The Garden of Learning

Geography

Which country suffered the worst hyperinflation ever recorded?

  • Hungary
  • Zimbabwe
  • Germany

The answer is Hungary. In 1946 - prices doubled roughly every 15 hours.

Hungary in 1945 and 1946, where prices doubled roughly every fifteen hours - the fastest inflation ever documented anywhere. The largest note issued was one hundred million billion pengo, and a note for a thousand times that was printed and never released.

The mechanics were straightforward and terrible. The country had been fought over from both directions, industry and infrastructure were wrecked, it owed enormous reparations to the Soviet Union, and the government printed money because it had no other way to pay anything. Notes were carried in wheelbarrows, wages were paid daily and spent immediately, and the government eventually introduced a parallel index-linked unit for taxes because the currency could not measure anything for longer than a day.

It ended in August 1946 with a new currency, the forint, and a stabilisation that worked - the total value of all pengo in circulation at the changeover was reportedly less than a single US cent. Zimbabwe in 2008 and Weimar Germany in 1923 are the other famous cases, and both were slower. What all three shared was not simply printing money but a state that had lost the ability to tax and a population that had stopped believing tomorrow's money would be worth anything.