Hyperinflations

Inflation is when prices rise a little each year. Hyperinflation is when they rise every day, sometimes every hour.

Economists speak of hyperinflation above a fifty per cent rise in prices in a single month.

Fifty per cent a month for a year means prices multiplied by nearly one hundred and thirty.

The mechanism is almost always the same. A state can no longer pay for its spending, so it has money printed.

The more it prints, the more money loses value. And the more everyone rushes to spend it before it melts.

Germany, nineteen twenty-three. The country must pay war reparations, and the printing press runs day and night.

In November, one dollar is worth four point two trillion marks. Children play with bundles of banknotes.

Wages are paid twice a day. Workers rush to spend before prices change.

To get out, a new currency: one new mark for one trillion old ones. A lifetime of savings has vanished.

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Hungary, nineteen forty-six. The world record. At the worst point, prices double every fifteen hours.

At that pace, they triple in a day. A wage received in the morning is worth a third the next day.

The largest note is worth one hundred quintillion pengős: a one followed by twenty zeros. The new currency, the forint, wipes out twenty-nine.

Zimbabwe, two thousand eight. Production collapses, the state prints. By the end of the year, prices double roughly every day.

In January two thousand nine, a one hundred trillion Zimbabwean dollar note comes out. A few months later, the country abandons its currency.

Venezuela, from two thousand sixteen to two thousand nineteen. Oil, which pays for almost everything, collapses, and the state prints.

In two thousand eighteen, according to its own central bank, prices are multiplied by more than one thousand in a year.

Millions of Venezuelans leave the country. Those who stay look for dollars.

And Argentina. Not a single crisis, but a habit. In nineteen eighty-nine, prices rise by more than three thousand per cent.

Since nineteen seventy, the country has removed thirteen zeros from its currency, in four reforms.

The result has become a culture: people save in dollars, buy bricks or a car rather than keep pesos.

The twist: in hyperinflation, whoever has debt is set free. Whoever has savings in banknotes is ruined.

What keeps its value is real things: land, houses, companies, gold, foreign currencies.

You will probably never live through this. But the lesson holds everywhere: savings all in banknotes depend on the wisdom of those who print them.