What Is Hyperinflation? Causes, Effects, Examples, And How To Prepare

What Is Hyperinflation?

Hyperinflation is a term to describe rapid, excessive, and out-of-control general price increases in an economy. While inflation measures the pace of rising prices for goods and services, hyperinflation is rapidly rising inflation, typically measuring more than 50% per month.

Although hyperinflation is a rare event for developed economies, it has occurred many times throughout history in countries such as China, Germany, Russia, Hungary, and Georgia.

Key Takeaways

    Hyperinflation refers to rapid and unrestrained price increases in an economy, typically at rates exceeding 50% each month over time.
    Hyperinflation can occur in circumstances affecting the underlying production economy, in conjunction with a central bank printing excessive money.
    Hyperinflation can cause a surge in prices for essential goods—such as food and fuel—as demand outpaces supply.
    While hyperinflation scenarios are typically rare, they can spiral out of control once they begin.

 Understanding Hyperinflation

Inflation is measured by the Bureau of Labor Statistics using the Consumer Price Index (CPI) to measure the dollar's purchasing power. The CPI is an index of the prices for about 94,000 commodities and services; around 8,000 rental housing unit quotes; and prices for airline fares, apparel, household goods, prescription drugs, used automobiles, and postage.

Generally speaking, the Federal Reserve strives to maintain what it calls a healthy inflation rate of around 2% over the long term.2 Hyperinflation is an extreme case of inflation, not just a high case. Inflation higher than 5% is considered high inflation. Inflation of 50% or more per month is considered hyperinflation.

For comparative purposes, the U.S. inflation rate measured by the CPI averaged about 2.5% per year from 2013 through 2022. The average for June through April of 2023 was 5.55%.

In an environment of hyperinflation, prices may increase daily or weekly, which can have a dramatic impact on what consumers pay for basic necessities. For instance, imagine you always buy the same items at the grocery store. If the economy were experiencing a rising inflation rate of 5% per day, your grocery bill might rise from $500 one week to $675 the next week, then as high $911 the week after that. 

 Causes of Hyperinflation

Although several circumstances can trigger hyperinflation, here are the most common causes of hyperinflation.

Excessive Money Supply

Central banks generally control the circulating supply of money. In circumstances that historically warrant an increase in the money supply—like a recession or depression—central banks can increase the amount of money circulating. The intent behind this action is to encourage banks to lend and consumers and businesses to borrow and spend.

However, if the increase in money supply is not supported by economic growth—as measured by gross domestic product (GDP)—hyperinflation can result. If GDP—the measure of an economy's production—isn't growing, businesses raise prices to boost profits and stay afloat.

Because consumers have more money, they pay higher prices and feed inflation. If economic output continues to stagnate or shrink and inflation keeps rising, companies charge more, consumers pay more, and the central bank prints more money. A cycle of increasing inflation rates occurs, leading to hyperinflation.

Demand-Pull Inflation

Demand-pull inflation is a scenario in which aggregate demand becomes too high for aggregate supply. This increases prices rapidly because there are not enough goods and services available to meet the increase in overall demand from consumers and businesses.

Hyperinflation is the product of many circumstances and poor monetary decision-making coming together.

Effects of Hyperinflation

Hyperinflation can cause several adverse consequences. People may begin hoarding goods, such as food. In turn, there can be food supply shortages.

When prices rise excessively, money decreases in value because inflation causes it to have less purchasing power. Less purchasing power means consumers spend more to buy less. As a result, they have less money to pay bills and fewer dollars to use on essential items.

Also, people might not deposit their money in financial institutions, leading banks and lenders to go out of business. Tax revenues may also fall if consumers and businesses can't pay, resulting in governments failing to provide essential services.

How to Prepare for Hyperinflation

It's critical to remember that hyperinflation doesn't happen very often, especially in developed countries where a central bank focuses on reigning in and controlling inflationary periods. However, there are some actions you can take to reduce the effects normal or high inflation have on your portfolio.

A balanced and diversified portfolio can help you reduce losses through inflationary periods. Commodities and real estate can reduce the adverse effects of inflation because they tend to increase in value during these times. Treasury Inflation-Protected Securities (TIPS) can hedge against rising inflation because the principal you have invested in a TIPS adjusts with inflation.

