Hyperinflation is not an unusual phenomenon. 32 countries have experienced hyperinflation over the last 100 years of which no less than 21 have experienced it in the past 25 years and 3 in the past 10 years. The United States is one of the few countries to have experienced two currency collapses during its history (1812-1814 and 1861-1865). Is it about to happen again? Words: 1450
So writes Mike Hewitt (dollardaze.org) in edited excerpts from his original article* entitled Hyperinflation Around the Globe.
This post is presented compliments of Lorimer Wilson, editor of www.munKNEE.com and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.
Hewitt goes on to say in further edited excerpts:
Hyperinflation Has Occurred in 21 Countries Over the Past 25 Years
1. Angola (1991-1999)
In the 1995 currency reform, 1 kwanza reajustado was exchanged for 1,000 kwanzas… In the 1999 currency reform, 1 new kwanza was exchanged for 1,000,000 kwanzas reajustados. The overall impact of hyperinflation: 1 new kwanza = 1,000,000,000 pre-1991 kwanzas.
2. Argentina (1975-1991)
In the 1983 currency reform, 1 Peso Argentino was exchanged for 10,000 pesos. In the 1985 currency reform, 1 austral was exchanged for 1,000 pesos argentine.
Hyperinflation continued reaching a peak annualized rate of 4,923.3 percent in December 1989. At that time, government expenditure reached 35.6 percent of GDP and the fiscal deficit was 7.6 percent of GDP.
In 1990 the Argentine government created a new monetary system and established a Currency Board in April 1991. Inflation fell from 1,344 percent in 1990 to 84 percent in 1991. In the 1992 currency reform, 1 new peso was exchanged for 10,000 australes.
The inflation rate for 1992 was 17.5 percent, 7.4 percent in 1993, 3.9 percent in 1994 and 1.6 percent in 1995. By 1995, government expenditure represented 27 percent of Argentina’s GDP. The overall impact of hyperinflation: 1 new peso = 100,000,000,000 pre-1983 pesos.
3. Belarus (1994-2002)
In the 2000 currency reform, the rublei was replaced by the new ruble at an exchange rate of 1 new ruble = 2,000 old rublei.
4. Bolivia (1984-1986)
In the 1987 currency reform, the peso boliviano was replaced by the boliviano which was pegged to the U.S. dollar.
5. Brazil (1986-1994)
By the mid 1980s inflation was out of control reaching a peak of 2000 percent. In 1986 three zeros were dropped and the cruzeiro became the cruzado. In 1989, another three zeroes were dropped and the cruzado became the cruzado novo.
In order to avoid confusion and not associate the new currency with previous monetary policy, the cruzado novo was renamed the cruzeiro with no change in value in 1990. By 1993, three more zeros were dropped from the cruzeiro which became known as the cruzeiro real.
In 1994 the cruzero real was replaced by the real, worth 2.75 old cruzeiros reais… and the following measures were enacted:
1. A constitutional amendment… which empowered the Central Bank not to finance the budget deficit
2. The Central Bank made it illegal for regional banks to buy government-issued bonds
3. Wages were frozen…
As a result of these measures, prices dropped dramatically from July 1994 onwards and by 1997 inflation had been reduced to standard international levels. The overall impact of hyperinflation: 1 (1994) real = 2,700,000,000,000,000,000 pre-1930 reis.
6. Bosnia-Herzegovina (1993)
Bosnia-Hezegovina went through its worst inflation in 1993. In 1992, the highest denomination was 1,000 dinara. By 1993, the highest denomination was 100,000,000 dinara. In the Republika Srpska, the highest denomination was 10,000 dinara in 1992 and 10,000,000,000 dinara in 1993.
7. Bulgaria (1991-1997)
In 1996, Bulgaria defaulted on its international debt and narrowly escaped a revolution. From 1991 to 1997, Bulgaria experienced hyperinflation (rates of inflation exceeding 50%) that crippled its banking system and during the winter 1996-97 hyperinflation and food shortages led to hunger protests. A currency board established in July 1997 slashed three zeroes off the currency.
8. Ecuador (2000)
Ecuador officially pegged its currency to the US dollar in September 2000 after a 75% drop in value in early January of that year.
