Extreme inflation levels in U.S. history are remembered as nearly 15% per year in the 1970s and post-WWII. Hyperinflation is unchecked inflation that includes rapid price increases in an economy, typically at rates exceeding 50% per month, combined with a devalued currency. It can result from unstable governments or wars. Five significant events reveal how a country's currency is devalued during inflationary periods.

1. Germany's 100 Trillion Mark (1923)

In 1923, the Weimar Republic of Germany, which arose following World War I, defaulted on reparations payments mandated by the Treaty of Versailles. Massive political instability, a striking workforce, and military invasions from France and Belgium ensued, giving rise to Hitler's popularity. The republic rapidly printed new money, causing hyperinflation and devaluation of the currency.

The 澳洲幸运5开奖号码历史查询:exchange rate of Marks/U.S. dollars rose from 17,000 to 4.2 trillion in less than a year. Banknotes worth 1 million marks were followed by the issuance of the 100 trillion Mark. The former lost value so quickly that citizens began using the currency as notepads for wallpaper.

2. Hungary's 100 Quintillion Pengo (1946)

Hungary's hyperinflation bout resulted in the largest official banknote in history, the 100 quintillion pengo. The destruction following WWII meant a destroyed industrial base and a lack of governing institutions. The Hungarian National Bank increased the money supply following the hostilities. The hyperinflation resulted in monthly inflation rates of 28 million percent in June 1946 and 12,952 trillion percent in July 1946.

3. Zimbabwe in the 21st Century (2008-09)

This 100 trillion dollar note is one of the world’s largest denominations of currency, issued in Zimbabwe in 2008. The first hyperinflation of the 21st century occurred in Zimbabwe, which devalued its currency. Zimbabwe experienced an economic decline caused by failed monetary and fiscal policies, resulting in an inflation rate of 231 million percent and an unemployment rate of over 90%.

4. Ancient Rome (310-344 AD)

In the days before fiat currency, the economy of the Roman Empire was monetized with gold and silver. When Roman rulers decided to physically debase the currency with le🐓ss precious metals and more common metals like copper or bronze, merchants responded by raising the prices of their goods. Coins contained less precious metal than their nominal value.

The debasement of coins was a strategy used due to an inefficient tax system. The Roman state did not secure loans to cover its debts, so when expenses increased, such as during war, the currency was debased to help pay for the costs. Inflation prevailed in the third and fourth centuries AD, and the older currency system was eventually replaced.

5. The U.S. Continental Currency

Hyperinflation in the U.S. occurred during the Revolutionary War. In the days before the Federal Reserve Bank and the U.S. dollar, the Continental Congress issued new currencies to help fund the war efforts. Currency changed in appearance from colony to colony, leading to rampant counterfeiting, both by domestic citizens and ✃groups who secretly wanted to see the young nation fail in its attempt at independence.

The rapid devaluation of the fledgling currency gave rise to the term "Not worth a Continental," as the Continental saw inflation rise from 4% in 1777 to 130% in 1780. The Constitution in 1787 brought fiscal stability to America and created a common currency. The new doctrine launched a national bank and gave Congress the authority to tax.

The Bottom Line

Economists consider hyperinflation anything exceeding 50% inflation in less than a year. In the United States, if economists see signs of inflation or a threat of hyperinflation, the Federal Reserve will implement any monetary policy tools allowed to try to maintain a 2% inflation rate.