The only place in the western world this ever happened was pre-WW2 Germany, and it will never happen again unless someone specifically sets out to destroy their own economy.
It is not a thing which "just happens", ever.
For example, Japan.
http://www.smh.com.au/money/japan-prepares-to-print-more-mon... http://online.wsj.com/articles/boj-unexpectedly-eases-policy...
The BOJ is now almost the entire demand of new Japanese Government bonds. You can say Japan is printing all the new money it needs to fund its 50% fiscal deficit.
In the past 2 years, the yen has reduced in value by a least a third against the dollar: https://au.finance.yahoo.com/q/bc?s=JPYUSD=X&t=2y&l=on&z=l&q...
One step after another Japan refuses to accept the failure of its own banks and excess government spending, and is walking towards the direction of central bank failure.
EDIT: I don't mean to say Japan is in a state of hyperinflation but to say if it continues to avoid major effects happening to its economy, e.g. Significant reduction of government spending, hyperinflation is one possible final outcome, akin to a computer crashing after hours of refusing to deallocate memory from terminated processes. Debt repudiation, confiscation and war are other possible outcomes.
It is very different to a currency falling a large amount of its value over the course of a couple of years. People have time to divest, predict, etc. - otherwise engage in normal business activities.
What does that have to do with hyperinflation? Let's assume, for no particular reason, that the dollar inflates at 1% a year. For the yen to fall in dollar-measured value by a third over the same two years, it would need to inflate at an annual rate of 23.7%, or just under 1.79% per month. Nobody calls that hyperinflation. Compare the original definition of hyperinflation as inflation rising above 50% per month.
(Admittedly, there is a current standard[1] which views annual inflation in excess of 26% as a risk factor. But, first, 23.7 is less than 26, and second, they require other factors such as "the general population is unwilling to hold monetary instruments" and "prices are quoted in foreign currency". Do you see that happening in Japan?)
Anything that can't go on forever, won't.
And here is a list of it happening around the world: http://en.m.wikipedia.org/wiki/Hyperinflation#/image/File:Th...
Once the old debts are hyperinflated away, the hyperinflating currency is publicly indexed to an imaginary unit of trade, with artificially stabilized value. Then once full penetration has been achieved, and people start making their business decisions based upon the imaginary unit, the old currency is dropped entirely, and the imaginary unit becomes the new circulating currency.
The net effect is to simply wipe out all debts and start over. If you're going to do that, you might as well just get it over with, and skip the hyperinflation step entirely.
Otherwise, you could end up with a Zimbabwean situation, where the currency is destroyed, and the ruling regime actively impedes any naturally occurring repairs to the system, as a means of seizing more economic resources and consolidating its power.
You cannot have hyperinflation without a deliberate and malicious decision to manipulate the money supply and seize economic resources from the savers and builders. Since monetary inflation works best when no one knows it is happening, it would probably be disguised by first redefining the publicly available statistics on the money supply, and then might take the form of buying up certain forms of debt that essentially allow private banks to expand the money supply by issuing their own notes, rather than running the printing press that everyone already knows about and watches closely. Also, if you refer to the program by a pseudonym like "quantitative easing", people will be slower to catch on.
Hyperinflation only happens when the peripheral economic actors are able to recalculate prices as fast as the central bank can manipulate them. It can be mitigated by employing massive amounts of deception, propaganda, and crass stage magic. As long as the retail store managers don't realize that they should be raising prices by 15% per year, they won't. And if people don't see higher prices for goods, they won't demand 15% pay raises. And if workers don't demand more pay, companies won't raise their prices or fire marginal employees to compensate.
If all the people dependent on the US-dollar-based economy realized what the Federal Reserve has been doing, there would be hyperinflation. It doesn't "just happen" because the smartest guys in the room are so much smarter than the median that they are effectively fooling all the people, all the time. The root cause of hyperinflation is already there, but the feedback loop that causes prices to rise rapidly and noticeably has been deliberately obstructed.
In short - no, there is no hyperinflation about to happena and in fact the US is able to borrow money and sell treasuries at record low interest rates compared to other countries. So, did the Fed also fool all the treasury market participants AROUND THE WORLD who go long US treasuries during its open market operations?
