Such broad conversion into hard currency actually can accelerate inflation, as people jettison their money at ever-faster rates. Despite the best efforts of the public to seek new information about changing prices, in periods of accelerating inflation expected inflation remains below actual, current inflation. This means that the demand for real balances can fluctuate, or even increase, and with it the inflation tax base. This provides the government with tremendous latitude to benefit from inflation. But it is doubtful that the public can be deceived so for very long.
Stabilization becomes the sole option.
Hyperinflation thus leads inevitably to stabilization, precisely according to the irresistible logic of inflation's progress. Because the public's expectations are formed adaptively in response to new price information, expectations will lag behind actual inflation, never quite catching up. Under these conditions, the inflation tax base may shrink dramatically, and with it the opportunity to finance budget deficits with inflation. Theoretically, the government can continue to finance its deficit as long as the rate at which it prints money outpaces the rate of public adaptation. At that stage, currency collapse can occur almost instantaneously.