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Worst cases of hyperinflation in history

inflation

The conventional marker for hyperinflation is 50% per month, which was first proposed in 1956 by Phillip Cagan, Professor of Economics at Columbia University. Below we review three other historical cases of hyperinflation.

  • Hyperinflation is extreme or excessive inflation where price increases are rapid and out of control.
  • Most central banks (such as the U.S. Federal Reserve) target an annual inflation rate for a country of around 2% to 3%.
  • During periods of hyperinflation, a country experiences an inflation rate of 50% or more per month.
  • Venezuela, Hungary, Zimbabwe, and Yugoslavia have all experienced periods of hyperinflation.

Hungary: August 1945 to July 1946

  • Highest monthly inflation rate: 4.19 x 1016%
  • Equivalent daily inflation rate: 207%
  • Time required for prices to double: 15 hours
  • Currency: Pengő

While hyperinflation is generally considered to be the result of government ineptitude and fiscal irresponsibility, the hyperinflation of postwar Hungary was apparently engineered by government policymakers as a way to get a war-torn economy back on its feet. The government used inflation as a tax to help with a revenue deficit needed for postwar reparation payments and payments for goods to the occupying Soviet army. Inflation also served to stimulate aggregate demand in order to restore productive capacity.

Zimbabwe: March 2007 to Mid-November 2008

  • Highest monthly inflation rate: 7.96 x 1010%
  • Equivalent daily inflation rate: 98%
  • Time required for prices to double: 24.7 hours
  • Currency: Dollar
Long before Zimbabwe’s hyperinflation period began in 2007, signs were already apparent that the country’s economic system was in trouble. The nation’s annual inflation rate hit 47% in 1998 and this trend continued almost unabated until hyperinflation began. With the exception of a small decrease in 2000, Zimbabwe’s inflation rate continued to grow through to its hyperinflation period. By the end of its hyperinflation period, the value of the Zimbabwean dollar had eroded to the point that it was replaced by various foreign currencies.

Yugoslavia: April 1992 to January 1994

  • Highest monthly inflation rate: 313,000,000%
  • Equivalent daily inflation rate: 64.6%
  • Time required for prices to double: 1.41 days
  • Currency: Dinar
Following the disintegration of Yugoslavia in early 1992, and the outbreak of fighting in Croatia and Bosnia-Herzegovina, monthly inflation would reach 50%—the conventional marker for hyperinflation—in Serbia and Montenegro (i.e., the new Federal Republic of Yugoslavia).

Conclusion

While hyperinflation has severe consequences, not only for the stability of a nation’s economy but also that of its government and greater civil society, it’s often a symptom of crises that are already present. This situation offers a look at the true nature of money. Rather than being just an economic object used as a medium of exchange, a store of value, and a unit of account, money is far more symbolic of underlying social realities. Its stability and value depend upon the stability of a country’s social and political institutions.

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