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 - 13:17 | 2529815 TaxSlave
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And when debt-based fiat crashes (because it's not my debt and I ain't gonna pay it (cause I couldn't even if I wanted to)), then presto-chango, we go instantly to pure printing and helicopters and wage/price controls.  Easy peasy.  See?

Fri, 06/15/2012 - 14:00 | 2530006 Pbn2Au
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Except it doesn't go 'presto'..."The mark was dead, one million-millionth of its former self. It had taken almost ten years to die." - from the above

It goes far to prove the revolutionary axiom that if you wish to destroy a nation you must corrupt its currency. Thus must sound money be the first bastion of a society's defence. - ditto

Our currency is being corrupted.  Our society is asleep at the wheel.  Curious to think how this will read in 100 years.

Fri, 06/15/2012 - 20:19 | 2531091 BigJim
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If I were Iran... I'd be counterfeiting perfectly-cloned USD like there's no tomorrow (and buying gold and other hard assets with it, obviously). Weaken the dollar and get shit for free.

Imagine a computer virus that could penetrate the banking system and SWIFT and send billions of USD to millions of random recipients all over the globe. I find it hard to believe that many of the original software engineers of those systems haven't since been reading ZH, gotten some religion, and aren't seriously contemplating blowing up the system they helped create.

Fri, 06/15/2012 - 23:25 | 2531334 AustriAnnie
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"Inflation vs. deflation is a meaningless conversation."

It isn't the inflation/deflation that scares me.  Its the 30,000 drones buzzing over my head and the forced "relocation" plans that follow.  

What good is preparation when you wake up one morning and find that the ground you buried your gold in no longer belongs to you, nor does the gov't recognize your right to live on it?

If its just me vs. nature, or me vs. civil breakdown, no big deal.  But me vs. a militarized police state?  Yeah, not so prepared for that.....


Sat, 06/16/2012 - 17:58 | 2532719 Iconoclast
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Nice summation man..

Fri, 06/15/2012 - 13:11 | 2529789 Totentänzerlied
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Prelude to which act? I do hope it's act III, awfully tired of this play.

Fri, 06/15/2012 - 13:31 | 2529876 trilliontroll
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"The inflation is going to come later"

How ?

Fri, 06/15/2012 - 13:14 | 2529804 TaxSlave
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"All the reserves at banks have to be loaned out to get inflation in the US."

That is just not true.

 

Don't forget we have a spender of last resort.  When everyone goes on ration cards, it will indeed take unlimited quantities of digits to buy a bowl of gruel.   And everyone will end up on ration cards eventually, capable of holding 256-bit wide numbers. Price controls will make food and fuel (and cash and silver) into contraband.  As always.  Wheelbarrows are so old-school.

Fri, 06/15/2012 - 13:31 | 2529887 Kprime
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Last year I bought a canister of coffee for $6.50.  This was a regular price.  Today I paid $10.00 for the same coffee. 

Thank God there is no inflation.

Fri, 06/15/2012 - 13:49 | 2529966 Dr. Richard Head
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Bernanke said it will well within the targeted 2-3%, so you must be a liar.

Fri, 06/15/2012 - 14:16 | 2530089 Calmyourself
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Animal feed up $3 per 50# in 4 months...  No inflation, ha

Fri, 06/15/2012 - 14:33 | 2530185 akak
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Soon to be known, after BLS "hedonic adjustment", as Granny feed.

Fri, 06/15/2012 - 17:06 | 2530762 upWising
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You are unclear on the concept.

THERE IS NO INFLATION. WE KNOW THAT IS TRUE BECAUSE THE TeeVee SAYS SO.

Now just because almost everything costs more, that is beside the point.  

(Price of KoolAid has been quite stable and, obviously, KoolAid consumption is steady or rising.)

ALCOHOL.  TELEVISION.  FAITH IN THE SYSTEM!!!

Fri, 06/15/2012 - 17:05 | 2530758 devo
devo's picture

It's the evil coffee speculators.

