Miners, farmers, tour operators, nongovernmental organizations, embassies and Zimbabweans living abroad can now purchase 15, Zimbabwean dollars with a U. For others the official rate remains at per USD. On the black market that same tourist can do much better, ZWD 3. This will end, as do all hyperinflations, with a regime change: either a new monetary system, a new political setup, or both. It began in January , in what was left of Yugoslavia, and peaked in January , when the official monthly inflation rate was million percent.
The results were devastating. In Montenegro was still part of this mess, since its official currency was the discredited Yugoslav dinar. Exporters are also winners because the falling value of the local currency makes exports cheaper compared to foreign competitors. Additionally, exporters receive hard foreign currency, which increases in value as the local currency falls.
The most well-known example of hyperinflation was during the Weimar Republic in Germany in the s. Through World War I, the amount of German paper marks increased by a factor of four.
By the end of , it had increased by billions of times. From the outbreak of the war until November , the German Reichsbank issued In that period, the value of the mark fell from about four to the dollar to one trillion to the dollar.
At first, this fiscal stimulus lowered the cost of exports and increased economic growth. When the war ended, the Allies saddled Germany with another billion marks in war reparations.
Production collapsed, leading to a shortage of goods, especially food. Because there was excess cash in circulation, and few goods, the price of everyday items doubled every 3. The inflation rate was Farmers and others who produced goods did well, but most people either lived in poverty or left the country. The most recent example of hyperinflation is in Venezuela.
It is promoting a new cryptocurrency, the "Petro," because the bolivar lost almost all its value against the U. How did Venezuela find itself in such a mess? But mandated prices were so low it forced domestic companies out of business. In response, the government paid for imports. In , oil prices plummeted, eroding revenues to the government-owned oil companies. When the government ran out of cash, it started printing more. With the continued collapse of its economy, the country is facing a monumental problem of debt repayment.
By late , Venezuela continues to suffer hyperinflation. Zimbabwe experienced hyperinflation between and The government printed money to pay for the war in the Congo.
Also, droughts and farm confiscation restricted the supply of food and other locally produced goods. As a result, hyperinflation was worse than in Germany. It finally ended when the country retired its currency and replaced it with a system that used multiple foreign currencies, predominantly the U.
The only time the U. If hyperinflation were to reoccur in the U. The current inflation rate shows that the U. In fact, inflation may be too low, as mild inflation can be good for economic growth. The Federal Reserve prevents hyperinflation in America with monetary policy. The Fed's primary job is to control inflation while avoiding recession.
It does this by tightening or relaxing the money supply, which is the amount of money allowed into the market. Tightening the money supply reduces the risk of inflation while loosening it increases the risk of inflation. Later that year, the government introduced a new currency, the rentenmark, backed by agricultural land. Prices stabilised and later Germany's creditors agreed to restructure war payments. Prices doubled every: 4 days, 6 hours.
Greece's economy suffered a great deal during the occupation by Axis countries in World War Two. It had already felt the impact of several attacks in late before being overwhelmed in the spring of The occupiers took raw materials, livestock and food, and the puppet government was forced to shoulder the costs of occupation.
A drop in agricultural production led to severe shortages of food in the main cities and a period known as the Great Famine. Although price hikes weren't as intense as in post-war Hungary or Germany, Greece's stabilisation efforts went on for longer.
After liberation came in October , the government made three attempts over eighteen months before reaching some stability through fiscal reform. Image source, Reuters. Hungary Image source, Getty Images. Zimbabwe Harare's solution to hyperinflation was to dollarise the economy. Unions demanded regular and automatic inflation adjustments which, until the fall of , kept blue-collar wages at an acceptable level relative to prices.
Anyone with any cash invested in stocks to hold on to some of the value of their funds. Renters benefited from rent control based on pre-inflation rents; borrowers saw the real cost of their debt vanish. Clever speculators might even feel they could profit from the situation. And the frenzy with which everyone spent, to get rid of their cash for items of value meant that, ironically, there was little unemployment in the country, however weak the purchasing power may have been.
And into this mix fell the Ruhrkampf : the occupation, in January , of the Ruhr Valley, the industrial heart of the country, by French and Belgian armies, in order to seize coal and other goods that they claimed as reparations payments. In protest, the Germans adopted a policy of passive resistance — mines and factories shut down, and the German government printed yet more marks in order to fund relief programs for the occupied Ruhr, and in the succeeding months crime, looting, barter, all accelerated as the mark collapsed.
In September of , the financial devastation Germany faced finally led the government to declare the end of the passive resistance — and a State of Emergency, and further political chaos and threats of local rebellions, plus, as the harvest proceeded, the refusal of farmers to bring food to market as long as the currency was worthless — before the ultimate implementation of currency reform in conjunction with the Dawes Plan to restructure reparations and provide loans.
The point was presumably not lost on the inflators.
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