The Worst Hyperinflation Cases in Modern History

December 26th, 2022

Spending millions in a single day may sound like a dream come true. Unless it happens during times of hyperinflation, in which case it can turn into a nightmare. Luckily, hyperinflation does not occur often, and we can learn about the worst hyperinflation examples from a distance.

This article will present you with some of the worst hyperinflation situations of all time, their causes, and their outcomes. After all, history is a great teacher to those who choose to listen.

Let’s dive right in!

What Is Hyperinflation?

Hyperinflation is an economic phenomenon that can have devastating consequences on a country's financial health. Hyperinflation is defined as an increase in prices larger than 50% per month.

The rising prices typically occur when a country has to print more money to adapt to new economic conditions without GDP growth. For reference, the standard inflation rate is around 2% per year. This leads to devaluation of the country's currency, which makes the prices go up and purchase power go lower.

What Causes Hyperinflation?

The leading cause of hyperinflation is printing more money without the GDP supporting it with growth. Such instances almost always occur at times of wars and national debt. Namely, the stability of a domestic currency is directly linked to the country's stability. Other causes of hyperinflation include a decline in economic output, and price controls, as was the case with the Zimbabwe hyperinflation and other hyperinflation examples.

Throughout history, there have been numerous examples of this dire economic phenomenon – some countries have experienced incredibly severe cases of hyperinflation that resulted in total economic collapse and destabilization. Some of the worst cases of hyperinflation in modern history happened after World War I and II.

Keep reading, because we're about to delve into those examples and explore why they were so destructive and how societies were able to recover afterward (if at all).

The Worst Cases of Hyperinflation in History

Although modern-day economies are far more stable than those from centuries past due to advancements in trade and global economic policy, hyperinflation does still happen, and its effects on currencies and societies have been devastating throughout the ages.

From Weimar Germany’s infamous “trillion Mark” disaster, which nearly destroyed a nation already reeling from World War I losses and devastation, as well as controversial treaty negotiations with allied nations, to Zimbabwe's crippling 11 million percent inflation rate in 2008 brought about by political instability — understanding how cash-strapped countries become vulnerable to such dire financial conditions is essential.

Below, we explore the worst hyperinflation cases in modern history, which demonstrate just how difficult it can be to recover from deeply entrenched hyperinflation cycles.

Zimbabwe Hyperinflation

The independent country of Zimbabwe had a stable economy for more than a decade and a bright future ahead of it. However, due to several factors, the residents struggled with hyperinflation and its consequences for more than 30 years.

In the 1990s, president Robert Mugabe and the ruling party made a series of decisions that led to hyperinflation and destabilization of the country. Firstly, the land of white farmers was given to black farmers, which caused a drop in economic output, as the new farmers did not produce enough food.

This led to farmers fleeing the country, eventually causing famine. The government tried to import food and goods, but due to the unstable economy, they had no sufficient funds for this. As a result, no foreign investors wanted to invest further in Zimbabwe due to the high risk of failure. The country also raised wages for officers and soldiers and funded the war in Congo. Unfortunately, it led to hyperinflation.

Printing more money was the only way to keep up with the expenditures. The unemployment rate was 80% in 2008, many schools and hospitals were closed, and other public services were severely compromised. Finally, the Zimbabwe hyperinflation reached its peak at 79,6 billion percent per month.

With the introduction of foreign currencies, the euro, and the dollar, the hyperinflation began to lessen. The people of Zimbabwe slowly began to regain their trust in economic stability in the following years.

Hungary Hyperinflation

Although Hungary managed to avoid war battles on its territory in the first years of World War II, the year 1944 was almost fatal for the Hungarian economy. Namely, around 40% of the capital stock was destroyed, and 90% was damaged.

The currency in use was the pengo, and by August 1945, prices doubled every 15 hours. The hyperinflation rate was 150,000% per day. The Hungarian hyperinflation lasted until July 1946. Out of all modern history hyperinflation examples, Hungary went through the highest inflation ever recorded and is, thus, considered to be the worst hyperinflation ever. However, it had some long-term positive effects.

Drops in production levels, high unemployment rates, national debt, and transportation crisis required substantial amounts of money to recuperate. The government saw hyperinflation as a way to regenerate the nation's economy. The Hungarian economy was once again stable after the hyperinflation ended in 1946.

The worst hyperinflation in history, in Post-WWII Hungary, although hard to endure, was successful. It ended with introducing the forint, the currency still in use today.

German Weimar Hyperinflation

Hyperinflation examples are plentiful, and one of the most famous ones is the Weimar hyperinflation in Germany. After the war, Germany could not repay the reparations it was due to pay the Allies. However, France and Belgium did not believe (or wished to believe) that Germany couldn’t pay, so they occupied the Ruhr area. Workers went on strike, and the government supported them by paying them wages anyway.

