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Top 10 Cases of Hyperinflation

Written by Top 100 Arena on 2012-07-05
Inflation is not just a topic of debate among the economists and policy-makers, as its effect always have substantial impact on every sectors and stakeholders of an affected economy. In fact, it is a major topic that every one of us should strive to understand. In every economy, inflation is inevitable. With every changes in fiscal and monetary policy, or shifts in supply and demand within an economy, inflation is bound to happen. However, it is vital to not let inflation gets out of control. When it does, it can get worse than an ordinary price increases we see nowadays. Imagine that during the time you are sleeping, the price of your breakfast doubled.This might seem like an extreme example, but in many cases of hyperinflation, it was a scary reality. There were several cases of hyperinflation during the 20th century. Let's take a look at the top 10 of them.

10 Taiwan 1949

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China was suffering from the hyperinflation during late 1940s, and Taiwan suffered the impact too. The main cause was the Chinese Civil war, and during its peak times, highest denomination in Taiwan was 1,000,000 Dollar Bearer's Cheque. The government introduced New Taiwan Dollar in June 1949 to control the inflation. When the new currency was introduced, exchange rate from old currency to new one was 1 New Taiwan Dollar = 40,000 old Dollar. More info

9 Argentina 1981

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Argentina saw a steady inflation from 1975 to 1991. It was pretty ordinary type of inflation until 1979. However, by the end of 1981, the highest currency denomination was 1,000,000 pesos compared to 10,000 pesos in early 1979. The government revalued the currency three times, and by 1992, 1 new peso (1992 revalued currency) is equivalent to 100,000,000,000 pre-1983 pesos. More info

8 Brazil 1994

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In 1994, Brazil saw the country's worst case of inflation, which reached a record 2,075.8%. Before the current de facto currency real was adopted, a cruzeiro (1967 Brazilian's currency) was worth less than one trillionth of a US cent in 1994. In 1994, real was adopted as new de facto currency and hyperinflation was brought under control. To put things into perspective, 1 current real is equal to 2,750,000,000,000,000,000 of the first currency. More info

7 Mexico 1982

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In common sense, oil producers and exporters shouldn't suffer from debt issues. But this wasn't the case for Mexico. Despite of the Oil Crisis in the late 1970s, Mexico had to default on its external debt in 1982 due to excessive social spending. The result was really serious case of capital flight and a few years of hyperinflation. Inflation rate reached to 10,000% during the peak times. The Mexican government created the neuvo peso (new peso or "MXN") to control the currency devaluation, and one MXN was equivalent to 1000 of the old pesos. More info

6 Poland 1921 - 1924

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After gaining independence in 1918, Poland experienced severe case of inflation. By 1921, prices rose around 251 times above those of 1914. In the following three years until 1924, prices rose by total of 988,233%. At its worst period in late 1923, Poland saw prices doubling every 19.5 days. At the beginning months of independence, the exchange rate was 8 marek per USD. By 1923, the rate rose to 6,375,000 marek (mkp) for 1 US dollar. The government reformed the currency in 1924 and introduced zloty, a new currency at the rate of 1 zloty = 1,800,000 mkp.

5 Greece Oct. 1944

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While not as extreme as our breakfast price example, Greece's inflation was pretty bad. In 1944, Greece suffered from hyperinflation, and saw prices rose by 13,800% in October. To put things into perspective, prices in Greece the doubled every 4.3 days. Scholars considered this one of the fifth worst inflation of all time. The main cause of hyperinflation in Greece was World War II, which put the country into loads of debt. More info

4 Germany Oct. 1923

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If you think that Greece was bad, you may want to shut back your gasping mouth until you see this. During October of 1923 in Germany, inflation rate reached around 29,500%. If you take it into days, prices double every 3.7 days. At the outbreak of World War I, exchange rate of the German papiermark to USD was 4.2 per US dollar, but in November 1923, it rose to 238 million papiermark to 1 USD. In fact, the rise of Adolf Hitler and the Nazi Party was mainly due to the economic pressures and hyperinflation. More info

3 Yugoslavia Jan. 1994

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Here is another shocker for you. In Yugoslavia, the hyperinflation was so bad that during January 1994, prices rose 313 million percent. Yes, you read that right. It's in millions (313,000,000%). Prices doubled every 34 hours. The hyperinflation lasted from 1993 to 1995, and really put the country into downward spirals. The government revalued the currency for five times, and scholars estimated that prices increased by 5 quadrillion percent during the period of hyperinflation. More info

2 Zimbabwe Nov. 2008

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Yugoslavia had a really bad case of inflation. But Zimbabwe had it worse. With prices doubling every 24.7 hours during November of 2008, the inflation rate in that month was around 79 billion percent. To put things into numerical perspective, it was 79,600,000,000%. At that time, $500,000 in Zimbabwe currency was equivalent to about $0.25 US. Price for a loaf of bread rose to $35 million from $2 million. The situation became so bad that businesses in Zimbabwe refused to accept the official currency, and began using the South African rand and the USD as the de facto medium of exchange. More info

1 Hungary 1946

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Here is the worst case of hyperinflation in the recorded history. If you think 79 billion percent of inflation in Zimbabwe was bad, then let us tell you that it doesn't hold a candle against Hungary's inflation. At the height of inflation, monthly inflation rate was 13.6 quadrillion percent. For maths guys, it was 13,600,000,000,000,000%. Yes, it wasn't a typo. By the middle of the year 1946, higest denomination bill was the 100,000,000,000,000,000,000 (One Hundred Quintillion). In 1944s, highest denomination was 1,000 pengo. Remember our example about your breakfast doubling in price overnight? It was so true for Hungary. Prices doubled every 15.6 hours. More info

The causes of hyperinflation are many. However, studies prove that generally countries suffer from hyperinflation when there are wars and ill-advised fiscal policies are implemented. To simplify, the core reason is a rapid increase in the money supply when the natural economic growth cannot support it. Current world's de facto standard for currency exchange is the US dollar, and many are concerned of the impact of a devalued dollar on the economy. The history has taught us many things about what can cause hyperinflation and how bad it can be. Now it is our job to not let the history repeats.

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