Money also breaks down as a medium of exchange, because the currency instability makes producers unwilling to sell their products for domestic currency, and producers often demand payment in foreign currencies or barter. Because there is a shortage of foreign exchange, illiquidity reaches its peak and demand collapses. This form of illiquidity can’t be relieved by money printing. Stores close and unemployment rises. As the economy enters hyperinflation, it contracts rapidly because the currency declines that were once beneficial now just create chaos.
