In Hungary, people are getting more and more negative surprises regarding inflation. But this is still a long way from the monetary deterioration of historically high periods of hyperinflation. Are we really world record holders in hyperinflation?
The January inflation figure in Hungary was 25.7 percent, so it exceeded the expectations of analyzing economists many times over. But we regularly receive big slaps in the shops when we see the price tags. Although this value is probably a record once more within the European Union, it is still far from the historical peak levels.
What is hyperinflation
The last time inflation in Hungary was higher than the current one was in 1995, when the year/year value in December was 28.3 percent. Some bloggers and forum members are already talking regarding hyperinflation, not knowing that we are only talking regarding hyperinflation from 50 percent. Also, the monetary deterioration must be 50 percent not on an annual basis, but on a monthly basis, which is the lowest limit of hyperinflation according to the agreement among economists.
1. Hungary, the leader
However, quite a few countries have managed to jump this value quite a few times, and not only in the event of war or other great misfortunes. THE Wikipedia has a great list according to Hungary, the world record is indeed held by Hungary with an inflation value that is difficult to say, around 40 billiards (or 40 thousand trillion) percent. Or ten to the 16th power, and multiplied by four, was the monthly inflation rate in July 1946.
Prices doubled in less than 15 hours, and the daily inflation rate was 207 percent. And the largest denomination banknote ever printed was 100 trillion pengos (20 zeros would have to be written following the one).
It is hardly necessary to explain why this happened, the country was completely ruined both economically and financially following the Second World War. Almost all goods ran out or perished, there was hardly any food, and money was printed all at once. Due to the devaluation of paper money, they used everything else they knew as means of payment, dollars, eggs, precious metals, cigarettes, nylon stockings.
2. Hyperinflation in Zimbabwe
According to the list, in second place is the depreciation of the Zimbabwean dollar in November 2008, which reached 100 billion percent per month. They didn’t even need a war for this, just a poorly functioning state and an extremely flawed economic reform, which resulted in the shutdown of a good part of production.
3.-4. The breakup of Yugoslavia
The Yugoslav and Serbian dinars came in third and fourth place, with monthly inflation rates of many hundreds of millions of percent, at the beginning of 1994. At that time, we practically saw the disintegration of Yugoslavia, and several wars broke out between the successor states. So it is no wonder that the economy was severely crippled, and the Yugoslav and Serbian money devalued several times.
5. The world’s poorest rich people
Venezuela is also one of those countries that managed to fight their way to the bottom of the slope even in peacetime. In January 2019, the country’s currency, called the bolivar, experienced 2.7 million percent inflation, at which time prices doubled in two days. Meanwhile, the country is the happy or unhappy owner of one of the world’s largest reserves of crude oil.
(Of course, this may have pushed them into a crisis. The essence of your “raw materials” is that a country becomes comfortable with the possession of significant mineral resources, forgets to develop the other branches of the economy, “forgets” to produce and do business. Instead, everyone grapples with how to distribute the wonderful wealth from raw material wealth, or who rules the country.)
They also ran… the German hyperinflation
One of the most famous hyperinflation in the world, the devaluation of the German mark following the First World War, with its peak inflation of 29,500 percent in October 1923, did not even make it to the list of five. Since then, Germans have been extremely afraid of inflation, and this probably influences the monetary policy of the European Eurozone to this day. Here, too, the war played a key role. Just as it was the main cause of the next Greek hyperinflation in 1944.
Even the ancient Romans
By the way, hyperinflation is not a modern invention at all, because of course we don’t have accurate data regarding it. But the history books mention that it was already cultivated by the ancient Romans. One or another Roman emperor diluted the metal money so skilfully, saving precious metal from it, that he was able to cause hyperinflation or something very similar to it.
And in China, where paper money began to be used centuries earlier than in Europe, hyperinflation – or at least very high inflation – also they got to know each other first. Already in the Middle Ages, the Yuan Dynasty at the time of (How interesting, the name of the Chinese currency is yuan…)
This danger seems to threaten all centralized money. Come on Bitcoin!
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Cover image: Inflation blade. (My photo.)
