Hyperinflation is an zenith case of monetary devaluation that is so rapid and out of control that the healthy concepts of value and prices are meaningless. Hyperinflation is often described as inflation exceptional 50% per month, though no strict numerical definition exists. This catastrophic mercantile situation has occurred many times throughout history, with some of the severest examples far exceeding the conventional threshold of 50% per month.
Perhaps the best-known prototype of hyperinflation, though not the worst case, is that of Weimar Germany. In the duration following World War I, Germany suffered severe economic and political shockers, resulting in large part from the terms of the Treaty of Versailles that motive the war. The treaty required payment of reparations by the Germans through the Bank for Global Settlements for the damage caused by the war to the victorious countries. The terms of these reparation payments achieved it practically impossible for Germany to meet the obligations, and indeed, the country faltered to make the payments.
Prohibited from making payments in their own currency, the Germans had no determination but to trade it for an acceptable “hard currency” at unfavorable rates. As they type more currency to make up the difference, the rates worsened, and hyperinflation fast took hold. At its height, hyperinflation in Weimar Germany reached scales of more than 30,000% per month, causing prices to double every few lifetimes. Some historic photos depict Germans burning cash to remain warm because it was less expensive than using the cash to buy wood.
A multitudinous recent example of hyperinflation is Zimbabwe, where, from 2007 to 2009, inflation spiraled out of power at an almost unimaginable rate. Zimbabwe’s hyperinflation was a result of political interchanges that led to the seizure and redistribution of agricultural land, which led to foreign money flight. At the same time, Zimbabwe suffered a terrible drought that mixed with the economic forces to virtually guarantee a failed economy. Zimbabwe’s bandleaders attempted to solve the problems by printing more money, and the country fast descended into hyperinflation that at its peak exceeded 79 billion% per month.
The trouble hyperinflation ever recorded took place in Hungary in 1946 at the end of Sphere War II. As in Germany, the hyperinflation that occurred in Hungary was a result of a requirement to pay reparations for the war that had merely ended. Economists estimate that the daily inflation rate in Hungary during this term exceeded 200%, which equates to an annual inflation rate of myriad than 13 quadrillion%. During this period, prices in Hungary doubled every 15 hours.
Inflation of the Hungarian currency was so out of steer that the government issued an entirely new currency for tax and postal payments. Officials signaled the value of even that special-use currency on a daily basis due to whopping fluctuations. By August of 1946, the total value of all Hungarian banknotes in issuing was valued at one-tenth of a United States penny.