Mutual funds and exchange-traded funds that practice inflation swaps can also be used to combat the effects of inflation on your portfolio.

Real-World Examples of Hyperinflation

Yugoslavia

One of the more devastating and prolonged episodes of hyperinflation occurred in the former Yugoslavia in the 1990s. On the verge of national dissolution, the country had already been experiencing inflation at rates that exceeded 76% annually.

In 1991, it was discovered that the leader of the then-Serbian province, Slobodan Milosevic, had plundered the national treasury by having the Serbian central bank issue $1.4 billion of loans to his cronies.

The theft forced the government's central bank to print excessive amounts of money to take care of its financial obligations. As a result, hyperinflation quickly enveloped the economy, erasing what was left of the country’s wealth and forcing its people into bartering for goods. The inflation rate nearly doubled each day until it reached an unfathomable rate of 313,000,000% per month.

The government quickly took control of production and wages, which led to food shortages. As a result, incomes dropped by more than 50%, and production crawled to a stop. Eventually, the government replaced its currency with the German mark, which helped to stabilize the economy.

Hungary

Hungary experienced hyperinflation after World War II. At the peak of Hungary's inflation, prices were rising 207% per day.

Zimbabwe

In March 2007, Zimbabwe entered a period of hyperinflation that equaled a daily rate of inflation of 98% until early 2009.6 The country's hyperinflationary period began in 1999 after the country experienced several periods of drought and a following reduction in GDP.

As a result, the country was forced to borrow more than it produced, and the government began spending more. It increased taxes to pay bonuses to independence war veterans, became involved in a war in the Congo, and borrowed from the International Monetary Fund to improve development and living standards for citizens.

The government began printing money to pay for the expenses, causing an inflationary rise, and residents began to move to other countries to escape the economy. By 2010, millions of people had left the country, and the economy was in shambles.

What Will Happen If There Is Hyperinflation?

Hyperinflation doesn't occur without any indication. In the United States, if economists see signs of hyperinflation the Federal Reserve will implement any monetary policy tools allowed to ensure it doesn't happen. This happens long before inflation can reach the 50% rate. In the past, Federal Reserve chair Paul Volcker raised rates to more than 21% to combat a rate of more than 14%—leading to two recessions before inflation came under control.

Will the U.S. Go Into Hyperinflation?

It is doubtful that the U.S. will experience hyperinflation unless economic circumstances become very dire. The Federal Reserve and government have many tools at their disposal that can prevent hyperinflation from occurring.

What Was the Worst Hyperinflation in History?

Hungary experienced hyperinflation from August 1945 to Jul 1946, with a daily inflation rate of 207%.

The Bottom Line

Hyperinflation is a scenario in which a county's inflation rate rises 50% or more in one month. It is different than a country simply experiencing high inflation; 5% is considered high inflation.

Hyperinflation raises consumer prices and can make it difficult or impossible for a country to meet its financial obligations or produce goods and services. It causes the prices of everyday necessities to rise rapidly, making them hard for consumers to afford. However, hyperinflation does not occur often and usually has a cause, such as war, natural disasters, or political corruption.

 

UN Agenda 2030: A Recipe for Global Socialism

Agenda 2030, touted as a solution to everything from poverty to global warming, is really a plan to empower a global governing body.

The United Nations and its mostly autocratic member regimes have big plans for your life, your children, your country, and your world. And those plans are not limited to the coercive “climate” agreement recently concluded in Paris.

While the establishment media in the United States was hyping ISIS, football, and of course “global warming,” virtually every national government/dictatorship on the planet met at the 70th annual General Assembly at UN headquarters in New York to adopt a draconian 15-year master plan for the planet. Top globalists such as former NATO chief Javier Solana, a socialist, are celebrating the plan, which the summit unanimously “approved,” as the next “Great Leap Forward” — yes, the old campaign slogan of the Chinese Communist Party.

