Tyranny of numbers

The typical Persian-language media reports refer to Iran’s rising inflation rate as runaway (afsar-gosikhteh), implying hyperinflation. In a recent post, I discussed the distinction between high or very high inflation and hyperinflation, highlighting the role of a singular political authority in preventing the loss of control over the money supply and, therefore, prices. I argued that the late Ayatollah Ali Khamenei played such a role, preventing different factions in power from using money creation to their advantage while in office without regard for its consequences for the country. In economics lingo, a strong leader internalizes the external costs of money creation for the political system as a whole.