Fri, 06/15/2012 - 23:33 | 2531347 AustriAnnie
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And the newest fad, "fair trade" coffee, in which a bunch of yuppies pay above-market prices to buy coffee, so that local farmers in other countries switch production to coffee, instead of growing food to feed their local populations, thus starving the local people who were already barely sutaining themselves, so that Mr. and Mrs. Yuppie can walk into their "quaint little coffee shop" with their kid in their $3,000 designer stroller, and feel good about themselves for "helping those in need".

Also, there is inflation.

Fri, 06/15/2012 - 19:46 | 2531044 HungrySeagull
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7.20 to 9.00 last year and now 14.30

My next purchase is going to be 12 tubs of coffee for the remainder of this year and the next.

Sat, 06/16/2012 - 04:20 | 2531569 cranky-old-geezer
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You forget $150 billion added to the circulating money supply each month from federal government borrowing.

This is why banks aren't lending into the private sector.   The federal government is doing all the borrowing now. 

It doesn't matter what money supply numbers the Fed reports.  We know they're lies.  We know the circulating money supply is expanding by $150 billion a month just from federal government borrowing.  It might be $200 billion a month before long.

We know QE is continuing right along, whether the Fed admits it or not.  That $150 billion a month has to come from somewhere, and it's being created out of thin air, because other nations have stopped buying our treasury debt.

And yes, the banking system has decided to sacrifice the housing market so the federal government can borrow $150 billion a month and still keep inflation to a reasonable level. 

This is why the housing market has no future.  Banks have simply stopped lending for housing, so all the lending can be to the federal government.

In fact they've decided to sacrifice the entire economy.  No more lending into the economy at all, so the federal government can get it all.

But $150 billion a month added to the circulating money supply IS inflation, any way you look at it.  It's just slow creeping inflation, not hyperinflation.

Hyperinflation will come when the rest of the world dumps the US dollar.

Fri, 06/15/2012 - 12:49 | 2529708 nwskii
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Awsome!

When do we get started!!!

Fri, 06/15/2012 - 12:56 | 2529741 ihedgemyhedges
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As soon as your avatar shows up at my house.  I'll make the sure the wife is gone................

Fri, 06/15/2012 - 12:49 | 2529709 CURWAR2012
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The US will have its moment in the hyperinflationary sun, most regretably so

Fri, 06/15/2012 - 13:12 | 2529794 UP Forester
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"It's better to burn ooouuttt, then to fade awaaayyyy....."

Fri, 06/15/2012 - 13:15 | 2529806 WhyDoesItHurtWh...
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oh no, after the gold rush.

Fri, 06/15/2012 - 13:31 | 2529885 Global Hunter
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its only castles burning

Fri, 06/15/2012 - 12:53 | 2529715 BLOTTO
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The monetary system eventually attacks every country.

 

ALL nations have been inflitrated...

 

Fri, 06/15/2012 - 12:54 | 2529717 DutchR
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How does that work, they give you a marker to add the zeros yourself?

Fri, 06/15/2012 - 17:15 | 2530785 upWising
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No, you will not be allowed to add your own zeros.  that could lead to chaos!!!

There will be a ZERO ASSURANCE PROGRAM (ZAP) administered by the CYPHER SECURITY ADMINISTRATION (CSA). Zeros will be ZAPped into existence and announced, just like the Lottery numbers are, on the TeeVee news.

When the Gumbint starts running out of zeros (kind of like when a school teacher starts running out of points), the zeros will be de-ZAPped and returned to the warehouses in a procedure called "currency reform" wherein 10 squidzillion "old dollars" will be worth ONE "new dollar."  Then we start again.

When you use public transportation or shop, you will be searched by Green-uniformed CSA Agents who will check for turrurrists who are carrying unauthorized zeros.  

Everything is under control.

Fri, 06/15/2012 - 12:55 | 2529725 Kamehameha
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Look for the double sucker punch when they roll out the new currency and then hyperinflate that also to suck out any remaining wealth from the meat muffins.  The middle ages will look like the Garden of Eden in a few short years.

Fri, 06/15/2012 - 12:54 | 2529728 TheCanadianAustrian
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It's not the rate of hyperinflation that makes it historically significant, but the scope. Once it gets to the point that nobody wants to hold the currency, it hardly matters anymore what the figure is. 30,000% monthly inflation in a republic of 60 million will be much more devastating than 13 quadrillion percent inflation in a country of 9 million.

