Peak Monthly Inflation In 1945 Hungary: 12,950,000,000,000,000% And Other Hyprinflationary Facts

Tyler Durden's picture




 

For some reason, whenever people want to make a historical example of a hyperinflationary period, they always bring up the Weimar Republic, aka Germany in 1920-1923. Yet with a highest monthly inflation of just under 30,000%, Weimar was a true walk in the park compared to the 309,000,000% monthly inflation in 1992-1994 Serbia, but especially to the 12,950,000,000,000,000% inflation that Hungarians had to deal with in the aftermath of WWII. For these and more  comparative examples of hyperinflation, particularly relevant now that the entire world is rumored (for now) to be getting ready to print, see below.

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Fri, 06/15/2012 - 12:48 | 2529703 carbonmutant
carbonmutant's picture

Scientific notation... Bitchez

Fri, 06/15/2012 - 13:01 | 2529750 drink or die
drink or die's picture

Carrying your cash in a wheelbarrow is so 20th century.  The preferred method of transport is wrapping it up in a Spiderman beach towel and slinging it over your back.

 

Fri, 06/15/2012 - 13:06 | 2529766 Think for yourself
Think for yourself's picture

If we're talking about actual money, I thought it was sewing it into your hems? It's definitely my preferred method.

Fri, 06/15/2012 - 13:44 | 2529942 Pladizow
Pladizow's picture

Credit cards have replaced wheel barrows - making hyperinflation so much easier!

Fri, 06/15/2012 - 13:51 | 2529972 Chaffinch
Chaffinch's picture

The problem with credit cards and hyperinflation is that the machines which read them can only cope with 'small' numbers.

Fri, 06/15/2012 - 14:05 | 2530016 Pladizow
Pladizow's picture

If true, easily remedied with software.

Fri, 06/15/2012 - 15:03 | 2530322 Shameful
Shameful's picture

Nope.  Most should be able to handle double precision floating point numbers.  Means can hit 1.7976931348623157 x 10308 before a problem happens.  If we are seeing transactions in the 1 x 107 for normal people (IE restaurant) we are already well, well off the deep end.  Getting to the upper bounds of even a single precision point number (3.4028234 × 1038) is well past currency death.  So have no fears for the tech ability to handle a digital hyper inflation.

Fri, 06/15/2012 - 15:26 | 2530422 francis_sawyer
francis_sawyer's picture

It could never happen here because... because... because... Obama is so smart!

Fri, 06/15/2012 - 16:43 | 2530696 max2205
max2205's picture

And because the dollar would be $0.50 to the euro

Fri, 06/15/2012 - 18:39 | 2530951 johny2
johny2's picture

Where the $$$$ is the Robot Trader?

Sat, 06/16/2012 - 11:30 | 2532088 RevCBH
RevCBH's picture

Financial systems don't use floating point math because of rounding errors (http://en.wikipedia.org/wiki/Floating_point#Accuracy_problems). Retail machines can deal with integer cents instead of fractional dollars. If more precision is required, simply deal with integer amounts of smaller fractions. Legacy embedded systems (i.e. those card reader thingies at the grocery store and gas station) likely deal with 32-bit integer values at best. That provides a maximum of 4,294,967,295 cents or $42,949,672.95 per transaction, well within the scope of a severe hyperinflation.

Fri, 06/15/2012 - 13:09 | 2529779 UP Forester
UP Forester's picture

Sure makes pre-paid Visa cards valuable.

Scientific notation is easier to fit in a Spiderman beach towel full of plastic rectangles....

Fri, 06/15/2012 - 13:16 | 2529808 Dr. Richard Head
Dr. Richard Head's picture

Digital currency can be snatched much easier than cash in hand. 

Fri, 06/15/2012 - 13:43 | 2529935 FeralSerf
FeralSerf's picture

1016% per month is no slouch at snatching.

