Home Finance Hyperinflation Illustrated: 5 Times the Currency Crashed

Hyperinflation Illustrated: 5 Times the Currency Crashed

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Hyperinflation occurs when a country experiences very high rates of inflation, which destroys the real value of the local currency, and causes the population to reduce their holdings of local money.

It is argued that extreme inflation often results in some sort of strain on the government’s budget. This is because the root cause is a large government deficit that is financed by wealth creation rather than by other options such as borrowing or higher rates of taxation.

In the following infographic we look at 5 times that currencies crashed in a big way. In each of these scenarios, war was the primary cause or played a major role in the government’s deficit leading to hyperinflation. Interestingly, if we examine all the documented examples of hyperinflation throughout history (as far back as the Romans), this is often true – a massive lack of money to finance wars or clean up from wars. which often leads to large-scale currency devaluation.

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