9. Georgia (1995)
In the 1995 currency reform, 1 new lari was exchanged for 1,000,000 laris.
10. Madagascar (2004)
The Madagascan franc lost nearly half its value in 2004. On 1 January 2005 the Madagascan ariary replaced the franc at a rate of 1 ariary for five Madagascan francs.
11. Mexico (1994)
On 1 January 1993, the Bank of Mexico introduced a new currency, the nuevo peso which was equal to 1,000 old pesos. Since the Mexico Peso Crisis of 1994 the value of the Mexico peso has plummeted by almost 60%.
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12. Nicaragua (1987-1990)
Nicarauga went through a currency reform in 1988 which saw 1 new Cordoba replace 1,000 old cordobas. In the mid-1990 currency reform, 1 old Cordoba equaled 5,000,000 new cordobas. Total impact of hyperinflation: 1 old Cordoba = 5,000,000,000 pre-1987 cordobas.
13. Peru (1984-1990)
In the 1985 currency reform, 1 intis was exchanged for 1000 soles de oro… In the 1991 currency reform, 1 nuevo sol was exchanged for 1,000,000 intis. The overall impact of hyperinflation: 1 nuevo sol = 1,000,000,000 pre 1985 soles de oro.
14. Poland (1990-1993)
Poland suffered two bouts of hyperinflation. The first occurred from 1922 to 1924 when inflation rates reached 275%.[The second,] after three years of hyperinflation, resulted in currency reform in 1994 in which 10,000 old zlotych were exchanged for 1 new zloty.
15. Romania (2000-2005)
Romania is still working through steady inflation that began around the time when the Iron Curtain came down… Consumer inflation in 2000 was over 45%… In July 2005 the leu was replaced by the new leu at 10,000 old lei = 1 new leu. Inflation in 2005 was about 9%.
16. Russia (1992-1994)
Russia experienced 213% inflation during the Bolshevik Revolution and again during the first year of post-Soviet reform in 1992 when annual inflation peaked at 2520%. In 1993 the annual rate was 840%, and in 1994, 224%. The ruble devalued from about 100 r/$ in 1991 to about 30,000 r/$ in 1999.
17. Turkey (1990’s)
Throughout the 1990s Turkey dealt with severe inflation rates that finally crippled the economy into a recession in 2001…Recently Turkey has achieved single digit inflation for the first time in decades, and in the 2005 currency reform, introduced the New Turkish Lira; 1 was exchanged for 1,000,000 old lira.
18. Ukraine (1993-1995)
Inflation rates peaked at 1400% per month between 1993 and 1995 resulting in the karbovantsiv being taken out of circulation in 1996 and replaced by the hryvnya at an exchange rate of 100,000 karbovantsivi = 1 hryvnya.
19. Yugoslavia (1989-1994)
[Yugoslavia had the] second worst hyperinflationary period in recent history with a monthly inflation rate of 5 quintillion percent. Between Oct 1, 1993 and January 24, 1994 prices doubled every sixteen hours on average. At the end of it, one novi dinar = 1,300,000,000,000,000,000,000,000,000 pre-1990 dinars.
20. Zaire (1989-1996)
In the 1993 currency reform, 1 nouveau zaire was exchanged for 3,000,000 old zaires. In 1997 Zaire was renamed the Congo Democratic Republic and changed its currency to francs. 1 franc was exchanged for 100,000 nouveaux zaires. The overall impact of hyperinflation: One 1997 franc = 300 billion pre-1989 dinars.
21. Zimbabwe (1999 – 2009)
The Rhodesian dollar (R$) replaced the pound as the currency in 1970 at a rate of 2 Rhodesian dollars = 1 pound (R$ 0.71 = USD $1.00). At the time of independence in 1980, one Zimbabwean dollar (of 100 cents) was worth US$1.50…. [Inflation reached an absurd 231,000,000% in the summer of 2008. Output measured in dollars had halved in barely a decade. A hundred-trillion-dollar note was made ready for circulation, but no sane tradesman would accept local banknotes. A ban on foreign-currency trading was lifted in January 2009. By then the American dollar had become Zimbabwe’s main currency, a position it still holds today.]
