Not Zimbabwe, this is the worst super inflation in history!

Imagine in the time you drink a beer, the price of that beer has doubled, which is the power of hyperinflation, a kind of power that terrifies any citizen and Government, and although it sounds fictional, it is something that has been witnessed in history. Hyperinflation causes commodity prices to increase exponentially, and a pound of money is worth less than a pound of paper overnight, and all people are dollar billionaires. The advantage of hyperinflation is that it turns ordinary citizens of a country into mathematicians. In countries experiencing hyperinflation, central banks often print money with larger denominations while smaller denomination notes gradually become worthless. This vicious cycle, in addition to exacerbating inflation, also creates banknotes with a super crisis denomination of 1 billion or more. Let's take a walk through history to see which are the most numbered banknotes ever printed.

Weimar Republic of Germany At the end of 1923, the Weimar Republic of Germany issued 2000 billion banknotes and postage stamps with a face value of 50 billion marks. Earlier, the German currency saw significant inflation during the First World War due to excessive borrowing by the German government to serve the war. The initial debt amounted to 156 billion marks in 1918 and then increased by 50 billion marks in 1921. What's worse is that after the war, the German central bank used the currency to buy foreign currency at any price to pay war reparations. In order to have enough markers to buy foreign currency, the Weimar government issued banknotes with increasingly large denominations, peaking at 100,000 billion marks, and pushing the price of the mark to the bottom of society. At the peak of hyperinflation, 1 US dollar was worth up to 4,000 billion German marks. Meanwhile, the bill of the Weimar Government's deposit printing company for Reichsbank is worth up to 32,776,997,637,734,490.41 marks.

Hungary in 1946, the largest denomination banknote ever issued by the Hungarian National Bank is also the largest denomination banknote ever put into official circulation with a denomination of up to 100 billion pengo. A bill worth 10 times that, that is, 1,000 billion pengoes, was printed, but then it was not officially issued. Previously, in 1944, Hungary's highest denomination was only 1,000 pengo. In order to avoid people suffering from court disorder when having to pronounce super-large denominations, the government did not print all the zeros. Instead, the denomination of money is printed in letters and abbreviations, for example, the 100 trillion pengo note is printed as 100 million B-pengo, and the 1,000 trillion pengo note is printed as 1 milard B-pengo. From Weimar's 100,000 billion marks, the face value is also expressed in the same letter. The note with the most zeros in history is Zimbabwe's $100 trillion note.

Going back to Hungary, the effects of the Great Depression of 1929-1939 and the recapture of the poor lands lost in the First World War left Hungary exhausted. When World War II broke out, the central bank was completely under government control, printing money without any tangible collateral. As a result, after World War II, Hungary held the record for the most extreme inflation rate ever on a monthly basis at 41.9 trillion percent in July 1946, equivalent to a doubling of commodity prices every 15.3 hours. For comparison, Zimbabwe's inflation rate in 2008 was estimated at 89.7 trillion percent, with the highest month being 79.6 billion percent, equivalent to the time when commodity prices doubled by 24.7 hours. Hyperinflation in Hungary was so severe that the government had to create a currency dedicated to paying taxes and the postal service, the price of which changed every day over the radio.

But mentioning hyperinflation without mentioning the case of jyb is a crime. When Zimbabwe gained independence in 1980, it issued a currency that had an initial value higher than the U.S. dollar. Specifically, in 1980, 1 Jim B dollar was exchanged for up to 1.25 USD. But by mid-November 2008, at the height of hyperinflation, 1 US dollar bought up to 2,621,984,228 Z$2,621,984,228.

In Zimbabwe in the late 1990s, in the midst of the country's booming dimples, soaring dimple production and a thriving tobacco industry, President Robert Mugabe launched a land reform campaign in the name of anti-colonialism. White European landowners were deported and farmland was given to black Zimbabwean farmers. The idea is good, except that many farmers after being allocated land do not know how to grow crops because they have no experience. As a result, the farms were then abandoned, causing a severe decline in food production.

