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Hyperinflation in Argentina
The note with the largest face value that has been put into circulation: "100 million trillion pengő", ie 100 trillion pengő (10 20 ), on July 11, 1946 in Hungary
Highest German banknote ever printed, 100 trillion marks , February 15, 1924
Zimbabwe $ 100 trillion , 2009

Hyperinflation is a form of inflation in which the price level increases very quickly. There is no generally accepted definition, but a rule of thumb established by Phillip D. Cagan in 1956 of monthly inflation rates of 50% (equivalent to an annual rate of around 13,000%) is widespread. Put simply, hyperinflation is uncontrollable inflation with an extremely high monthly rate. In most cases, hyperinflation only lasts for a short time and ends in a currency reform .


Before the 20th century, hyperinflation was rare, because when a certain level of inflation was exceeded , the economies would switch to unminted precious metals as a substitute for money or to exchange in kind . The increasing spread of uncovered money ( fiat money ) made hyperinflation possible. The cause of (hyper) inflation is always the state. If a state does not collect enough taxes to finance its expenditures, a budget deficit arises because it has to permanently borrow to cover its expenditures (fulfillment of performance promises). He can cover this deficit with debt instruments, government bonds . Most government bonds are unindexed nominal bonds .

If prices rise relative to the bonds, the nominal value of the bond remains the same. As a result, it relatively loses value. Investors suffer a real loss, but not a nominal one. Conversely, the issuer, the state, can repay a smaller real repayment value and thus make a real profit. In doing so, the state is trying to reduce its budget deficit. Governments can use monetary policy to control inflation and thus contribute to the desired effect. In the event of sudden and rapid increases in inflation, long bonds can be repaid relatively cheaply by the state because they do not provide a framework for legal changes. However, as a result of the higher inflation, new creditors are asking for higher nominal interest rates on new bonds, and their trust in bonds with a long maturity is also being lost. This will shorten the terms of the newly issued bonds. In order to pay for old bonds and to finance the new high nominal interest rates, governments have to issue more and more new bonds in order to obtain new capital. If there are still deficits in the budget, the government will have to start all over again. Ultimately, a government slips into hyperinflation with its currency and ultimately undermines trust in it.

While normal inflation is mostly justified by economic causes, hyperinflation is almost always associated with severe economic shocks as a result of war, civil war or social upheaval. The Soviet hyperinflation from 1919 to 1922 aimed to abolish money as a means of payment.

The alleged "economic war" that Hugo Chavez started in Venezuela in the 2010s against imaginary enemies lasted until autumn 2018 for hyperinflation, in which the vendors' suppliers set new prices every three hours.

Capital flight

Property loan from the municipality of Vöhrenbach to finance the Linach Dam during the hyperinflation of 1923

As with inflation, investments in foreign currencies can be made very quickly. In order to stop the associated flight of capital , foreign exchange control and massive foreign exchange restrictions occur during hyperinflation . In view of the global cashless payment traffic that has been possible since the end of the 20th century, however, such measures are only possible to a limited extent.

Escape to material assets

Hyperinflation often leads to a “flight into real assets” for investors and to a large loss of all other financial investments such as cash and cash equivalents. B. Bonds denominated in the relevant currency. Since the sharply increased demand typically leads to an increased shortage of supply, this is a self-reinforcing process.

Real assets are primarily real estate and raw materials , but also precious metals or stocks. The consequence is often a temporary shortage of means of payment, for example when the customers of a bank withdraw all of their savings.


Hyperinflation places a special burden on a society. Not all prices and wages increase equally, so inflation affects the income distribution in a society. Wealth is thus transferred from the lender, for example the lender or lender, to the borrower, for example the borrower or borrower. Debts no longer have the same purchasing power as they did when they were incurred. The real interest rate typically falls as well. For example, payments to pensioners are not adjusted to the price level, they lose their purchasing power in times of sharp price increases and are often pushed to the edge of the subsistence level. Any savings that have been saved for years suddenly have significantly less purchasing power. A very high rate of inflation thus divides society.

Relative prices could no longer show the real scarcity of goods; this can come about, for example, with rigid state interventions. As a result, it is hardly possible for consumers to find out the cheaper price; their demand behavior is severely impaired. This makes markets inefficient and can no longer allocate resources optimally.