Fri, 06/15/2012 - 13:29 | 2529875 Kprime
Kprime's picture

It sucks when inflation is so bad your $1000 pre-paid VISA card zeros out the day after you bought it.  You didn't even get to use it.  The fees were inflation indexed.  By the way, next week you'll get a bill for the remainer of the fees that the $1000 didn't cover.

Digital money sucks.

Fri, 06/15/2012 - 17:20 | 2530803 upWising
upWising's picture

Here: check out the rise in value of the Hungarian pengö;

http://tomchao.com/hb14.html

Sat, 06/16/2012 - 09:41 | 2531892 dexter bland
dexter bland's picture

And what was the inflation rate of the mythical republic of Goldlandia between 1980 and 1983 when the price of gold went from $1850 to $650 in real terms? That equates to around 80-90% inflation  for those loaded up with this supposedly inflation proof "store of value"  currency. It didn't bottom out until 2001 when the precious "ounce" was worth one fifth of its former value at around $350 of today's dollars...bitchez.

Fri, 06/15/2012 - 13:03 | 2529759 ACP
ACP's picture

I think the Bernank would call that "deflation" and make a case for more printing.

Fri, 06/15/2012 - 13:09 | 2529780 RationalPrepper
RationalPrepper's picture

+ 1E10

Fri, 06/15/2012 - 13:39 | 2529822 Think for yourself
Think for yourself's picture

To be fair, that is a beautiful case of linear vs exponential thinking. Who would think a harmless 4.62% hourly interest rate could create so much havoc?

/sarc

Fri, 06/15/2012 - 14:16 | 2530087 Matt
Matt's picture

In comparison, what does the worst case of deflation look like? Did prices ever drop 50% per day somewhere?

Fri, 06/15/2012 - 12:48 | 2529704 ArrestBobRubin
ArrestBobRubin's picture

That's a lotta goulash.

Fri, 06/15/2012 - 15:48 | 2530506 Captain Kink
Captain Kink's picture

it's the same amount of goulash at x1016 the price!

Fri, 06/15/2012 - 12:48 | 2529707 Snakeeyes
Snakeeyes's picture

All the reserves at banks have to be loaned out to get inflation in the US. Banks aren't lending enough to create inflation. A nice Centrally Planned outcome.

http://confoundedinterest.wordpress.com/2012/06/13/feds-operation-twist-what-did-it-accomplish/

The Fed just keeps twisting and QEing the night away while banks don't lend.

M2 Money Velocity has crashed and burning.

Fri, 06/15/2012 - 12:50 | 2529710 CURWAR2012
CURWAR2012's picture

Correct, we in a deflationary  spiral but that is the prelude my friend. The inflation is going to come later

Fri, 06/15/2012 - 12:55 | 2529732 Dr. Richard Head
Dr. Richard Head's picture

So it is like this?

Step 1. deflation to drive down asset prices.

Step 2. inject credit into the hand's of those well-connected in this system first.

Step 3. well connected purchase those assets

Step 4. money flows to the plebes.

Step5. plebes savings worth nothing.  

Fri, 06/15/2012 - 13:03 | 2529760 Spitzer
Spitzer's picture

All you need is a loss of confidence. No printing, no "deflation" no nothing.

Fri, 06/15/2012 - 13:14 | 2529782 Cognitive Dissonance
Cognitive Dissonance's picture

Thus the real reason behind their lies and our willingness to believe the lies.

Faith and belief is the only glue that binds this web together. Remove it and you have nothing.

Poof! And it's gone.

The only reason you accept that $20 in exchange for your goods and/or labor/services is because you have faith and belief that you can "pass it" (notice the same term is used when talking about counterfeit) on to someone else in exchange for what they have to offer.

Wanna play hot potatoe?

Fri, 06/15/2012 - 13:21 | 2529840 Dr. Richard Head
Dr. Richard Head's picture

I have no faith in the paper I exchange for my services; I am forced to do so.  I asked the board to pay me in gold and silver and the look of shock om their face was interesting.  They offered increase in my 401K matching and profit sharing instead. 

