Cases of hyperinflation have appeared several times over the past century; Today, inflation is a major topic of discussion, and while many people focus on the effect of inflation on the value of money, history has shown us that inflation is much more severe. Example! In 2008, Steve Hanke and Nicholas Cruz studied historical hyperinflation; They reported 17 cases of hypertrophy in Eastern Europe and Central Asia, including 5 in Latin America, 4 in Western Europe, 1 in Southeast Asia, and 1 in Africa. The US is certainly not a victim of hyperinflation, but a victim of twice as much. The first was during the Revolutionary War, and the second during the Civil War, when the government printed currency to pay for it. However, its war effort did not exceed the 50% monthly inflation rate (the unofficial limit for inflation) in two cases in the United States, which is almost as good as the most dramatic and unobservable case in history.
- Hungary, August 1945 – July 1946
Hungary was devastated economically in World War II and an estimated 40% of Hungarian capital was destroyed in the conflict. Hungary adopted a policy of intensifying production to support the German war effort with loans, but Germany did not pay for the goods! ! Hungary signed a peace treaty in 1945, the Soviet Union ordered huge reparations, 25-50% of the Hungarian budget, and the country’s monetary policy was mainly adopted; The solution to debt repayment was to increase the amount of printed money, although the Hungarian Central Bank warned that printing money to pay off the debt process would not end well, but the “Soviet Union” rejected these warnings, leading some to conclude that hyperinflation was aimed at achieving a political goal of destroying the middle class…and 1941; Every 5 pengo (Hungary’s currency at the time) was worth 1 dollar, and the currency continued to decline until it reached 460 trillion in 1946. The currency became worthless, with prices doubling every 15 hours and inflation at 207%, and the price of food, clothing and electricity rising even more From a billion times from July 15, 1945 to July 15, 1946!
- Zimbabwe March 2007 – November2008
Zimbabwe’s hyperinflation was preceded by a prolonged decline in economic output, followed by Robert Mugabe’s 2000-2001 land reforms, in which land was exported from white farmers and redistributed to the majority black population. The process of land allocation led to a collapse of 50% of production over the next nine years. Socialist reforms and the costly Congolese civil war led to massive budget deficits for the government. Meanwhile, Zimbabwe’s population is shrinking as people flee Zimbabwe. These two factors lead to an increase in government spending and a decrease in the tax base; This causes the government to have to monetize its fiscal deficit. With a daily inflation rate of 98%, prices rise every 25 hours; It’s easy to see price increases for necessities like: a loaf of bread now costs 10 million Zimbabwe dollars, a sausage costs 30 million Zimbabwe dollars, and a toilet paper you need 146,750 Zimbabwe dollars. Because of this fact, the signs published recommendations and emphasized the use of tissues (paper towels) instead of dollars!
- Yugoslavia April 1992 – January 1994
The dissolution of the Soviet Union led to the deterioration of Yugoslavia’s international standing; It played an important geopolitical role in linking East and West, and the Communist Party eventually came under pressure from the Soviet Union; This divided Yugoslavia into several ethnic groups, trade and industrial production collapsed between regions of the former Yugoslavia, and an international ban on Yugoslav exports was rejected. The central bank tried to remedy this deficit by implementing strict monetary policy, but it lost control of money formation and led to hyperinflation, with prices doubling every 34 hours and a daily inflation rate of 65%.