The constant fluctuations in the price level result in price adjustment costs, companies have to adjust their price lists so often that they can no longer offer at fixed prices. Individual behavior that is inefficient from a societal point of view now becomes rational.

Distortions make it more difficult to make rational decisions about the future. Very high inflation creates uncertainty and opaque market situations, which is why companies reduce their long-term capital investments, such as in research and development. However, because such investments are important to new technology development and competition, they are associated with economic growth and prosperity. Thus, high inflation reduces economic growth and thus the standard of living in the long term.

Due to the time difference between the generation and the time of payment of taxes, real tax losses are realized that would not play a significant role in the case of moderate inflation.

The daily shopping of consumers is also problematic, because of the large amounts of money, consumers have to carry a lot of physical money and pay with it. As a further consequence, the official means of payment is being displaced by exchanges in kind or unofficial currencies.

In such situations the so-called sole effect occurs, which describes the waste of resources by reducing the cash holdings. Business people waste a lot of time and energy organizing their cash management. This means that fewer factors are available for the production of goods.

See also inflation and its effects .


In order to stop hyperinflation, a government must sustainably and credibly restore confidence in its own currency.

The following theses are discussed in economics :

  1. Strengthen the central bank's assets. In the case of hyperinflation, confidence in a currency is disturbed within one's own population and abroad. It was previously believed that there was a link between the growth of money supply and confidence in a currency. This relationship has come under pressure in economic doctrine since the 1990s, as many central banks expand the money supply without causing inflation. Empirical data show that deflation sometimes occurs ( see Deflation in Japan ). Recent studies show a connection between the intrinsic value of the asset positions in the central bank balance sheet and the confidence in a currency there. On the balance sheet of a central bank, assets such as B. Government bonds reported at book value. In his doctoral thesis, Ingo Sauer shows a strong empirical connection between the market value of these balance sheet items and confidence in a currency for hyperinflation.
  2. Defend your own currency in the foreign exchange market. Another instrument discussed is the possibility of defending one's own currency on the foreign exchange markets against speculation and thus against falling confidence among professional participants in the foreign exchange market. The central bank tries to sell assets and buy back its own currency on the foreign exchange markets. A particularly well-known example is Black Wednesday , on which the Bank of England tried to defend the pound exchange rate against speculators like George Soros .

In a hyperinflation, credibility in the government and the central bank is weakened. There is often a change of government in order to strengthen or regain public confidence. A strongly austerity fiscal policy and the reduction of budget deficits in the state budget is currently the predominant motive for action to strengthen confidence in a currency.

Quantity equation of hyperinflation

An explanation for the rise in the general price level during hyperinflation is provided by Irving Fisher's quantity equation :

This formula can be transformed into:

The price level rises accordingly, among other things.

  • proportional to the amount of money (if, for example, the central bank puts more money into circulation, but the speed of circulation and the number of transactions remain unchanged);
  • likewise proportional to the velocity of circulation if the amount of money and the number of transactions remain unchanged;
  • also proportional to the reciprocal value of the number of transactions (e.g. if the economic cycle is disrupted by catastrophes , if, for example, the availability of supplies suddenly breaks down but the demand remains, whereby the amount of money and the speed of circulation should remain unchanged).

The weak empirical evidence of this theory was demonstrated by the Japanese deflation and, most recently, by Ingo Sauer's research on hyperinflation.

  1. Phillip D. Cagan:: The Monetary Dynamics of Hyperinflation. In: Milton Friedman (Ed.): Studies in the quantity theory of money . University of Chicago Press, Chicago 1956, pp. 25–117 ( PDF; 1.2 MB ( Memento from July 13, 2015 in the Internet Archive )).
  2. ^ A b Paul C. Martin: When will the national bankruptcy come? . Munich: Wirtschaftsverlag Langen-Müller / Herbig 1983, ISBN 3-7844-7119-6
  3. ^ A b Nicholas Gregory Mankiw: Macroeconomics . Translated from the English by Klaus Dieter John. 5th edition. Schäffer-Poeschel Verlag, Stuttgart, 2003. ISBN 978-3-7910-2026-6 , pp. 122-123.
  4. ^ A b c Michael Burda, Charles Wyplosz: Macroeconomics A European Text . 4th edition. Oxford University Press Inc., New York, 2005. ISBN 978-0-19-926496-4 , a pp. 377-378. b and c pp. 397-402.
  5. ^ Refugee misery on Venezuela's borders , Radio SRF "International", November 3, 2018; Minute 11
  6. ^ Refugee misery on Venezuela's borders , Radio SRF "International", November 3, 2018; Minute 14
  7. Olivier Blanchard , Gerhard Illing : Macroeconomics . 5th edition. Pearson Studies, Munich 2010. ISBN 978-3-86894-038-1 . P. 52.
  8. ^ Lloyd B. Thomas: MONEY, BANKING and FINANCIAL MARKETS . South-Western, Thomson Corporation, China, 2006. ISBN 978-0324176735 . Freely translated from English. P. 578.
  9. ^ Ingo Sauer: The influence of the central bank's assets on the exchange rate and the price level: essays and empirical analyzes. In: Dissertation. Department of Economics at the Johann Wolfgang Goethe University Frankfurt am Main, 2019, accessed on January 15, 2021 (English).


