Inflation (economics) is caused by

Inflation (economics) is caused by an increase in money supply. This typically occurs when a government prints money to finance deficit spending. Ergo, there is more money in the economy chasing the same number of goods because in the short-run supply is fixed.

In an inflationary environment, the velocity of money (a measure of how quickly money changes hands via transactions) increases because people realize that money is more valuable today than it will be tomorrow. As a result, people prefer to spend money right away in order to purchase goods rather than holding onto money that will purchase fewer goods tomorrow. In turn, shopkeepers, who are also afraid of accepting currency that is quickly losing value in exchange for goods, raise prices further. Thus the increase in velocity exacerbates inflationary expectations, causing inflation to accelerate. At this point, market participants’ expectations of inflation are self-fulfilling. As a result, real money supply (nominal money in circulation adjusted for inflation) falls and the economy becomes demonetized.

In order to stabilize inflation expectations and restore confidence, the most common macroeconomic tool deployed is implementation of a fixed exchange rate pegged to a stable currency like the U.S. Dollar. This policy implies that the central bank is obligated to exchange the local currency for the reserve currency (USD) at a fixed ratio. As a result, people are less inclined to spend the local currency as quickly as possible because they are comforted by the fact that the local currency is convertible into USD. This policy lowers the velocity of money and temporarily halts hyperinflation, giving the central bank and policymakers the desperately needed breathing space and opportunity to introduce major structural reforms. Argentina took this approach in addressing the hyperinflationary crisis in 1991 under President Menem.

Another common way to create this breathing space and a slow down in the velocity of money without fixing the exchange rate is by dramatically devaluing the currency to an exchange rate that is credibly defensible given the country’s foreign exchange reserves. Bolivia took this approach under the guidance of economist Jeffrey Sachs in 1985.

After creating this halt in hyperinflation, policymakers need to implement reforms aimed to cut deficit spending and the need to print money by reducing public expenditures and raising funds via increased taxes, improved tax collection or privatization of state-owned assets. To the extent that these fiscal policy reforms are perceived to be credible and are actually implemented, then policymakers will have successfully curbed hyperinflation.

Results (English) 3:

通货膨胀（经济学）是由于货币供应量的增加而引起的。这通常发生在一个政府印钱来资助财政赤字支出时。因此，有更多的钱在经济上追逐同一批货物由于在短期供给是固定的。

在通胀环境，货币的速度（一种衡量货币的快速变化的方法）是因为人们意识到钱比明天更有价值。因此，人们更倾向于把钱花在购买商品上，而不是拿在明天购买商品的钱。反过来，店主，谁也不怕接受货币，这是很快失去价值的商品交换，提高价格。因此，流速的增加，加剧了通胀预期，导致通胀加速。在这一点上，市场参与者的通胀预期是自我实现的。作为结果，实际货币供应量（名义货币流通经通胀因素调整后）下降，经济就停止。

为了稳定通胀预期和信心的恢复，最常见的宏观经济工具的部署是一个固定的汇率盯住一个稳定的货币像美元实施。这项政策意味着，中央银行有义务在固定比率下，将本地货币兑换为储备货币（美元）。因此，人们不倾向于尽可能快地花当地的货币，因为当地货币可以兑换成美元，这是因为他们感到安慰的是。这一政策降低了货币流通速度和暂时停止恶性通货膨胀，