I withdrew $9,999.99 in federal reserve debt today and I must tell you, I am passing this hot potato to everyone that is willing to exchange it for something I am willing to value. 

Fri, 06/15/2012 - 13:34 | 2529881 Cognitive Dissonance
Cognitive Dissonance's picture

Point of argument.

While you may not have faith in the future of the USA currency (future being loosely defined as anytime beyond today) at least for the moment you have faith that you can pass your Federal Reserve notes NOW in a "fair" exchange for goods and services.

So in effect your actions declare that you still have faith. :>)

I do understand that you have "no choice". At least not a choice that allows you to remain within the system and enjoy what you currently enjoy for a standard of living. But compelled responses serve as willing responses in this case.

BTW withdrawing just under the limit does not stop the bank from reporting your transaction. In fact, it puts you on the radar for reporting because you are obviously trying to avoid reporting requirements. It falls under the general "suspicious activity" heading of the reporting guidelines.

Fri, 06/15/2012 - 13:46 | 2529957 Dr. Richard Head
Dr. Richard Head's picture

Point of argument accepted and indeed understood. 

Every turn we make is covered in the land o' the free.  Great fun.  I will be looking forward to the call from authorities, after they monitor me for the next few months or years.

Fri, 06/15/2012 - 13:54 | 2529984 Cognitive Dissonance
Cognitive Dissonance's picture

Every now and then I will stop a phone conversation I'm having with a friend or loved one and shout "suspicious" words into the phone. I want my NSA/CIA file to be impressive when they come to pick me up for my initial interview. :>)

Just doing my part to keep the minders employed.

Fri, 06/15/2012 - 13:59 | 2530000 Pladizow
Pladizow's picture

If not already read, 2 books you may enjoy:

1. Money: The Greatest Hoax on Earth - 1971

2. Coin's Financial School - 1894

Fri, 06/15/2012 - 14:03 | 2530011 Dr. Richard Head
Dr. Richard Head's picture

Holy shit....HAHAHAHA.  I do that quite often.  In the middle of a conversation I will usually yell Osama Bin Laden, 9/11, 9/11, jihad! jihad!  Terrorist, bomb plot!  I often think about the poor stooge finding my phone file flagged, where he/she has to go listen to the call. That tard has to listen to a shit ton of mundane conversations about my wife getting her hair done, the kids acting up, cat vomit, whatever just to find me mindlessly spouting off buzz words.  Good times......good times.

Fri, 06/15/2012 - 14:24 | 2530136 Cognitive Dissonance
Cognitive Dissonance's picture

Look honey. Someone else has a cat that vomits.

I guess you were right, that it wasn't "personal" that our cat vomitted exactly where I step when I first get out of bed in the morning. :>)

Sat, 06/16/2012 - 06:45 | 2531664 Arrowhead
Arrowhead's picture

Maybe you will get your own drone assigned?

Fri, 06/15/2012 - 13:59 | 2529994 Pladizow
Pladizow's picture

You are correct, but perhaps he withdrew it from the 401K.

Fri, 06/15/2012 - 13:10 | 2529785 Global Hunter
Global Hunter's picture

Great point it takes a few sellers to say they no longer want paper or digital fiat for their goods or services and the immediate response by the buyer will be "I will increase my bid of paper/digital fiat" to get your good or service and voila.  It doesn't matter how much dosh in circulation at that point.

Fri, 06/15/2012 - 13:22 | 2529844 Dr. Richard Head
Dr. Richard Head's picture

More than a few sellers are already taking this route. http://www.opencurrency.com/

Fri, 06/15/2012 - 13:27 | 2529862 Global Hunter
Global Hunter's picture

cool...my wife is doing some canning as we speak so I will accept mason jars for my labour!

Fri, 06/15/2012 - 19:45 | 2531042 HungrySeagull
HungrySeagull's picture

Mason Jars eh?

Pretty soon you would have to raise up a Lodge to handle all those Jars.