There are several historical episodes of hyperinflation with monthly inflation rates in excess of 50 percent. examples are

Period country result Remarks
1919-1922 Soviet Russia
1922-1924 Soviet Union maximum monthly inflation rate of 212%
1919-1923 Deutsches Reich 1,000,000,000,000 marks

→ 1 Rentenmark (November 15, 1923)

maximum monthly inflation rate of 29,525% in October 1923; 11 months over 50%

see: German inflation 1914 to 1923

1919-1924 Austria 10,000 crowns

→ 1 schilling (December 20, 1924)

maximum monthly inflation rate of 129% in August 1922; 4 months over 50%
1921-1926 Hungary 12,500 corona (crowns)

→ 1 pengő (December 27, 1926)

maximum monthly inflation rate of 98% in July 1923; 5 months over 50%
1921-1924 Poland 1,800,000 Polish marks

→ 1 zloty (April 14, 1924)

maximum monthly inflation rate of 275% in October 1923; 9 months over 50%
1923 Free City of Gdansk Introduction of the Gdańsk guilder maximum monthly inflation rate of 2,440%
1943/44 Greece 50,000,000,000 first drachmas

→ 1 second drachma

maximum monthly inflation rate of 13,800%
1945 Taiwan maximum monthly inflation rate of 399%
1945-1946 Hungary 400,000,000,000,000,000,000,000,000,000 pengő

→ 1 forint

highest inflation ever reached with a maximum monthly rate of 41.9 quadrillion percent (tripling of prices per day)
1943-1949 People's Republic of China 15,000,000,000,000,000,000 yuan

→ 1 renminbi

maximum monthly inflation rate of 5.070%
1985 Bolivia
1988 Nicaragua
1988 Socialist Federal Republic of Yugoslavia
1989 Poland 10,000 Polish Zloty (ZIP)

→ 1 New Polish Zloty (PLN) (January 1, 1995)

1989/1990 Brazil maximum monthly inflation rate of 84%
1989/1990 Argentina maximum monthly inflation rate of 197%
1990 Peru maximum monthly inflation rate of 397%
1990-1994 Bosnia and Herzegovina and Yugoslavia maximum monthly inflation rate of 322%
1990-1994 Yugoslavia the third highest inflation ever reached with a maximum monthly inflation rate of 313 million%
1990-1994 Zaire maximum monthly inflation rate of 250%
1992 Russia 1000 rub

→ 1 RUB

maximum monthly inflation rate of 245%
1992 Ukraine maximum monthly inflation rate of 285%
1992-1994 Georgia maximum monthly inflation rate of 211%. See Georgia Economy
1993 Armenia maximum monthly inflation rate of 438%
1993 Turkmenistan maximum monthly inflation rate of 429%
1994, 1996/1997 Angola
2006-2009 Zimbabwe Abolition of the currency the second highest inflation ever reached with a maximum monthly inflation rate of 79.6 billion% or even 500 billion%, see also Zimbabwe dollar .
2011–2012 Belarus 10,000 BYR

→ 1 BYN

see Belarusian ruble
2016 -? Economic crisis in Venezuela 100,000 VEF

→ 1 VES

2018: 80,000%
2019– Zimbabwe Hyperinflation (300+ percent) was officially declared again in October 2019 on the basis of IAS 29 after the 2006–2009 period .