In the period 1999-2009, agriculture was the cornerstone of Zimbabwe's economy, and its collapse severely affected export revenues as well as food production. Compared to before the reform, food production fell by 45%, and production fell by nearly a third, pushing prices up rapidly. Unemployment has risen to 80 percent, with most of the middle class leaving the country or relocating to Zimbabwe's capital, Harare. In the midst of that context, Zimbabwe printed more money, a lot of money.

As of 2006, 21 trillion Zimbabwean dollars had been printed to pay off debts from the IMF. An additional $60 trillion was printed at the end of 2006 to pay the salaries of soldiers, police and other civil servants. Expenses that have more and more zeros.

According to a July 2008 article, printers were forced to print more banknotes of large denominations ranging from 5 million, 10 million, 25 million, 50 million in 2007, to 100 million, 250 million, and 500 million dollars in 2008, but they were practically worthless. The price of a newspaper rose from $200,000 at the beginning of the month to $25 billion in the middle of the month. A loaf of bread went from $2 million to $35 million overnight. A beer at a bar in the capital, Harare, costs 100 billion Zimbabwean dollars at 5 p.m., July 4. An hour later, the price reached 150 billion. Money printers are available 24/7, and employees have to constantly come up with new bills because they quickly become flip paper. But there is one thing that cannot be thought of, and that is paper.

Zimbabwe prints so much money that they don't have enough paper to print anymore. Helpless, in 2007, the government declared inflation illegal and imprisoned business owners who dared to increase the price of their products. One solution to avoid using those macro numbers is to declare a new currency. For example, instead of $10 billion, the Central bank might stipulate that $1 new would be equal to one billion dollars old. As such, the new bill will only need to be written with a new $10.

Turkey did this in 2005, when the old lira was converted to a new lira at the rate of one million old lira for a new lira. This is called a redenomination. This method can only change the denomination, not the purchasing power of the banknote. That is, if 1 million old lira is exchanged for a loaf of bread, so is a new lira. Another way is to raise currency prices (revaluation). Hungary succeeded in boosting the purchasing power of its local currency when it announced a new currency, the forint, in August 1946. First, the government will announce a new price for the new currency. For example, instead of 1 billion pengő being exchanged for 1 dollar, the Hungarian government claims that 1 dollar can only be exchanged for 1,000 forints. But how does the world believe that? Obviously, they will have to buy their own forint at the exchange rate they declare themselves with something of fixed value, such as gold.

According to CNBC, by the time the forint replaced the pengo in August 1946, the total amount of Hungarian banknotes in circulation was worth only 1/1 thousandth of a US dollar. In desperation, the government may also try to hide the real inflation rate, publishing a figure that is many times lower than it actually is. However, if the root cause of inflation is not addressed, people will doubt and gradually lose confidence in the currency, allowing inflation to increase further. The government can also control the price of some essential goods by setting a ceiling price, i.e., the highest price at which the item can be sold. Because this ceiling price is cheaper than the actual price, it leads to scarcity because people massively buy it to hoard. Meanwhile, businesses that no longer profit from production will go bankrupt or stop distributing government-controlled products, causing shortages of goods and supply chain disruptions.

An easier way is to abandon the local currency altogether in favor of a strong foreign currency such as the US dollar. In 2009, Zimbabwe officially abandoned its local currency in favor of the US dollar and strong foreign currencies such as the South African rand, the euro or the British pound. In the midst of calm and economic recovery, in 2019 the Zimbabwean government decided to give birth to the Zimbabwean dollar v2.0. Since then, Zimbabwe's inflation has reached triple digits and continues to top the world, an achievement that is not to be proud of. A smaller problem may arise for computerized money processing systems. For example, during the Zimbabwean dollar hyperinflation, many ATMs and card payment machines were riddled with arithmetic errors when customers requested to withdraw or pay trillions of dollars at once. An arithmetic spillover error is an error when a calculation produces a result that exceeds the design limit. No programmer would think that someone would withdraw up to $100 trillion from an ATM.

Which superinflation are you most stunned by? Please share below. As always, be sure to like to support us, subscribe to Facts, and ring the bell to receive the earliest notifications. For now, hello and see you soon!