Hyperinflation

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In economics, Hyperinflation is when an economy's inflation rate increases to very high levels. Hyperinflation refers to increased rates of monetary inflation and price inflation. This hyperinflation historically causes people to rapidly spend their remaining money on tangibles. During a period of hyperinflation, the prices of goods and services rapidly increases as the fiat currency loses actual value.

Any of a large number of threats to the economy (local, national, global) can cause hyperinflation where the economy degrades to the point that it is no longer able to support the individuals and systems which depend on it.

A wheelbarrow full of printed currency

Weimar Republic

The early years of Weimar Germany were characterized by hyperinflation, which was caused when the government started printing money since it was low on cash, in part due to reparation payments. Workers were paid daily, and sometimes twice daily, in wheelbarrows of cash. The value of the German mark went from 4 to the dollar to over 1 trillion to the dollar at the peak of the inflation in 1923.The Beer Hall Putsch of Adolf Hitler largely was a reaction to the government's hyperinflation policy.

Zimbabwe's hyperinflation

The Government of Zimbabwe's chaotic land reform program, recurrent interference with the judiciary, and maintenance of unrealistic price controls and exchange rates have led to a sharp drop in investor confidence. Since 1999, the national economy has contracted by as much as 35%; inflation vaulted to hyperinflation of over 7,634.8% (year on year) in July 2007; and there have been persistent shortages of foreign exchange, fuel, and food. Direct foreign investment has all but evaporated. In a desperate attempt to control inflation, the government forced firms and supermarkets to reduce prices by half in July 2007, which resulted in severe shortages of basic goods and other commodities.

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