Failed Currencies Due To Hyperinflation

Well we have seen inflation growing at rapid rate the world over, vast economies of nations have shown a downward spiral in last one century or so. The situation has gone to extremes now, with lots of inflation, recession happening the world over fortunately in recent months there is some hope that countries are coming out of infected recessionary economies. The economic downturn has led to many business plans crashing down, because there were no takers in the market, even if it meant exporting the situation was bad everywhere. Its after all the thinking of our great economists they had this faith that the economies would change for good and yes it has, the stocks are looking nice and there is usual trade all around and we can even see people getting good job offers too. Its very rare to find an economy where nothing could be done or no plans can work out, the rampant inflation has its effects or that we call as “hyperinflation” in which the entire currency of an economy is discarded or gets replaced, reformed. There have been a few cases where even hyperinflation had taken place and the currencies duly getting replaced, not the replacing of the currency for an economy would obviously mean its failure. There may be different circumstance and the failure of the currency may happen in different conditions too. Given below are a listing of such 9 examples of currencies where they were devalued and later were to be replaced.

• Germany weimer republic – this happened in the year 1922-1923 when germany found it that they no longer have any resource to pay for war reparations as was set forth by the treaty of Versailles. The French and the Belgian armies had already occupied the most productive industrial regions of Germany. It was this year that the industrialists of germany ordered the company worker’s strikes which put a lot of pressure on the frail economy already. During this situation the german government decided to counter such situation by means of unbacked currency which meant printing them this would help to pay both for the benefit of the workers and also for the delinquent international debt. Through this, there was too much money being circulated in the economy and the demand the supply followed, this scenario made no value for money and it became worthless. The year 1922 was the one which had the largest denomination of papiermark that was 50,000 and later in that part of the year it went up to 100 trillion. That meant by the end of December 1923, the exchange rate of the currency went up to 4.2 trillion to 1. this year saw the highest inflation rate that was considered to be 325,000,000% that usually meant the cost of goods increased every 2 days, these were the worst days in its history as the result of which rentenmark was introduced which had the rate of 1 to 1 trillion of Papiermark. Even while rentenmark was introduced, the reparation payment from nation kept going and later france and Belgium agreed upon to leave the country.
• The great depression of 1945-1946 bought adverse effects to the economy of Hungary where the initial strain was on Austrian Pengo, it was introduced to replace the Austrian Hungarian Korona in the year 1926 as decided upon the treaty of Versailles. The currency had bad effects especially after the world war II, in the year of 1944, the highest denomination value of Hungarian Pengo stood at 1,000 note, after a year of its introduction it stood at 10,000,000 and in the mid 1946 it was over 100,000,000,000,000,000,000, this was the best of the worst case of hyper inflation we ever came across. This hyper inflation was not going to work for a longer period of time and after 20 years, the Pengo was replaced by Forint, this event has its memories captured in photos, the pictures includes street sweepers cleaning the sea of pengo notes. At this glorious time of replacement, the pengo to forint exchange stood at four hundred octillion that is 29 zeroes after 1, the forint got an exchange rate of 11.74 to $1, since then the inflation rate has been running at a subdued rate, currently the exchange stands at 195.2 forint to $1. it is believed since than that the replacement bought the value of Hungarian currency that equaled less than one thousandth of 1$.
• After the ascension of socialist president Salvador Allende in Chile in the year 1971-1981, it was announced that the leading industries of Chile were to be nationalized but then there were lots of management problems between the bureaucrats, the government of Chile soon started hemorrhaging money to subsidize the losses caused the result of which the Chilean central bank started printing unbacked currency at rapid rate which caused the inflation of around 600% by the end of the year 1972, later the inflation raised to 1200% by end of the year 1973. the year 1973 ws the same year in which General Augusto Pinochet’s US backed coup seized the control of populist military regime. Later in the year 1985, the Escudo was replaced by the New peso currency at the rate of 1,000 to 1. later there was a slight depression in the year 1981 in which the Chilean economy recovered from its depression due to the government of Chile’s decision to sell off newly acquired state owned enterprises, the rest of Pinochet’s tenure is altogether a different story.
• The year of 1975-1992 saw an unprecedented growth of Argentina largely due to the effects of growth rate and record trade surpluses but it also saw panic and political unrest between Trotskyists and Peron loylalists in the year of 1973 which saw huge oil crisis. The blunder going on came to head in the year 1975, the year in which there was sharp recession. The ecnomy was entirely hit by recession and to top it, the argentine government refused to borrow in order to cover the budget and trade deficits which already existed. In the year 1975, the argentine peso denomination was 1,000, one of its largest. After a year of its introduction, 5,000 note was declared, this caused much of unrest in the country and by the month of march 1976 the violent coup staged the country’s military leaders who all promised to bring back the stability in the region. The law and order continued in the year 1979, 10,000 peso banknote was introduced and by the year 1981, the central bank introduced a 1,000,000 peso note. In the year of 1981 and 1982, the country’s economy declined which further worsened the situation around, the GDP of the nation fell to 12% which was the worst since the great depression. The currency of Argentina was reformed in the year 1983, and 1 peso Argentino was exchanged for 10,000 old peso. The year of 1985 saw the introduction of Austral which replaced the peso Argentino at the rate of 1-to-1,0000, later than this, in the year 1992, the new peso introduced was replaced by Austral at the rate of 1-to-10,000, the particular experience was termed as the “march of zeroes” which equated to a 1 new peso equal to 100,000,000,000 pre 83 peso.
