US Finance System Hyperinflation Caused "Transaction Processing Failure" Systemic Risk Assessment

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Abstract
Where the vast bulk of today’s money is not physical, but electronic, however, chances of adapting to Hyperinflation here are virtually nil.

In terms of hyperinflation, there have been a variety of definitions used over time. The circumstance envisioned ahead is not one of double- or triple-digit annual inflation, but more along the lines of seven- to 10-digit inflation seen in other circumstances during the last century. Under such circumstances, the currency in question becomes worthless, as seen in Germany (Wiemar Republic) in the early 1920s, in Hungary after World War II and in the dismembered Yugoslavia of the early 1990s.

Where the US Federal Reserve may hold roughly $210 billion in currency outside of $50 billion in commercial bank vault cash, the bulk of roughly $780 billion in currency outside the banks is not in the United States. Back in 2000, the Fed estimated that 50% to 70% of U.S. dollar cash existent was outside the US. That number is higher today, with perhaps as little as $200 billion in physical cash in circulation in the United States. No matter how you run the numbers, there is not enough cash available for a US economy in a hyperinflation mode.

Think of the time, work and effort that went into preparing computer systems for Y2K, or even problems with the recent early shift to daylight savings time. Systems would have to be adjusted for variable, rather than fixed pricing, credit card lines would need to be expanded daily, the number of digits used in tallying dollar-denominated transactions would need to be expanded sharply.

It is understood that a number of businesses have accounting software that can handle any number of digits, but probably most of the US (and Canadian or NAFTA "banking infrastructure" in general) is not ready.