Inflation :: essays papers

Inflation Hyperinflation The term "hyperinflation" refers to a very rapid, very large increase in the price level. Measurement problems will be too minor to notice on this scale. There is no strict formal definition for the term, but cases of hyperinflation tend to be expressed in terms of multiples rather than percentages. "For example, in Germany between January 1922 and November 1923 (less than two years!) the average price level increased by a factor of about 20 billion." Some representative examples of hyperinflation include "Hyperinflation 1922 Germany 5,000% 1985 Bolivia *10,000% 1989 Argentina 3,100% 1990 Peru 7,500% 1993 Brazil 2,100% 1993 Ukraine 5,000%" These quotations from other web pages are given mainly as examples of what people have in mind when they talk about hyperinflation, and I cannot say just how accurate the figures are. In any case, figures for the purchasing power lost in hyperinflations can only be rough estimates. Numismatics (coin and currency collecting) gives some examples of just how far hyperinflations can go: an information page for currency collectors tells us that, in the Hungarian hyperinflation after World War II, bills for one hundred million trillion pengos were issued (the pengo was the Hungarian currency unit) and bills for one billion trillion pengos were printed but never issued. (I'm using American terms here -- the British express big numbers differently). The story behind the German hyperinflation illustrates how all hyperinflations have come about, and is of particular interest in itself. After World War I, Germany had a democratic government, but little stability. A general named Kapp decided to make himself dictator, and marched his troops and militias into Berlin in an attempted coup d'etat known as the "Kapp Putsch." However, the German people resisted this attempt at dictatorship with nonviolent noncooperation. The workers went out in a general strike and the civil servants simply refused to obey the orders of Kapp and his men. Unable to take command of the country, Kapp retreated and ultimately gave up his attempt. However, the German economy, never very sound, was further disrupted by the conflict surrounding Kapp's putsch and by the strike against it; and production fell and prices rose.