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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 - 13:46 | 2529954 aerojet
aerojet's picture

They don't look at shit the same way we do.  Yeah, food and gas prices are up, but house prices collapsed, so, to them, in the overall picture, it looks like debt deflation, which is bad if you're a central banker.  They have no capacity for looking at the nano-world of the peons under a microscope, they only deal with macro trends, it seems.

Fri, 06/15/2012 - 13:53 | 2529977 Stimulati
Stimulati's picture

You don't understand me about Bernanke.  He is the bankers man in Washington doing the job of making sure the banks don't suffer from this terrible economy.  I'm just saying his money printing won't cause excess inflation just like it won't spur the economy.  For the same reason in both cases - the money is sitting in bank vaults and is untouched by the middle class. 

Fri, 06/15/2012 - 17:47 | 2530849 akak
akak's picture

So the cost of living is currently rising 6-10% on an annual basis due to, what, our robust and overheated economy?

Get a clue.

Fri, 06/15/2012 - 13:43 | 2529937 aerojet
aerojet's picture

I have always said that it is an accounting exercise.  The liquidity is there to make banks appear solvent.  That's all it is for.  People panicked about it--"what if all that 'money' gets into the real economy?"

Fri, 06/15/2012 - 14:18 | 2530098 walküre
walküre's picture

How come corporate execs have been making allot more in 2011 over 2010 for example?

We've never seen anything like it in history. Economy was the shits and execs made 20% to 45% more?

Fri, 06/15/2012 - 13:17 | 2529820 The Reich
The Reich's picture

Where's the EURO is your list??

 

10^zillion % perceived inflation 

 

Doesn't count that att all?

Fri, 06/15/2012 - 13:32 | 2529873 Jumbotron
Jumbotron's picture

All the times listed seem to correlate pretty well with either postwar periods or during war periods.

And the postwar hyperinflation periods help initiate other wars....in particular Germany pre-WW 2...China pre-Korean war....Serbia pre-Balkan war.

Either way....hyperinflation following a war....or as a lead up to war.....inflation ultimately kills

Fri, 06/15/2012 - 13:44 | 2529920 walküre
walküre's picture

What if they prepare to announce the "reset" on Monday? Close all exchanges for a week and collapse the debt and derivative bubble?

Europe's debt problems are FUBAR. Greece is just one pebble, Spain is a domino and Italy and France are bricks.

Trillions in synthetic liquidity sloshing around electronically. Money that doesn't really exist but needs to be accounted for and to be serviced.

A year ago they said Greece would never exit the Euro or the Eurozone would never break-up and least of all, a reset would never happen.

Well, looks like Greece is exiting and the Eurozone is terminally ill. Once they start talking about a "reset" it is too late, I'm afraid. They will never discuss a "reset" openly because the panic that ensued could not be controlled. They'd have to meet all at once, and agree to do it all at once and complete the process before markets are opened.

In that case, the only store of wealth are gold and silver. What else would protect value? Hoarding cash is useless because they just print and print more of the same. Equity prices would collapse with cash and cash equivalent's values during the reset.

Let's say they reset 100:1 or 1000:1. Does that mean the price of gold would be adjusted to $160 or $16 oz? Technically probably but good luck finding sellers and producers for that price. The jump would occur right then and there and gold would immediately shoot up, likely to double or triple in one day.

Any thoughts?

Fri, 06/15/2012 - 13:54 | 2529983 aerojet
aerojet's picture

Think $100 is now $1 and you get what has to be done.  So if you have a Benjamin after the reset, you have $1 of real purchasing power--a half a loaf of bread.  Sucks to be a saver, should have run up huge piles of debt.  So gold at $1600/oz. today goes to $160,000/oz. instantaneously, but it's technically worthless because nobody is going to want to convert you at that price, they won't have the money themselves, so the price of gold probably collapses until the market finds a new level--you might retain some purchasing power, you might not.  Nothing will work the way you think--the precious metals "out" has always been too obvious a play.  You'll get skullfucked somehow, mark my words.

Fri, 06/15/2012 - 14:05 | 2530020 walküre
walküre's picture

Not if they announced a return to a gold backed currency which is possible.

What options do they have? Just slash a few zeros, destroy debt and derivatives and reset with a currency backed by another promise to pay? They've got to do better than that.

A currency backed by a basket of commodities where gold takes a vital role. We're talking G20 here where the opinions on gold differ widely. China, Russia, Germany (probably much of the Europeans) and Canada LOVE gold. It's only Bernanke who says it's a barbaric relic. But he's a liar anyway so what do you make of that? He's a Jewish banker. I have yet to meet a wealthy Jewish person who hates gold. It's a cultural thing. They didn't build that calf out of gold for no reason.