This negatively impacted the country's economy, so the government decided to print more money. As a result, prices doubled every 3.7 days. The inflation hit 32,400%. German hyperinflation ended with the introduction of Rentenmark, the domestic currency, in 1923.

As for the reparations, U.S. banker Charles Dawes, who later won the Nobel Prize for peace, created the Dawes Plan that enabled Germans to repay the debts reasonably. The burden of reparation debt that led to hyperinflation severely affected people with savings. Life-long savings, pensions, and insurance were no longer valued in real life.

On the other hand, farmers and business people profited from hyperinflation because the value of the goods never decreased. Along with them, people with large debts were able to repay them quickly since the domestic currency severely depreciated.

Unlike Hungarian hyperinflation, which had a positive outcome, the Weimar one paved the way for the rise of Adolf Hitler and the Nazi Party. The people feared the domination of the Communist party and turned to the Nazi party instead.

Hyperinflation in Yugoslavia

Yugoslavian hyperinflation lasted for a full 22 months, from February 1992 until January 1994. It will become known as the second-longest as well as the second-highest hyperinflation in history.

Under the SPS (Socialist Party of Serbia) and its ruler Slobodan Milosevic, the economy of Yugoslavia crumbled. At its peak, the daily inflation rate went as high as 62%. The domestic currency, the dinar, was devalued, and the biggest printed bill was 500 billion dinars toward the end of hyperinflation.

The government introduced a price control on food and products. But, this did not provide great results, as farmers could not earn money, and stores did not want to sell goods at low prices either. It was in January 1994 that professor Dragoslav Abramovic, governor of the Yugoslavian National Bank, introduced a new dinar that replaced the 12 million dinars at the time. However, this was possible only because the unofficial currency was the Deutch Mark.

Argentina Hyperinflation

During the 1980s, Argentina experienced a deep economic crisis resulting in a period of hyperinflation. Prior to the 1980s debt crisis, inflation was already on a rise. But once the country plummeted into recession and needed some extra cash flow –they turned to an age-old technique: printing money!

The economy suffered greatly, with prices of goods more than tripling from 1982 to 1989. This led to an average annual inflation rate of 300% between 1975 and 1990, wiping out savings and reducing wages to a minimum. The majority of the population was affected as they tried to cope with an unprecedented increase in prices.

As a result of these extreme economic circumstances, there were drastic shifts in production and employment as well as spikes in crime rates as desperate citizens resorted to illegal activities for financial gain. This crisis prompted the government to institute strict economic policies to curb the inflationary spiral and restore economic stability to the country.

Although this period of economic turmoil was difficult and had dramatic consequences on people’s lives, it ultimately made way for a period of growth and stability in Argentina. However, some consequences are still visible to this day, with high unemployment and persistent poverty among various pockets of society that were disproportionately affected by this era of hyperinflation in Argentina.

Greece Hyperinflation

Despite having already suffered enormously due to its involvement in World War II, Greece was inflicted with hyperinflation during the years 1943-1946. In just three short years, the Grecian economy suffered an astronomical devaluation of its currency due to increasing prices and a lack of liquidity.

At its peak moment in October, ‘44 the inflation rate was estimated at approximately 1031%, which took an immense toll on citizens’ livelihoods. This crisis had strong repercussions on the government too; ultimately leading to their defeat in the Civil War (1946-1949) due to inadequate resources for arms and soldiers. The consequences were so severe that some have argued that it was a much larger disaster for Greece than the war itself had been.

Nevertheless, Greece managed to recover from this catastrophe with some help from abroad, thanks to a series of low-interest loans granted by the US. The international aid enabled a much-needed rebuilding process and new measures such as economic reforms were put into place as well.

Although this dark period has passed, it resonates within Greece’s political landscape to this day and serves as a reminder that vigilance is key when it comes to tackling economic crises.

Fast Forward: What Country Has the Worst Currency Today?

Despite Iran's rich natural resources, the Iranian Rial remains the lowest currency today due to economic sanctions that impede its ability to export petroleum. Political insecurity has only served to heighten economic hardship in this region and make it more difficult for Iranians seeking financial stability.

With 42 thousand IRR equal to $1 USD, it remains the world’s weakest currency due to the combination of international sanctions inhibiting Iran’s ability to participate in global markets and the instability caused by tensions within the Middle East.

Are You Planning to Visit Some of These Countries Anytime Soon?

All these countries still use their local currencies, excluding Germany, but tourists can also pay in Euros or US dollars.

If you need to exchange money before your trip, you can buy and sell foreign currencies at US First Exchange and get them delivered right to your address.

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