Fri, 06/15/2012 - 12:54 | 2529729 RobotTrader
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With the CRB Index in a full fledged collapse, sending John "Big Mac" Williams back to the hospital with heart pains......

Bernanke would have to print at least a quadrillion dollars in order to get inflation back up over 8% like we had in the 1970's.

Of course, the more he prints, the bigger the rally in Treasuries due to "Greece Fears", therefore borrowing cost would be near zero.

Fri, 06/15/2012 - 13:10 | 2529778 Spitzer
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Inflation is the expansion of the money supply, not rising prices.

The inflation already happened. It is all sitting in the bond bubble. When you buy your last few treasuries , just like you top ticked Netflicks, the bubble bursts and the money that is already in existence needs to find a home, that is when you get the rising prices.

And too bad Hungary didn't have Bernanke in control back then... Because we all know he can stop hyperinflation in 15 minutes.

Fri, 06/15/2012 - 13:11 | 2529787 malikai
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I'm with Spitzer. Just let us know when you go all-in on Tbills, Robo.

Fri, 06/15/2012 - 13:18 | 2529825 Stimulati
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If inflation is the expansion of the money supply then we need a new metric that tracks rising prices because that metric woud be pretty important.  Treasuries will be in vogue until the economy recovers and we have growth.  At which point we'll be able to raise rates and contract the money supply to keep inflation at bay.

Fri, 06/15/2012 - 13:25 | 2529856 Spitzer
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Treasuries will be in vogue until the economy recovers

How well is that working for Europe ? Why isn't European debt in vogue until the economy recovers ?

At which point we'll be able to raise rates and contract the money supply to keep inflation at bay.

 They raised rates in 2004. How well did that work ? Funny how people say that gold will crash when Bernanke raises rates by 1%. He raised them in 2004 to 2006 and gold went up the fastest in those years.

Fri, 06/15/2012 - 13:46 | 2529956 Stimulati
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Europe has a currency problem, that is completely different from the U.S. situation.  Treasuries are in vogue for the same reason British debt is in vogue.

Also, consumer inflation was not a problem in the mid-2000s so I'm not sure how your 2nd point is relevant except for a failed attempt to tie in housing asset bubbles to consumer inflation.

Fri, 06/15/2012 - 14:22 | 2530110 Spitzer
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Europe has a currency problem, that is completely different from the U.S. situation. 

?? The Euro is worth more then the USD. Benchmark rates are higher in the EU.The Eurozone is a net creditor with no trade deficit. They can afford to let rates rise. Its not pretty but they are doing it.

 

Treasuries are in vogue for the same reason British debt is in vogue.

Yeah. Its called a bubble. Treasuries are return free risk.

Also, consumer inflation was not a problem in the mid-2000s so I'm not sure how your 2nd point is relevant except for a failed attempt to tie in housing asset bubbles to consumer inflation.

(inflation is an expansion of the money supply) Inflation is not a rise in consumer prices in the USA. The inflation that was in the housing bubble is now in the bond bubble. US and UK and Japan.

You were the one that said rates need to rise "when the economy recovers".  Not me. That is what they tried in 2004-06

 

Fri, 06/15/2012 - 18:16 | 2530904 Ricky Bobby
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The word "Hyperinflation" must be one of trip wires for the DTD - Department of Troll Deployment. 

Fri, 06/15/2012 - 13:28 | 2529866 riphowardkatz
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they have metrics that track rising prices its called a price index. 

 

yes at that point when the government has a bagillion in debt they will just be able to raise the rates right up and everything will be great. Get real. Every thinking person knows if the 10 year goes above 4-5 the US gov is in a world of hurt. 

Fri, 06/15/2012 - 13:48 | 2529964 Stimulati
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That's interesting, because most price indexes I'm aware of are also called inflation indexes.  Somebody better tell our friend above with his alternative definitions of inflation.

Fri, 06/15/2012 - 19:48 | 2531047 HungrySeagull
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If they jack interest upwards, they are gonna bite the big COLA.

Fri, 06/15/2012 - 23:45 | 2531363 AustriAnnie
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"That's interesting, because most price indexes I'm aware of are also called inflation indexes. "

No shit.  Because a complete failure to understand money, credit, and markets is what got us into this mess.


