|Only remotely related to the practice of hedging, hedge funds borrow money to make big, speculative investments, usually in areas that banks and traditional investors shy away from.
R.C. Epping, A Beginner's Guide to the World Economy, 3rd ed., New York, 2001.
|In the most extreme form, chronic price increases become hyperinflation, causing the entire economic system to break down. The hyperinflation that occurred in Germany following World War I, for example, caused the volume of currency in circulation to expand more than 7 billion times and prices to jump 10 billion times during a 16-month period before November 1923. Other hyperinflations occurred in the United States and France in the late 1700s; in the USSR and Austria after World War I; in Hungary, China, and Greece after World War II; and in a few developing nations in recent years. During a hyperinflation the growth of money and credit becomes explosive, destroying any links to real assets and forcing a reliance on complex barter arrangements. See "German Hyperinflation" essay.
Microsoft® Encarta® Encyclopedia 2001. © 1993-2000 Microsoft Corporation. All rights reserved.