Hyperinflation in the World

Hyperinflation refers to excessive rise in the rate of inflation. Hyperinflation in the World is an important economic phenomenon, affecting different countries at different times, be it in the historic past or in the present.

Hyperinflation in the world is more or less a rare economic phenomenon, affecting economy of a country not on a continuous basis, but during specific time periods, owing to certain particular economic conditions. A careful study of global Hyperinflation reveals that the condition prevailed in several countries across the world, including Germany, Yugoslavia, China, Zaire and many more.

German Hyperinflation:

Germany suffered Hyperinflation in its worst form in the 1920s, during the post-First World War periods. In fact, the German nation is considered to be the most well-known instance of Hyperinflation.

Hyperinflation began in Germany sometimes in the beginning of the 1920s. The situation did not appear to be a serious one in the initial stages, but started spreading its tentacles and assumed full form since 1921. Very soon, it spread like a wild fire, taking the entire German nation in its deadly clutches. Hyperinflation continued in Germany until the close of 1923. However, what was shocking about German Hyperinflation in this period was that the prices increased to five times more than all other individual weeks in that year.

The actual scenario:

In the initial stages during 1920 and in the beginning of 1921, the inflationary signs visible in the German economy were assorted in nature. Though the food prices were escalating, the exchange rate of dollar with respect to the German Mark showed signs of decline, along with the prices of commodities imported from the United States of America.

Hyperinflationary signs became all the more evident in the following year, that is, from the middle of 1921 to that of 1922. This was a period when the overall German prices increased to as many as six times, indicating that the purchasing power of German Mark reduced remarkably. However, this was only the dawn of Hyperinflation in Germany, with respect to the actual intensity of the situation.

Between 1922 middle to 1923 middle, prices in Germany increased at a tremendous rate, to as much as 100 times or even more. In fact, the intensity of Hyperinflation in Germany could be best understood, when measured with respect to the prices of food products. In the closing years, Hyperinflation in Germany was 135 times more than it was in the initial stages. When measured with respect to the purchasing power of German Mark, Inflation was the highest, about 222 times more. However, this worst condition was still considered to be a better one, compared to that which occurred between July-November, 1923. During this period, Hyperinflation in Germany rose to about a million or billion times more than the earlier rate of increase.

Effects:

Hyperinflation in Germany resulted in the remarkable re-allocation of wealth, excluding the value of all bank savings and policies related to life insurance. By the year 1924, the German wealth was thoroughly re-allocated. As far as the social impacts of German Hyperinflation are concerned, the middle-class was the worst-affected lot, while the rich class remained unaffected as usual. However, the wealth retained in the accounts of foreign banks, together with land, gold and other expensive metals jointly preserved the value.

Hyperinflation in Zaire and Yugoslavia:

Zaire and Yugoslavia are two countries which underwent Hyperinflation quite recently, from 1989-1996 and from 1989-1994 respectively.

Chinese Hyperinflation:

China experienced Hyperinflation in the historic days, during the rule of the Yuan Dynasty. Being the foremost Fiat Currency user, the Fiat paper currency was printed in excessive amounts during the Yuan Dynasty, for financing the battles fought during that period. Together with a handful of other factors, this situation resulted in Hyperinflation to occur in China. However, this was not the first and last case of Hyperinflation on Chinese mainland. Hyperinflation in China was a recurrent economic phenomenon. The worst and severe of all Chinese Hyperinflation affected the nation between 1948 and 1949.