Fri, 06/15/2012 - 13:28 | 2529869 Bam_Man
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Well said, Client 9.

Fri, 06/15/2012 - 13:50 | 2529970 centerline
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Precisely.  I have been saying this for years now.  Add in the shadow banking market and the necessary explosives to nuke the financial landscape has already been created.  With orders of magnitude to spare.

 

Fri, 06/15/2012 - 14:03 | 2529939 akak
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Bernanke would have to print at least a quadrillion dollars in order to get inflation back up over 8% like we had in the 1970's.

More denial of reality from RobotLoser.

Hey dipshit coward asswipe cockmunch, "inflation" (annual overall price increases) is ALREADY at or near 8% --- and you would know that if you were out buying ANYTHING other than Netflix, Lululemon or discount skank pussy.

Fri, 06/15/2012 - 12:56 | 2529737 kridkrid
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When Money Dies: http://www.goldonomic.com/When%20Money%20Dies.pdf - load this into your tablet and read at your leisure.  lots of anecdotal stories about life in a hyperinflationary period.

Fri, 06/15/2012 - 14:12 | 2530062 tamboo
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from page 145:

 

"They woke up very late. They started selling their valuables because they couldn't buy food —
the china from the mantelpiece, the furniture, the silver. That made them think — it made them
think when the price of a set of old silver spoons went up from 20,000 to 40,000 crowns in a
matter of a week or two. And if you had to sell a valuable writing desk for money which was
worth only half as much a week later, of course there was ill-feeling.

It was resented when Jews bought these things. The Jewish women would turn up at parties or at
the dansants when we were all broke, wearing the silver fox furs — three at a time for
ostentation -- and diamonds which they had bought from our relations for a song — or what,
when they saw them again, had become a song. My relations didn't know the value of anything.
They were stupid. Our solicitors were no better. My mother's bank manager gave her appalling
advice — he didn't know what he was talking about either.

 

Anti-Semitism had been negligible before inflation. Although Bela Kun's revolution had been
mainly run by Jews, the White Terror had largely purged political resentment. The Jews had
been badly treated in Hungary since the 1860s, and were not received socially for many years.
Nine out of ten bore grudges, and when the opportunity of impressing the arrogant gentiles
arrived at last, who was to blame them for taking it? When they made a success of inflation, they
were hated. When they were ostentatious about it, they were hated even more. "

Fri, 06/15/2012 - 12:58 | 2529745 Lucky Guesst
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I don't care anymore... bring it on! I'm a little smarter and a little more prepared than the average sheep. I might even be a little crazier lol Lets do this!!!

Fri, 06/15/2012 - 12:59 | 2529746 lolmao500
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Almost 13 quadrillion % of inflation... no biggie... the derivative market is at around a quadrillion right now... give it a few more years and lots of money printing from Ben and we can easily go over that minuscule 13 quadrillion % inflation when it all collapses! USA NUMBER ONE!

Fri, 06/15/2012 - 13:05 | 2529754 Element
Element's picture

OT:

Some excellent points being made, and also questions being asked by Iran’s top negotiator, Saeed Jalili, as war with the US draws noticeably closer.  It has something of an air of Iran stating it's final case and position, for the history books, before the conflict finally gets rolling ... if a diplomacy fails in Moscow.

The Question is, what will Russia do, as China announced today that it is not going to, "take sides with any party in Syria", and is basically looking to the P5 (+2?) meeting in Moscow to solve this just short of war (and hoping like hell it works ... as the US, Japan and ROK Navys are having a major 'drill' near China's eastern waters all this week.)

--

‘We’re strongly against weapons of mass destruction’ – Iran’s nuclear negotiator

Published: 15 June, 2012, 11:21

http://www.rt.com/news/iran-nuclear-talks-jalili-876/

--

There are just days left to defuse this now, and this is certainly the positioning prior to negociation, but it appears the US has (i.e. definitely has) already decided to invade Syria, prior to commencing a full blooded attack on Iran.

Fri, 06/15/2012 - 13:02 | 2529755 Belarusian Bull
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Yay,  we got mentioned! oh, wait...

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