The master plan is comprised of 17 “Post-2015 Sustainable Development Goals” (SDGs) with 169 specific “targets” to be foisted on all of humanity — literally all of it, as the plan itself states explicitly. “As we embark on this collective journey, we pledge that no one will be left behind,” reads the UN manifesto, entitled Transforming Our World: the 2030 Agenda for Sustainable Development. But if you love liberty, self-government, free markets, or the U.S. Constitution, you will almost certainly be wishing that the UN would leave you behind.

Officially dubbed “Agenda 2030,” the UN plot, as its full title suggests, is aimed at “transforming” the world. The program is a follow-up to the last 15-year UN plan, the defunct “Millennium Development Goals,” or MDGs. It also dovetails nicely with the deeply controversial UN Agenda 21, even including much of the same rhetoric and agenda. But the combined Agenda 2030 goals for achieving what is euphemistically called “sustainable development” represent previous UN plans on steroids — deeper, more radical, more draconian, and more expensive.

“This Agenda is a plan of action for people, planet and prosperity,” reads the preamble. “All countries and all stakeholders, acting in collaborative partnership, will implement this plan.” Ironically, the preamble even claims the UN goals will “free the human race from the tyranny of poverty” and “heal” the planet — or, as the planet is also referred to in the document, “Mother Earth.” Not-so-subtly purporting to usurp the role of God, the UN even claimed that the “future of humanity and of our planet lies in our hands.”

Speaking on September 25 at the opening ceremony of the confab that adopted Agenda 2030, Secretary-General Ban Ki-moon hinted at just how far-reaching the plot really is. “The new agenda is a promise by leaders to all people everywhere,” he explained, presumably conflating “leaders” with mass-murdering gangsters such as Kim Jong-un, Raul Castro, Robert Mugabe, and other despots who hold great sway with most of the regimes comprising the United Nations. “It is a universal, integrated and transformative vision for a better world.” “We need action from everyone, everywhere,” Ban said, pointing to the “guide” offered by the 17 SDGs. “They are a to-do list for people and planet, and a blueprint for success.” “We must use the goals to transform the world,” Ban continued. “Institutions will have to become fit for a grand new purpose.”

The Agenda 2030 agreement makes the audacity of the scheme clear, too. “This is an Agenda of unprecedented scope and significance,” boasts the document.  “Never before have world leaders pledged common action and endeavor across such a broad and universal policy agenda,” the agreement continues. “What we are announcing today — an Agenda for global action for the next fifteen years — is a charter for people and planet in the twenty-first century.”

The Agenda

Perhaps the single most striking feature of Agenda 2030 is the practically undisguised roadmap to global socialism and corporatism/fascism, as countless analysts have pointed out. To begin with, consider the agenda’s Goal 10, which calls on the UN, national governments, and every person on Earth to “reduce inequality within and among countries.” To do that, the agreement continues, will “only be possible if wealth is shared and income inequality is addressed.”

As the UN document also makes clear, national socialism to “combat inequality” domestically is not enough — international socialism is needed to battle inequality even “among” countries. “By 2030, ensure that all men and women, in particular the poor and the vulnerable, have equal rights to economic resources,” the document demands. In simpler terms, Western taxpayers should prepare to be fleeced so that their wealth can be redistributed internationally as their own economies are cut down to size by Big Government. Of course, as has been the case for generations, most of the wealth extracted from the productive sector will be redistributed to the UN and Third World regimes — not the victims of those regimes, impoverished largely through domestic socialist/totalitarian policies imposed by the same corrupt regimes to be propped up with more Western aid under Agenda 2030.

Wealth redistribution alone, however, will not be enough. 

Governments must also seize control of the means of production — either directly or through fascist-style mandates. “We commit to making fundamental changes in the way that our societies produce and consume goods and services,” the document states. It also says that “governments, international organizations, the business sector and other non-state actors and individuals must contribute to changing unsustainable consumption and production patterns … to move towards more sustainable patterns of consumption and production.”

In plain English, the Agenda 2030 document is claiming that today’s “consumption and production” patterns are unsustainable, so we’ll need to get by with less. How much less? It would be hard to find a more clear and concise assessment than that offered by the late Maurice Strong, the recently deceased Canadian billionaire  and longtime UN environmental guru who led the 1992 Earth Summit, in a pre-Earth Summit document: “It is clear that current lifestyles and consumption patterns of the affluent middle-class … involving high meat intake, consumption of large amounts of frozen and ‘convenience’ foods, ownership of motor vehicles, numerous electrical appliances, home and workplace air-conditioning ... expensive suburban housing … are not sustainable.”

