An important article on deflation and hyperinflation

Here is a link to an article I found very useful in describing the relationship between deflation and hyperinflation.

The article is titled, How Deflation Creates Hyperinflation and is by Eric deCarbonnel.

What I found most interesting was the description of how hyperinflation takes hold, and how the accelerating velocity of money signals not animal spirits, but increasingly fearful spirits. We could do with a little increase in the velocity of money right now to unclog the system. But, be careful what you wish for. I doubt that we will undergo hyperinflation here (hyperinflation is generally only associated with failed states), but the possibility of heightened inflation (10%-15%) is not out of the question. Much depends upon the strength, the courage and the independence of the Fed, and its commitment to fight inflation. On the basis described in the article, I would say that Japan is a potential candidate for hyperinflation at some point in the future (although the demon of demographic deflation will serve as a counterweight...much will depend upon whether all those seniors retain their faith in the existing order).

Note: Somewhat strangely I think it could be argued that the American penchant for cynicism toward big government makes it a greater candidate culturally for hyperinflation compared to the more conforming Japanese culture. Only time will tell.