The Fed simply stopped publishing M3 in 2006. Yet, the portion of M3 that is not also in M2 is nearly 30% of the total money supply, and increasing steadily since about 1960, with only a slight setback from 1991-1995. The portion of M2 not in M1 has remained about 50% of the money supply.
By now, everyone who buys or sells knows that the CPI is completely useless as a measure of inflation. The portion of inflation that is visible and obvious to consumers is now about 10% per year. That doubles prices about every 7 years. This is somewhat mitigated on the shelf by adding more air to packages and aggressively hunting foreign suppliers whose costs are not measured in dollars, thus delaying price increases until trade balances are settled. The gallon jugs of Floridian fresh-squeezed orange juice are replaced by 0.75 gallon jugs of blended Floridian and Brazilian frozen concentrate.
I believe that Fed operations since 2005 have been less about stabilizing the value of money than they have been about keeping large changes in the money supply off the Fed's books, and hidden in numbers that have historically been less scrutinized as economic indicators, or perhaps never reported at all. The bond-buying spree appears to be a shell game to manipulate money velocity and leverage monetary reservoirs to replicate the effects of running the printing press, without actually alarming those who cry bloody murder whenever they hear it operating.
Nice use of the bandwagon fallacy, there. They don't necessarily have to fool everyone around the world. They just have to be better than all the alternatives. Since the rest of the world economy is also in bad shape, that is not a high bar to pass. That's a lot like asking why so many customers in Comcast's service area choose to get Comcast. Most of the time, it's because they're the only game in town. It may also be that all those who are not fooled do not have control over institutional investment funds.
Your post contains several implicit and unstated assumptions about economics that I do not necessarily agree with. And I also have several assumptions that I am certain you would not agree with.
I believe that the Fed and the other central banks of advanced industrial economies do have the tools at their disposal to prevent hyperinflation. But I do not believe that the consistent use of those tools are less damaging over the long term than an actual outbreak of hyperinflation. They often simply spread the pain out over a longer period, and prevent reallocation of resources from failed or failing institutions.
In the United States since 1959, banks lent out close to the maximum allowed for the 49-year period from 1959 until August 2008, maintaining a low level of excess reserves, then accumulated significant excess reserves over the period September 2008 onwards. Corporations began sitting on their cash. So money is being allocated towards other things than jobs and investment in local wages, which have been stagnating for decades, and given a boost by the consumer credit explosion of the 80s and 90s. The money is being offshored, globalization and automation have caused the American worker to participate in a race to the bottom with the rest of the world - this mean reversion helps billions of people around the world but undoes the dominanxe the US has enjoyed thus far. Supply chains now stretch around the world. Apple offshored its money to avoid taxes for one thing. Amazon employs robots now, and its wage slaves are interchangeable etc. I see structural problems as being responsible for the slow recovery the US, not Fed policy.
Although I would probably agree with you in one thing - a direct unconditional basic income for US residents would do much more long term to revitalize the economy and lower misallocation of resources, than giving it to banks.
You are right to say that CPI is not all that useful as a measure of inflation. A better measure is the core CPI which strips out volatile commodity prices. (If the actual CPI that includes the cost of gas were to be used, we would be facing a massive deflationary spiral given the recent trend in oil prices.) Looking at core CPI trends that you'll notice that globalization, and automation have actually caused price decreases for many goods. (With some inflation in service industries not subject to competitive pressures such as healthcare and education.)
Now it's true that, if the Fed isn't careful (and lucky?) winding this down, there could be problems. But we are not (yet) at the point where hyperinflation is the rational outcome of the Fed's moves.
> It doesn't "just happen" because the smartest guys in the room are so much smarter than the median that they are effectively fooling all the people, all the time.
By "the smartest guys in the room", I presume you mean the Fed, since you seem to be casting them as the ones who are able to pull the wool over everyone else's eyes. But do you really think that they're enough smarter than the ones at, say, Goldman Sachs, to be able to fool them all the time? I don't.
Central banks can prevent bank crashes - but only at the cost of partially compromising its own integrity (See central bank balance sheets and the amount of toxic assets they hold). Eventually a crash would become so big the central banking system itself would fail. One possible failure mode is hyperinflation.