In truth, such “lifestyles and consumption patterns” are sustainable, so long as the freedom that makes prosperity possible is not destroyed in the name of achieving “sustainability.” The UN and the environmental lobby claim that we must get by with less because there are now too many people on the planet consuming too many resources. But this rationale for accepting UN-imposed scarcity is patently false.

Of course, the promoters of Agenda 2030 would claim that rather than impoverish us, the global regime they envision would take good care of us — through universal health coverage, for instance. One of the targets for Goal 3, ensuring “healthy lives” and “well-being,” is: “Achieve universal health coverage,” including “vaccines for all.” Universal access to “mental health,” along with “sexual and reproductive health-care services” — code words for abortion and contraception — are also included. All governments are expected to integrate such services into their “national strategies and programmes,” the agreement demands.

It is worth noting that mass-murdering Soviet dictator Vladimir Lenin made clear that controlled healthcare is the “keystone” of socialism. The United Nations obviously agrees. And though he may not call it “socialism,” Obama undoubtedly also views government control of healthcare as key. Indeed, enactment of ObamaCare could be viewed as a “great leap forward” by the United States toward implementation of a key component of Agenda 2030, before Agenda 2030 was even “approved.”

But as important as targeting healthcare is to the globalist schemers, any plan for building international socialism would be lacking without also targeting the next generation with global-socialist propaganda. And so an entire goal of Agenda 2030 is devoted to ensuring that all children, everywhere, are transformed into what the UN calls “agents of change,” ready to push forward the plan for the new global order. “Children and young women and men are critical agents of change and will find in the new Goals a platform to channel their infinite capacities for activism into the creation of a better world,” the agreement explains.

The sort of activists that the UN hopes to make your children into is also explicitly defined in the agreement. “By 2030, ensure that all learners acquire the knowledge and skills needed to promote sustainable development, including, among others, through education for sustainable development and sustainable lifestyles, human rights, gender equality, promotion of a culture of peace and non-violence, global citizenship and appreciation of cultural diversity and of culture’s contribution to sustainable development,” the global plan for 2030 states. Considering what the UN means by “sustainable development” — population control, central planning, global governance, and more — the agenda for your children takes on an even more sinister tone.

“Sustainable” children for global citizenship in the new order will be accomplished via what the UN misleadingly refers to as “education.” In the UN document the word “education” alone is mentioned more than 20 times. And throughout the agreement, the UN openly advocates the use of schools to indoctrinate all of humanity into a new set of values, attitudes, and beliefs in preparation for the new “green” and “sustainable” world order. The UN’s education agenda also puts sex “education” front and center. “By 2030, ensure universal access to sexual and reproductive health-care services [abortion and contraception], including for family planning, information and education,” the document explains.

How much will Agenda 2030 cost? Various figures have been thrown around by UN bureaucrats regarding the monetary costs of the plan, generally ranging between $3 trillion and $5 trillion per year.

Yes, trillions. In the “From Billions to Trillions” report released by the World Bank in July 2015, the globalist outfit, a key player in Agenda 2030, conceded: “To meet the investment needs of the Sustainable Development Goals, the global community needs to move the discussion from ‘Billions’ in ODA [Official Development Assistance] to ‘Trillions’ in investments of all kinds: public and private, national and global, in both capital and capacity.”

But the money needed to implement Agenda 2030 and other UN schemes is only part of the cost. Other parts include the loss of our national independence and freedom that the rise of global governance and global socialism would surely entail. Revealingly, empowering dictators to help in global governance is openly touted by Agenda 2030. The document states, “We recommit to broadening and strengthening the voice and participation of developing countries [the regimes ruling those countries] — including African countries, least developed countries, land-locked developing countries, small-island developing States and middle-income countries — in international economic decision-making, norm-setting and global economic governance.”