How many Americans, Europeans are actually holding physical gold at home? Not too many. The money is being spent foolishly on toys and other short term valued gimmicks.

 

 

Fri, 06/15/2012 - 14:25 | 2530139 prole
prole's picture

Yea I'm sure you are right poster:

Throughout all the thousands of years of recorded history, gold has never "collapsed" Gold has never once in recorded history ever on the Earth found itself "technically worthless" but this time it's going to be different!

They brought Gold to Jesus to honor him, but this time get ready for the collapse of gold!

I'm just saying I believe you, and when the price of gold collapses, could you give me a heads up so I can scoop up a few tons of the stuff? TIA!

Fri, 06/15/2012 - 19:57 | 2531064 HungrySeagull
HungrySeagull's picture

What will matter is those who have gold and or silver and those who dont.

Fri, 06/15/2012 - 13:40 | 2529922 DaveA
DaveA's picture

Exponential functions are better characterized by their "half-life", i.e. how long does money take to lose half its value. For example, at two percent annual inflation, prices double in 35 years. Other examples:

Germany 1920-23 24 days
Zimbabwe 2007-09 6.4 days
China 1947-49 5.6 days
Serbia 1992-94 34 hours
Hungary 1945-46 8 hours

It's a myth that you need bank credit to spark a hyperinflation. If banks won't lend, the government can just give money away directly, as salaries, pensions, food stamps, etc. Eventually the expansion of base money overcomes the contraction of credit money, and prices explode. Since this newly-created money is not debt, the Fed can't call it back in by raising interest rates.

Fri, 06/15/2012 - 17:12 | 2530776 hazenyc
hazenyc's picture

Nice data.  In any of those cases did they see it coming, or was it kind of out of nowhere and abrupt?

 

Also, there's been talk of monetary hyperinflation ever since the TARP program was passed years ago, so if not then, why now?

Sat, 06/16/2012 - 00:58 | 2531434 DaveA
DaveA's picture

Because every saver struggles with two opposing fears. If you fear exhausting your savings, you spend less. If you fear that your savings are being devalued, you spend more. No one knows how much money a central banker must print for the second fear to overcome the first -- it's highly dependent on culture and psychology. But once this invisible line is crossed, prices triple or quadruple overnight with no increase in base money or wages.

The central banks can either stop there, or they can print until the world reverts to a de facto gold standard. Either way, the real incomes of government employees and dependents dwindle almost to nothing, freeing up resources for the private sector to recover (if said private sector isn't dragged into the street and shot by government thugs).

Fri, 06/15/2012 - 18:17 | 2530907 Oldrepublic
Oldrepublic's picture

http://www.tldm.org/News12/HemingwayGermanInflation1922.htm

report of Ernest Hemingway on Germany inflation of 1922

Fri, 06/15/2012 - 13:43 | 2529931 Zola
Zola's picture

Ah the same linear delusional thinking as skiers on an avalanche slope. You can't tell when or how the avalanche starts, but you know that the conditions are favorable. All it will take is the treasury bubble to pop with massive debt to GDP in USSA and then, when the fed will print , BOOM... 

Fri, 06/15/2012 - 13:48 | 2529944 reader2010
reader2010's picture

Marc Faber once said, at the end of a society and civilization, the ruling elite have always become so corrupt. Hyperinflationary pressures to peasantry have always generated radical regime changes. This Time is Different?

Fri, 06/15/2012 - 13:46 | 2529953 reader2010
reader2010's picture

Marc Faber once said, at the end of a society and civilization, the ruling elite have always become so corrupt. Hyperinflationary pressures to peasantry have always generated radical regime changes. This Time is Different?

Fri, 06/15/2012 - 13:46 | 2529955 Bear
Bear's picture

I find it very curious that none of the countries on this list ar English speaking countries. Is there something about English law that would influence this?

Fri, 06/15/2012 - 17:45 | 2530840 Oldrepublic
Oldrepublic's picture

Save Your Confederate Money Boys, The South Shall Rise Again

Fri, 06/15/2012 - 13:52 | 2529971 Abraxas
Abraxas's picture

I lived through one of these hyper-inflations and I can tell you it’s no picnic. I was always paid at the last Friday of the month and as you can imagine got screwed over multiple times. Then I lost my job like the other 70% of people my age, but that was a blessing in disguise, because I worked as needed and got paid right away, so I could run to the street and exchange what I got for a steady currency (US$ was popular). When you need something, you go back to the street with your $$$ to buy the local currency and then run to buy what you need before the price goes up. No picnic, I tell you.

