7 The consequence of this double problem was increased budget deficits, which in turn limited the capacity of the states to finance the deficit through raising debt. When the government could not resort to tax collection or further debt accumulation, printing money was the only option left, consequently resulting in hyper-inflation.
The evolution of the international financial environment at the time also played a role in the process. During the 1970s, oil prices skyrocketed and oil-exporting countries invested their money in international banks, which recycled a major portion of this as loans to Latin American governments.