• Like many other latin American countries, Peru introduced varied trade liberalization policies in the year 1988-1991. this was the same time when government increased the amount of public spending, and also started to privatize the enterprises, but it lacked on one thing that is neglecting the nation’s external debt due to which by the end of the year 1990s, Peru which is already a small economy started showing negative economic growth which was once upon a time an enticing avenue for foreign direct investments, it experienced deficits of various types including hyperinflation. The Hyperinflation became very much a part of Peruvian economy and so the government decided to replace the its old sol with Inti in the year 1985 at the rate of 1,000 to 1. the largest of this new currency was a 1,000 note. Later after 2 years, the monthly inflation of the economy started rising by around 132% during the sept 1988 and jumped to 400% by September 1990. in order to control back the prices, new notes were introduced like 10,000,000 Inti note in the year 1991. this was the time when the Peruvian government again decided to replace its currency that was Neuvo Sol at 1,000,000,000 to 1 this exchange stood at one billion times than it was 6 years before.
• The unfortunate story of Angola 1991-1999 is seriously an interesting one, which is today one of the fastest growing economies of the world. The civil war which plagued the country in the year 1975-2002 led to conflicts and placed a large strain on the economy of the nation and had its deeper effect on the currency too, the Kwanza. The largest note in the year 1991 was 50,000 Kwanza. In the year 1994, the 500,000 note was introduced and later in the year 1995, the Readjusted Kwanza was introduced for 1,000 Kwanzas, this new currency also consisted of 500,000 denominations. The country again changed its currencies in the year 1999 and altogether a new Kwanza was introduced which was exchanged for 1,000,000 of the readjustment made. The new currency was equal to one billion of pre 91 Kwanzas.
• The year of 1992-1995 saw a great change in Yugoslavian economy, between the year of 1988 and 1989, the largest denomination of Yugoslavian Dinar switched from 50,000 to 2,000,000 notes. The new dinar replaced the old dinar in the year 1992 at the rate of 1 to 10 and the highest denomination remained at 50,000. in the year 1993, the largest and highest denomination stood at 10,000,000,000. there was a sharp increase in inflation rate then so to improve the condition the government simply removed 6 zeroes that stood behind and that gave rise to again a new dinar which replaced the old dinar at the rate of 1 to 1,000,000. the next year again saw a change in the currency which was replaced again and this time at the rate of 1 to 1,000,000,000. in the January 1995, the prices increased to quadrillion percent in merely just 2 years and so the German Mark became the country’s fiat currency, it is believed that hyperinflation caused during that time caused the prices to increase by 100% per day. The fact of the matter remains, that the increasing inflation led many Yugoslavians to forego paying their bills so longer periods because several weeks down the line they would pay relatively cheaper amount.
• Belarus was a highly developed economy at the time of independence and many economies started experiencing the currency fluctuation especially after cold war, the citizens of Belarus experienced a good standard of living which was highest in the eastern Europe. It was in the year 1993, the largest Belorussian note stood in the circulation of 5,000 Rubles and the by the end of the decade it increased to 5,000,000 notes. Just to displace this, the government of Belarus replaced the new Ruble at an exchange rate of 1 to 1,000 the old ruble. The highest denomination standing today is at 100,000 note which is equivalent to 100,000,000 that of 1993 ruble. Many Belarus citizens term the high rate of inflation due to the leadership of Lukashenko who stood in office since 1994. present day Belarus sees80% of its industries nationalized.
• Zimbabwe dollar was valued higher than US dollar when Zimbabwe was declared an independent african state in the year 1980, it stood at the rate of 1 to 1.25. later due to a series of race based land seizures and rampant money printing, the Zimbabwe dollar experience a rampant inflationary rate by early 21st century. In the year 2004, the inflation reached at an all time high of 624% before it went down to below triple digits in the year 2005 and then later again surged to 1,730% in the year 2006. the year of august 2006 saw the replacement with a new Zimbabwe dollar at the rate of 1 to 1,000 and the by the middle of 2007 the inflation was nearly 11,000% yearly and the May 2008, saw a release of 100 million and 250 million new Zimbabwe dollars and later 500 million dollar note was released which was valued at about $2.50. and later than that 5B, 25 B and 50B ZWD were introduced and the month of July saw 100B denomination note. And the year of August 2008, all the ten zeroes were removed from the currency and 10 billion ZWD became equivalent to 1 New ZWD with an inflation rate of around 500 Quintillion and the monthly rate of 13 billion percent.