Hungary isn't gonna be the only country that raises the inflation target. In fact all central banks will probably follow through. After all there's no rationale why the current target is 2% and why this is the case for all central banks, it might as well be 1 or 3/4/5. But once someone raises everybody will get on board with the new paradigm and follow through, because otherwise it would be obvious that there's nothing special about 2% and whatever the new arbitrarily-picked number will be. And of course this gives the people in charge leeway too, if the inflation is 10% and the inflation goal is 5% instead of 2%, it doesn't look that awful anymore.
slv77|2 years ago
At some point it makes more sense for commodity producers to leave the oil or copper in the ground because the commodity in the ground is more valuable than what can be earned digging it up, converting it to cash and the losses of holding the cash relative to inflation and taxes.
When things reach that point nations typically have enforced capital controls, fixed exchange rates, and then will nationalize commodity producers and will attempt to implement some form of commodity price controls. Production drops to nothing and the end result is usually a concentration of wealth and power in a small percentage of well connected individuals who strip the country of wealth. This leads to entrenched strong men and oligarchs (Russia, Venezula, Zimbabwe).
The best part is that initially the middle class cheers inflation with rising property values and wages. As the inevitable enshittification and looting of the economy ensues it isn’t obvious that a choice was made and who is to blame. The misery is blamed on foreign powers, the political opposition, and the poor while power and wealth end up in the hands of a few.