Rapid money supply growth can lead economic agents to react in four possible ways

If a country’s central bank sharply increases the money supply, economic agents can react in four possible ways: By simply holding this additional money, which may happen in the short term if there is a high level of uncertainty and risk aversion; By immediately buying goods and services in the expectation that money will lose purchasing power (value) relative to goods and services. There would then be inflation in goods and services prices; By immediately buying assets other than the country’s currency (other countries’ currencies, loans, bonds, equities, gold, real estate) to hedge against a loss of this currency’s value relative to asset prices. There would then be exchange rate depreciation and inflation in asset prices; By buying nothing immediately (neither goods and services nor assets) but holding onto the money (as transaction currency) and later using it to finance purchases in a form that is not official, public or national currency - confidence in which has disappeared - but alternative private currencies (such as private cryptocurrencies). Public currencies would then disappear, leading to hyperinflation in goods and services and assets measured relative to public currencies and to a transfer of liquidity into private currencies .