The 4 phases of inflation

The RBI raised the Repo (to 8.5%) and CRR (to 8.75%) rates by 50 bps. Hopefully it's not too little too late - given that actual CPI is probably going to come in higher than 12%. Bank Deposit rates should crest 10% easily in the next couple of weeks.

In light of this I read an interesting interview on Financial Sense (linked to the title of this post). But one excerpt caught my eye:

So we've gone from phase one where money supply is growing but the currency is not losing value because people trust it. We are now in phase two where the currency is in trouble, it is falling, money velocity is increasing and expectations for inflation are going up, and we are heading into phase three where velocity really starts to ramp up, prices are rising much faster than the supply, the currency is being ditched, which is what is occurring right now overseas by those that are accumulating dollars. And eventually you get to phase four where the currency collapsed and that's the final phase, which is the hyperinflationary phase.

Ominous stuff...