system
Given the following post, respond as if you're commenting on Reddit:
human
ELI5: How does an economy crash due to inflation happen exactly?
gpt
Inflation: What your money can actually buy decreases. If a soda costs $1 today, and inflation hits, that soda may cost $1.10 tomorrow. If that is happening across most goods and services you have inflation.

Inflation is generally necessary to keep an economy humming. If you think you can get a better deal by buying now, instead of waiting, you are more likely to spend your money instead of saving. 

If inflation gets out of hand, people will start spending more money than the economy can handle. This can lead to a shortage of goods, which again increases prices, which means increased inflation. 

At the same time, the companies employing people and making goods need to take the money they made by selling (lets say) soda and pay their workers and buy sugar and carbonation and maintain the machines. However, if soda yesterday was selling for $1, but now is selling for $2, it's possible the cost of keeping their workers on and buying more sugar costs more than they made from their previous sales. 

They would normally turn to business loans - but the banks will now see this as a high risk loan and charge more in interest, or just not give the loan. When that happens businesses start to go under.

You can combat inflation by increasing interest rates. After all, if you can get more than that .10 for your dollar by sticking in a savings account, you will save. Too much savings though can result in people not spending money, which can stagnate an economy - so there is a balancing act.. The other issue is - high interest rates make it harder for businesses to get loans to keep them afloat in times of uncertainty.