Fri, 06/15/2012 - 13:58 | 2529995 aerojet
aerojet's picture

Argentina?  Nicaragua?

Fri, 06/15/2012 - 14:03 | 2530010 newworldorder
newworldorder's picture

I feal your past problem on hyperinlation. Those of us who have not experienced it cannot fully unerstand what it means. That said however - you had a way out. The USD and and a functioning FX system outside your country.

What we are talking about here is TOTAL RESET: No USD, no other fiat currency - just a reset. Are they willing to do it voluntarily? I think not. This will be a forced event - Forced by circustances beyond their control and then only just prior to the appearance of pitchforks and torches.

Fri, 06/15/2012 - 14:14 | 2530069 kekekekekekeke
kekekekekekeke's picture

tell us more please! What would you do differently?  Submit a guest post!

Fri, 06/15/2012 - 14:28 | 2530155 Abraxas
Abraxas's picture

To tell you the truth, gold wasn't too big. US$ was. Sure gold was better than the worthless paper, but most of the people couldn’t afford it. What I would do differently if I knew then what I know now? I would borrow as much of the local currency as I could and then buy steady currencies with it. Then I’d wait a month and pay off my debt with the fraction of what I borrowed.

Since in the current environment there are no safe currencies any more (as the newworldorder above noted), then I have to concur that the only way out is gold (and his little brothers and sisters).

Fri, 06/15/2012 - 14:45 | 2530248 kekekekekekeke
kekekekekekeke's picture

thanks for the affirmation re: PMs!

Fri, 06/15/2012 - 18:09 | 2530881 Oldrepublic
Oldrepublic's picture

I was in Bolivia and Argentina during hyperinflation periods. Quite interesting. Also Russia just after breakup of Soviet Union.

I remember an incident in La Paz Bolivia during the  hyperinflation, actually two incidents, one, I needed some small coins to use the local public telephones, went into a bank to get some coins and the guy banker, actually gave them to me for free! the second incident, when you changed a 10 dollar bill, you never actually counted the money, took too long, but measured the pile by inches!

I found it very difficult to use more than five us dollars a day, hotels, meals etc.

Fri, 06/15/2012 - 18:38 | 2530949 Abraxas
Abraxas's picture

See, it was easy to count for us as they printed 5 000 000 000 notes. I'm not even kidding.

Fri, 06/15/2012 - 13:53 | 2529980 kekekekekekeke
kekekekekekeke's picture

durable goods bitches

make your own paraffin candle lanterns

while you stll can

Fri, 06/15/2012 - 13:56 | 2529990 Bastiat
Bastiat's picture

In a weird sort of symbolic fractal fore-echo of inflation Madonna flashed a nipple then 2 days later, her butt on stage.  Maybe over the weekend she'll do a whole donkey act while singing "Respect Yourself."  That would clinch it. 

Fri, 06/15/2012 - 14:06 | 2530029 FeralSerf
FeralSerf's picture

Dollars will be replaced with Googolplexians.

Fri, 06/15/2012 - 14:10 | 2530048 adventure007
adventure007's picture

Great Book from Peter Bernholz. This guy has done more research on Inflations and Hyperinflations. All instances of Hyperinflations expect France 1789 happened in the environments of Paper money under Central Planning using Currency manipulations and price fixing by the bueraucrats. There were no instances of Hyperinflations (defined as monthly inflation of 40% or higher) under the Gold and Silver standard in all the history of the existence of money.

Fri, 06/15/2012 - 14:51 | 2530279 Spigot
Spigot's picture

I'm surprised to not see a DMAT entry for anything over 100% inflation in a month (Doesn't Matter After That).

Fri, 06/15/2012 - 15:05 | 2530333 DavosSherman
DavosSherman's picture

3,800 currencies have all been shot to shit and people still hate metal.  Proof of just how fucking stupid people can be.

Fri, 06/15/2012 - 15:12 | 2530368 Grand Supercycle
Grand Supercycle's picture

Rally warning continues...

SPX & EURUSD bullish daily charts dominate further.

As mentioned, shorts will be slaughtered next week.

