The Bullwhip Effect & Currency Printing Loop

• 17. 11. 2025 • H. T. •

When governments print large amounts of currency, it doesn’t just raise prices — it amplifies volatility across the economy.

Here is the cycle:

1. Currency Printing Begins Governments inject currency to stimulate demand — often during crises or slowdowns.
2. Demand Surges Artificially Households and businesses spend more, even if real productivity hasn’t increased.
3. Prices Rise More money chases the same goods → inflation kicks in.
4. Producers Overreact Retailers and suppliers ramp up orders and production to meet perceived demand.
5. Supply Glut Emerges Demand cools or normalizes → inventories pile up → prices start falling.
6. Deflation Risk Appears Falling prices threaten profits, wages, and debt repayment. Governments panic.
7. Currency Printing Resumes To avoid deflation, more stimulus is injected — restarting the loop.

Why It’s Dangerous

• Each cycle amplifies volatility: bigger booms, deeper busts.
• Inflation becomes sticky, while deflation risk never fully disappears.
• Central banks lose credibility.
• Households lose purchasing power.
• Real productivity gets distorted by artificial signals.

This is why Heperum matters: it has potential to break the loop by anchoring value in real productivity,  and stabilize the economy by mitigating both inflation and deflation shocks.