Hyperinflation – Five Shocking Facts

As time passes prices have a tendency to rise, this is inflation and it’s a very common occurrence amongst all nations. Efforts to curb rising inflation are put into place by governments and central banks. Then there is deflation which occurs less frequently. Deflation can been seen as a general reduction in wages and over-all prices while at the same time the inflation rate drops below zero. Occurring at a much lesser degree is hyperinflation, a very rare event. Hyperinflation is an event that does not affect or trouble nations often. However if and when it does it leaves behind a path of destruction with such force, it will completely wipe-out an entire society.

5 – Facts Surrounding Hyperinflation -

• Linked closer to deflation rather than inflation:
  This is a surprising fact that many investors do not know or understand regarding hyperinflation. The name itself implies a very severe case of inflation. Technically this is a true statement. However hyperinflation is more directly associated with deflation. It’s looked upon as the direct result of excessive money printing which fails to avoid the deflation that otherwise would be created by austerity.

• Lack of confidence in a national fiat currency:

  The sheer lack of confidence in a nation’s currency and the inability for its government and central bank to maintain that confidence upon its citizens is one of the quickest ways towards the destruction of the currency. When public trust in a fiat currency is lost the value of the fiat currency drops quickly. Investors find other places to store their assets. Loss of confidence is only detrimental to paper money. As endless printing of paper money (fiat) directly causes people to question the actual value of the currency in question.

  America has been completely off a gold standard over 41 years. Analysts and smart, savvy investors for years have been calling upon government to return to a monetary system that is once again backed by gold. The current monetary system, the dollar standard carries great risks. Risks directly connected with endless money printing and mismanagement by both the Federal Reserve and politicians to permanently solve the currency crisis underway.

• Occurs due to substantial increases in a nation’s money supply:

  Quite often, as a direct result of a nations increased money supply, hyperinflation will occur. As a central bank starts rapidly printing money, the paper money quickly devaluates. Which in-turn leads to a death spiral to where even more money must be printed to continue funding over in-debited government programs, projects and other liabilities. Soon afterwards, prices in consumer goods and services will rise across the board and continue to accelerate. One measurement of hyperinflation can be defined as monthly increases of inflation in excess of 50 percent.

• The United States has the greatest risk of hyperinflation today:

  America has been showing similar signs of other countries that previously experienced hyperinflation for quite a long time now. The risk that America falls into hyperinflation becomes greater each day. As deficits continue to grow, money continues to be printed by the fed, interest rates continue to hold near zero and government spending does not slow down or reverse. A recent report by UBS was quoted as saying “A significant deterioration of the fiscal situation or a significant expansion of the monetary policy stance in large-deficit countries could lead us to increase the probability we assign to the risk of hyperinflation”.

Hyperinflation of the past and present:

Most all examples of societies suffering from hyperinflation have occurred early on in the 20th century such as Weimar Germany or Hungary in 1923. During the years following WWII Hungary was hit yet again. Except this time the country was swallowed up hole between 1945 and 1946. Hungary experienced the worst hyperinflation ever, in modern recorded history.

Quoting Wikipedia; “When the pengő was replaced in August 1946 by the forint, the total value of all Hungarian banknotes in circulation amounted to1/1,000 of one US dollar. This is the most severe known incident of inflation ever recorded, peaking at 1.3 × 1016 percent per month (prices double every 15 hours)”.

Hyperinflation today still occurs; the largest example to date is Zimbabwe. Between the mid to late 2000’s Zimbabwe became consumed with crushing hyperinflation which is still on-going to this day. While not quite as bad as Hungry in 1946, Zimbabwe is considered the second worst society of all time to be consumed by hyperinflation. During its peak Zimbabwe suffered an annual inflation rate of 6.5 quindecillion novemdecillion percent. To put this number into simpler terms use the number 65 and add 107 zeros to it. This equals an actual inflation rate of 98 percent daily, with prices doubling every 24.7 hours.

Protect yourself and you’re assets from inflation, deflation or hyperinflation today. Own physical precious metals. Specifically hold gold and silver outside the world’s banking systems for the utmost in asset protection with zero counter-party risk. Gold and silver throughout history have been used as monetary metals and money assuring wealth protection regardless of any economic or political calamity.

 
Tom Genot –