Fri, 06/15/2012 - 15:18 | 2530389 news printer
news printer's picture

Changing gold into paper money. Taken from the Arlequin Actionist (1720)

http://www.marketoracle.co.uk/images/2010/Dec/JohnLawCartoon.png

Starving billionaires.

http://moneytipcentral.com/wp-content/uploads/sarving-billionaires.jpg

http://www.marketoracle.co.uk/Article24909.html

http://moneytipcentral.com/inflation-in-america-what-will-hyperinflation...

examples of just how fast inflation pushed prices up during the crisis:

  • People collected their wages in suitcases.
  • One person, who left their suitcase unattended, found that a thief had stolen the suitcase but not the money.
  • One boy, who was sent to buy two bread buns, stopped to play football and by the time he got to the shop, the price had gone up, so he could only afford to buy one.
  • One father set out for Berlin to buy a pair of shoes. When he got there, he could only afford a cup of coffee and the bus fare home.

http://www.bbc.co.uk/schools/gcsebitesize/history/mwh/germany/crisis1923...

Fri, 06/15/2012 - 15:42 | 2530474 egoist
egoist's picture

Wallace And Gromit In A Close Shave: "Now THAT'S cleaver!" as they're about to be devoured by a sheep shroning machine.  Seems applicable.

Fri, 06/15/2012 - 17:00 | 2530740 Dr. Gonzo
Dr. Gonzo's picture

The first major country that goes to a gold standard in response to the current economic destruction will inadvertantly kill all paper money EVERYWHERE. That's why they can never allow this to happen.

Fri, 06/15/2012 - 17:06 | 2530760 hazenyc
hazenyc's picture

Well a nice hyperinflation would certainly 'fix' the housing market. lol

Fri, 06/15/2012 - 18:11 | 2530883 steve from virginia
steve from virginia's picture

 

 

 

Article left some things out:

France 1789-96 French Revolution/Bonaparte 143.26%

Weimar Republic (ex-German Empire) 1922-23 post-WWI 29,525.71

Austria (ex-Austro-Hungarian Empire) 1921-22 post-WWI 124.27

Poland 1921-24 post-WWI 187.54

USSR (ex-Tsarist Russia) 1922-24 post-WWI Revolutionary War 278.72

Hungary (ex-Austro-Hungarian Empire) 1923-24 post-WWI 82.18

Greece 1942-45 WWII/Civil war 11,288.00

Hungary 1945-46 post-WWII/Soviet occupation 1.3x10^16

Taiwan 1945-49 post-WWII/ Communist Revolution 398.73

China 1947-49 post-WWII/Communist Revolution 4,208.73

Bolivia 1984-86 Series of Military governments/coups 120.39

Nicaragua 1986-89 Sandinista/Contra civil war 126.62

Peru 1988-90 Sendero Luminosa civil war 114.12

Argentina 1989-90 Military regime/Falklands war 196.60

Poland 1998-90 Breakup of USSR 77.33

Brazil 1989-90 post-military regime 84.32

Yugoslavia 1990 Civil war 58.82

Azerbaijan 1991-94 Breakup of USSR 118.09

(Republic of) Congo (ex-Zaire) 1991-94 First Congo war 225.00

Kyrgystan 1992 Breakup of USSR 157.00

Serbia (ex- Yugoslavia) 1992-94 Civil war 309,000,000.00%!

Ukraine 1992-94 Breakup of USSR 249.00

(Republic of) Georgia 1993-94 Breakup of USSR 196.72

Armenia 1993-94 Breakup of USSR 438.04

Turkmenistan 1993-96 Breakup of USSR 62.50

Belarus 1994 Breakup of USSR/dictatorship 53.40

Kazakhstan 1994 Breakup of USSR 57.00

Tajikistan 1995 Breakup of USSR 78.10

Bulgaria 1997 post- USSR breakdown 242.70

Zimbabwe 2007-09 Civil disturbance/UN sanctions 2,600.00

Not included are Great European Inflation (16th century: conquest and war), Constitutional Confederation (USA: Revolutionary war 1777-1795), Confederate States of America (Civil war 1863-65). The first was caused by flow of gold and silver from Spanish conquests Western Hemisphere: both confederation hyperinflations were caused by counterfeiting by adveraries. Post-WWI inflations were caused by shortage of consumer goods, flow of gold into Europe after 1918. 

War and military goverments are expensive particularly nuclear-armed USSR. The fixed ruble regime ended with the Soviets leading to deprecated post-ruble currencies.  

All hyperinflations are currency arbitrage, BTW. You need 2 currencies (or more) trading.

Fri, 06/15/2012 - 22:44 | 2531262 robertocarlos
robertocarlos's picture

If 99% of us have no gold then wouldn't there be some kind of riot on Monday if we all get wiped out?

Sat, 06/16/2012 - 20:45 | 2532908 unemployed
unemployed's picture

If they have inflation in the US,  all those dweebs will pay off their mortgages and there wont be any more foreclosures and all those CDS the banksters bought will be zeroed.

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