway printing of money it s occurred throughout history even when money was based on precious metals all contemporary hyperinflation has begun with a fundamental breakdown in the real production economy and or political instability in the country the bottom linefiat money derives its value from supply and demand not from an underlying physical commodity governments use fiat money to create economic stability and help protect against the booms and busts that are natural parts of the business cycle the overproduction of fiat money risks inflation or even hyperinflation by increasing supply beyond demand however 