Ambrose Evans-Pritchard has written a very illuminating article titled "The Death of Paper Money" which discusses how the social fabric of society is destroyed by hyperinflation. He notes that bankers around the world are currently reading a book called Dying of Money: Lessons of the Great German and American Inflations to educate themselves on the mechanics of hyperinflation. Evans-Pritchard goes on to describe some of the conclusions reached in the book as to what sparked hyperinflation in the Weimar Republic:
People’s willingness to hold money can change suddenly for a "psychological and spontaneous reason" , causing a spike in the velocity of money. It can occur at lightning speed, over a few weeks. The shift invariably catches economists by surprise. They wait too long to drain the excess money.
"Velocity took an almost right-angle turn upward in the summer of 1922," said Mr O Parsson. Reichsbank officials were baffled. They could not fathom why the German people had started to behave differently almost two years after the bank had already boosted the money supply. He contends that public patience snapped abruptly once people lost trust and began to "smell a government rat".