The economic condition of the country continues to decline toward its rendezvous with an, as yet, unknowable catastrophe. As economic and political matters become more desperate, so will what the government considers acceptable. If a debt default cannot be engineered via continuous inflation, it will occur via a direct repudiation of obligations or a quasi-surreptitious one like the hypothetical one presented in this article…a look (not a prediction) at a series of not improbable events that could develop [and which] would change our economic world overnight. Viewed from this perspective, I don’t think such a move or something approximating it is out of the question. Words: 1300
On the surface, policy settings around the world look very inflationary with large fiscal deficits and aggressively easy monetary policies yet it is hard to see inflation gaining any traction [with] global activity so weak and the monetary transmission process so impaired in many countries. There is more of a deflationary than inflationary tone to the economic environment and it does not look as if this will change any time soon.
I have been reading a lot lately about the coming hyperinflation in America… [and while] I respect many of the writers [who express that opinion] I think they are jumping the gun. At this point none of the economic or political factors required to set off hyperinflation are present – and a careful analysis of theory, fact, and history leads me to conclude that inflation/stagflation is our future. It is quite a leap of fancy to say we are certain to have hyperinflation. Words: 2780
A look at the trend in prices of the Big Mac clearly shows that investors are being penalized with higher inflation, lower income from bonds and certificates of deposit and being led to believe that the economy is growing better than it really is. [Let me explain.] Words: 1012; Charts: 2
The public’s estimates and predictions of inflation are significantly, and systematically, related to the demographic characteristics of the respondents…[and] even after we hold constant income, age, education, race, and marital status…women in our survey tended to think inflation was 1.9 percentage points higher than men. [There are more interesting findings, so read on.] Words: 987
Many investors are treating inflation as a certainty because the Fed has expanded its balance sheet to unheard of levels through its quantitative easing strategy. Some have even gone so far as to say that this program will utterly destroy the U.S. currency. To demystify this conclusion, I’m going to explain quantitative easing and why the Fed is using this monetary strategy. Afterward, I’ll explain why gold is still positioned to rise even if inflation continues to be low. Words: 786
If inflation starts to head towards 5%, you can be sure it’s headed for 10% because they don’t have the ability to stop it now. The only antidote they have to the mess we are in, which is massively excessive debt reinforced by derivatives, is unlimited money printing. The idea that you can withdraw the punch bowl or sharply raise interest rates, it just doesn’t exist, unless you want to take a complete deflationary collapse.
James Turk believes hyperinflation is ahead. Bob Prechter believes massive deflation is coming. An interesting discussion between the two takes place in this audio. Ultimately, both lead to Depression. Only the route taken differs, but that is important.
Whether our current economic crisis will end with massive inflation or in a deflationary spiral (ultimately, either one results in a Depression) is more than an academic one. It is the single most important variable for near and intermediate term investing success. It is also important in regard to taking actions which can prepare and protect you and your family. [Here is my assessment of what the future outcome will likely be and why.] Words: 1441
The developed economies of the world have opened the money spigots…[and this] massive money and credit creation is sitting in the banking system like dry tinder just waiting for a spark to set it ablaze. How quickly it happens is anyone’s guess, but once it does we are likely to be enveloped in a worldwide inflation unlike anything before ever witnessed. [Let me explain further.] Words: 625
People get confused about the nature of mass inflation, hyperinflation, and what causes both. [Let me clarify the nature and causes of each.] Words: 930
The U.S. economic and systemic-solvency crises of the last four years only have been precursors to the coming Great Collapse: a hyperinflationary great depression. Outside timing on the hyperinflation remains 2014, but there is strong risk of a currency catastrophe beginning to unfold in the months ahead…moving into a full blown hyperinflation [in a few] months to a year… depending on the developing global view of the dollar and reactions of the U.S. government and the Federal Reserve. [Let me go into more detail.] Words: 2726
Daniel Thornton, an economist at the Federal Reserve Bank of St. Louis, argues that the Fed’s policy of providing liquidity has “enormous potential to increase the money supply,” resulting in what The Wall Street Journal’s Real Time Economics blog calls “an inflation inferno.” [Personally,] I think it’s too soon to make significant changes to a portfolio based on inflation fears. Here’s why. Words: 550