Sat, 06/16/2012 - 01:11 | 2531450 FEDbuster
FEDbuster's picture

Bullets in various calibers could become the coinage of Bartertown.  .22lr, 9mm, .308 etc....  Be sure to have a couple of years of food, they always restrict the food supplies.

Fri, 06/15/2012 - 13:54 | 2529979 Solon the Destroyer
Solon the Destroyer's picture

Usually what you need is a shooting war.

Most of the inflationary episodes displayed above are correlated to some shooting conflict (either contemporaneously or subsequently).

War makes governments desperate, encourages corruption, tears the fabric of societies, and thus destroys the sheeple's confidence (among other things).

Fri, 06/15/2012 - 13:04 | 2529762 WhyDoesItHurtWh...
WhyDoesItHurtWhen iPee's picture

All your 'flations are belong to us.

Fri, 06/15/2012 - 13:41 | 2529928 Alpha Monkey
Alpha Monkey's picture

I believe it does... from Cato, a story on hyperinflation of Yugoslovia.  This is an example of step 2 to 5.  No reason to assume the same type of psychopaths are not at some levers of power in our country.  Some day, people will lose faith in our dollar as well.  Buy Gold.

On January 7, 1991, the federal government of Prime Minister Ante Markovic discovered that, under the control of Slobodan Milosevic, the Serbian parliament had secretly ordered the Serbian National Bank (a regional central bank) to issue $1.4 billion in credit to Milosevic's friends.

That illegal plunder equaled more than half of all the new money the National Bank of Yugoslavia had planned to create in 1991. The heist sabotaged the Markovic government's teetering plans for economic reform and hardened the resolve of the leaders in Croatia and Slovenia to break away from the Socialist Federal Republic of Yugoslavia.

Without the Croats and Slovenes to fleece, Mr. Milosevic turned on his own people with a vengeance. Starting in January 1992, what was left of Yugoslavia endured the second-highest and second-longest hyperinflation in world history.

Fri, 06/15/2012 - 13:54 | 2529982 FeralSerf
FeralSerf's picture

How does that compare with the misplaced $2.3 Trillion that Rummy said the DoD "couldn't account for"?  (So far it still hasn't been located.)

How much currency was in circulation in 2001?  $2.3 trillion is what % of that?

Sat, 06/16/2012 - 14:50 | 2532465 Alpha Monkey
Alpha Monkey's picture

Probably something like the $4tr handed out to Fed member banks in 2008.

http://rt.com/usa/news/fed-federal-reserve-report-938/

Sat, 06/16/2012 - 10:11 | 2531945 Bendromeda Strain
Bendromeda Strain's picture

Yup - I was looking at that chart above and knew instantly that somebody had some 'splainin to do. I have the 12 digit Yugo Dinar notes tucked away next to my 15 digit ZIM dollars.

Fri, 06/15/2012 - 12:58 | 2529738 Cognitive Dissonance
Cognitive Dissonance's picture

Correctamundo!

http://www.hark.com/clips/ydjrgglgqn-correctamundo

http://www.youtube.com/watch?v=SlzHK3mYatA

First comes love deflation, then comes marriage printing. Then comes inflation in a baby carriage wheel barrel.

Fri, 06/15/2012 - 13:04 | 2529761 kridkrid
kridkrid's picture

I posted this yesterday, but it makes more sense in this thread...

Inflation vs. deflation is a meaningless conversation.  The monetary system can't be sustained because math is math.  What can't be stopped is the collapse of our debt based monetary system in which virtually all money is loaned into existence with interest attached at its creation.  New debt must be issued in order to roll old debt forward.  Aggregate debt is required to grow or you have cascading defaults.  Deflation vs. Inflation is like choosing between a bullet and a noose.  Either will do the trick.

And I agree with you... first deflation and then, most likely, inflation.... but it doesn't matter.  What's really happening is the collapse of the monetary system... inflation vs. deflation is a policy choice that gets to be mentioned as the final cause of death... but it isn't really.

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