There was also severe inflation before the 20th century:

Period country Remarks
1166 Empire of China
1620-1623 Holy Roman Empire (Central Europe) Tipper and luffing time The value of the cruisers fell from 1 Reichstaler to 124 Kreuzer (end of 1619) to 1 Reichstaler to over 600 (regionally also over 1000) Kreuzer (1622/23)
1719-1720 France
1789-1796 Kingdom of France / French Constitutional Monarchy / First French Republic see assignat
1861-1865 USA , especially southern states


  • Adam Fergusson : The End of Money (Original English Title: When Money Dies ); Finanzbuch-Verlag, Munich 2011 ISBN 978-3-89879-627-9 .
  • Bernholz, Peter (2006): Monetary Regimes and Inflation. Edward Elgar.
  • Milton Friedman (Ed.): Studies in the quantity theory of money. University of Chicago Press, Chicago 1956.

Individual evidence

  1. a b c d Uwe Westphal: Macroeconomics: Theory, Empiricism and Political Analysis . 2nd Edition. Springer-Verlag, 2013, ISBN 978-3-642-78955-7 , p. 530 (data from Michael Bruno: High Inflation and the Nominal Anchors of an Open Economy, Princeton 1991, p. 2).
  2. World Hyperinflations | Steve H. Hanke and Nicholas Krus | Cato Institute: Working Paper . Cato.org. August 15, 2012. Archived from the original on October 17, 2012. Retrieved on January 12, 2021.
  3. Archive link ( Memento from November 4, 2004 in the Internet Archive )
  4. Uwe Jean Heuser: weltwirtschaft: The change of Jeffrey Sachs . In: The time . No. 38/2003 ( online ).
  5. http://2001662.homepagemodules.de/t475443f11745512_Nicaragua_Der_Sieg_der_Sandinisten.html
  6. Inflation and price stabilization policy in Yugoslavia, Egon Žižmond, Faculty of Economics and Business Administration, University of Maribor, Maribor, Yugoslavia, published in: Post-Communist Economies, Volume 3 Issue 2 June 1991, pages 187-200, informaworld
  7. ^ Banka Slovenije
  8. Archive link ( Memento from April 15, 2005 in the Internet Archive )
  9. Archive link ( Memento from December 18, 2004 in the Internet Archive ), see also Fernando Henrique Cardoso
  10. a b c Heimo Losbichler: Cash flow, investment and financing (=  fundamentals of financial management . Volume 3 ). tape 3 . Linde, Vienna 2015, ISBN 978-3-7094-0678-6 , pp. 106 (data from markets and certificates March / April 2012, RBS-Bank).
  11. https://doi.org/10.1017/S0022216X00011640
  12. Archive link ( Memento from September 1, 2004 in the Internet Archive )
  13. https://web.archive.org/web/20071008011709/http://www.bmlv.gv.at/download_archiv/ausle_unterlagen/k_e_landesinfo_ab2.pdf (PDF)
  14. http://www.tomchao.com/hb20.html , archived copy ( Memento from May 29, 2005 in the Internet Archive ) (PDF)
  15. http://www.bpb.de/publikationen/D0THIA,0,0,Die_Finanzkrise_in_Russland_im_Gefenue_der_Asienkrise.html
  16. https://web.archive.org/web/20090919144813/http://www.us-angola.org/pressreleases/071904.htm archive link ( memento of October 30, 2004 in the Internet Archive )
  17. http://wirtschaft.t-online.de/hyper-inflation-in-weissrussland/id_52182478/index
  18. Hyperinflation: Venezuela deletes five zeros from currency , DerWesten.de, July 26, 2018
  19. Maduro removes five zeros from the Bolívar , Tagesschau, July 26, 2018
  20. Venezuela's Hyperinflation Hits 80,000% Per Year in 2018. Forbes, January 1, 2019.
  21. It's official: Hyperinflation has returned to Zimbabwe. Fin24, October 12, 2019.
  22. http://www.ex.ac.uk/~RDavies/arian/amser/chrono4.html
  23. http://www.atimes.com/atimes/Global_Economy/DK08Dj01.html
  24. Archived copy ( Memento of February 13, 2009 in the Internet Archive )
  25. 1,000,000,000,000 marks in: FAZ of July 18, 2011, page 10

Web links

Commons : Hyperinflation  - album with pictures, videos and audio files