Powerful Promoters

When Agenda 2030 was adopted at the 70th annual UN General Assembly confab in New York City on September 25, the UN plot to re-engineer civilization was ushered in with a “thunderous standing ovation,” the UN Department of Public Information reported. Every one of the 193 UN member governments on the planet — from murderous communist and Islamist dictatorships to those ruling what remains of the “Free World” — vowed to help impose the UN’s controversial goals on their subjects.

It all sounded so wonderful to some of the world’s most brutal dictators that they could hardly contain their glee. “This agenda promises a brave new world, a new world which we have to consciously construct, a new world that calls for the creation of a new global citizen,” gushed Marxist dictator Robert Mugabe, the genocidal mass-murderer enslaving Zimbabwe who also serves as chairman of the African Union. “I want to believe that we are up to this task that we have voluntarily and collectively committed ourselves to. Our success, and in particular the promise of a new world that awaits us, depends upon this commitment.” He also promised to vigorously impose the UN Agenda 2030 on the starving and impoverished victims his regime lords over with Agenda 2030-style policies. The communist Castro regime vowed to work with socialist Venezuelan strongman Nicolas Maduro and other tyrants to impose the UN goals on their victims, too — all with financing from Western taxpayers.   

The brutal tyrants ruling Communist China, meanwhile, have also been enthusiastic cheerleaders for the UN goals — goals that the regime boasted it played a “crucial role” in developing. The Chinese autocracy, infamous for forced abortions, censorship, religious and political persecution, the “one-child policy,” terrible pollution, kangaroo courts, and of course, murdering more human beings than any other entity in all of human history, used its vast, global propaganda machine to celebrate Agenda 2030.

“China has made important contributions to the global efforts in reaching a fair, inclusive and sustainable post-2015 development agenda,” the regime’s deputy permanent representative to the UN, Wang Min, was quoted as saying in a report by the Communist Chinese news and espionage service Xinhua. “China is also very active in putting forward Chinese proposals…. The agreement includes important proposals by China and many other developing countries in numerous aspects.”  

 Among other “commitments,” China promised to spend $2 billion in foreign countries to meet the UN goals in “education” and “health,” with its funding increasing to $12 billion by 2030. While only contributing a small piece of the pie, the fact that Beijing is so excited about the agenda is quite revealing. Echoing Chairman Mao’s rhetoric, EU and NATO globalist Javier Solana said, “With a sustained commitment from all countries, developed and developing alike, the world can ensure that it celebrates another great leap forward in 2030.” (Emphasis added.) The last “Great Leap Forward,” presided over by Chairman Mao Tse-tung between 1958 and 1963, resulted in the murder of an estimated 45 million Chinese who were worked, starved, or beaten to death.

The Obama administration, which apparently does not plan to present the UN scheme to the U.S. Senate for ratification as required by the U.S. Constitution, also offered a forceful defense of the UN agenda. Speaking to the UN General Assembly on September 27, 2015, after purporting to commit the United States to the global plot, Obama claimed the UN blueprint “is one of the smartest investments we can make in our own future.”

Even the world’s leading religious figure, Pope Francis, addressed UN member governments with a plea to support the UN goals. “The adoption of the 2030 Agenda for Sustainable Development ... is an important sign of hope,” he declared, before demanding a UN “climate” regime as well.

Beyond governments and religious figures, much of the private sector also enthusiastically backed the new goals. Among the mega-corporations backing the scheme are the world’s top three search engines: Google, Microsoft’s Bing, and Yahoo. It was not immediately clear whether those corporations’ support for the UN agenda would affect the supposed impartiality of search results, but critics of the UN plan expressed alarm nonetheless.

For now, at least, the world and the White House are all pretending that the SDGs are binding on Americans, too. However, the U.S. Senate was not consulted, as the Constitution requires for all treaties. And even if the Senate were to ratify it, the federal government cannot grant itself new anti-constitutional powers merely by approving a treaty. Therefore, the agreement has no force in the United States. But as UN Agenda 21 showed clearly, that does not mean that the Obama administration, and possibly future presidents, would not attempt to push it forward anyway. The American people, therefore, must demand through their elected representatives that the UN power grab be stopped.