Hyperinflation facts for kids

A 5 Million Mark coin from Germany. Its value dropped hugely in 1923.

Hyperinflation happens when prices for goods and services increase super fast. It means that money quickly loses its value. Imagine if a candy bar cost $1 today, but $100 tomorrow! That's what hyperinflation feels like. It's a very serious problem in economics.

What is Hyperinflation?

Hyperinflation is a type of inflation that is "out of control." It means prices go up incredibly quickly. Your money becomes worth less and less almost every day. This makes it hard for people to buy what they need. It also makes it difficult for businesses to plan.

How Money Loses Value

When hyperinflation happens, the government might print a lot more money. This is often done to pay for things. But when there's too much money, it becomes less valuable. Think of it like this: if everyone suddenly had a million toys, each toy wouldn't feel as special or valuable anymore. The same thing happens with money.

Hyperinflation in Germany

One of the most famous examples of hyperinflation happened in Germany in the 1920s. After World War I, Germany had many debts. The government printed a lot of money to pay for things.

The German Mark Loses Value

• In 1922, the largest banknote was 50,000 Mark.
• By 1923, the largest banknote was 100,000,000,000,000 (100 trillion) Mark!
• In December 1923, you needed 4,200,000,000,000 (4.2 trillion) German Marks to buy just one US dollar.

People's money became almost worthless. They would use banknotes for unusual things. Sometimes, people would burn stacks of money in their stoves to keep warm. The paper money would burn longer than the amount of wood they could buy with it. Prices would sometimes double every two days!

Stopping the Crisis

To fix this huge problem, Germany introduced a new currency. It was called the Rentenmark. This new money helped to stabilize the economy. The exchange rate was set at 4.2 Rentenmarks to 1 US Dollar. This helped stop the hyperinflation.

Hyperinflation in Zimbabwe

Another recent example of hyperinflation happened in Zimbabwe. This was in the country of Zimbabwe in Africa. In July 2008, the inflation rate was extremely high. It reached 231,150,888.87% in just one month. This means prices were going up incredibly fast. People needed huge stacks of money to buy basic items.

Images for kids

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  100 quintillion (10²⁰) pengő, the largest denomination bill ever issued, Hungary, 1946.

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  Hyperinflation in Venezuela shown by how fast money loses 90% of its value.

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  Hyperinflation in Argentina.

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  The price of gold in Germany from 1918 to 1923.

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  In Germany, 1923, banknotes had lost so much value that they were used as wallpaper.

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  The 100 million b.-pengő note was the highest denomination of banknote ever issued, worth 10²⁰ or 100 quintillion Hungarian pengő (1946).

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  Banana banknotes issued by the Japanese Government during the occupation of Malaya.

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  The value of one US dollar in Venezuelan bolivares over time.

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  A 500 billion Yugoslav dinar banknote from 1993, a result of hyperinflation.

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  The 100 trillion Zimbabwean dollar banknote (10¹⁴ dollars).

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  A selection of Zimbabwe notes from 1 dollar to 100 trillion dollars.

See also

In Spanish: Hiperinflación para niños