Here is an alphabetical list of countries, summarized from this Wikipedia page, whose currencies have been destroyed or severely devalued by hyperinflation at least once at some point in history:
Angola (1991-95)
Argentina (1975-91)
Austria (1921-22)
Belarus (1994-2002)
Bolivia (1984-86)
Bosnia-Herzegovina (1993)
Brazil (1986-94)
Bulgaria (1996)
Chile (1971-73)
China (1948-49)
Free City of Danzig (1923)
Georgia (1994)
Germany (1923)
Greece (1944)
Hungary (1944-46)
Israel (1971-86)
Japan (1943-51)
Krajina (1993)
Madagascar (2004-05)
Mozambique (1977-2004)
Nicaragua (1987-90)
Peru (1988-90)
Phillippines (1939-1945)
Poland (1922-24, 1989-91)
Republika Srpska (1993)
Romania (1998-present)
Russia (1921-22, 1991-99)
Turkey (1995-2005)
Ukraine (1993-95)
United States (1775-83, 1861-65)
Yugoslavia (1989-94)
Zaire (1989-96)
Zimbabwe (1980-present)
That last one, Zimbabwe, is an especially good example of hyperinflation since it is still happening at this very moment. On January 16 of this year, Zimbabwe's government issued a $100 trillion paper bill:
I just have to laugh when I witness the utter ignorance of economics displayed by some people when they try to rationalize why hyperinflation must be caused by the free market rather than government. Take this example from Wikipedia describing the "major cause" of Russia's 1992 hyperinflation (Note: I am a huge fan of Wikipedia, it's just that once in a while one inevitably stumbles across questionable statements in its articles):
In 1992, the first year of post-Soviet economic reform, inflation was 2,520%, the major cause being the decontrol of most prices in January.
So decontrol of prices, i.e., free market forces, are what caused the hyperinflation? In other words, as soon as the government stopped controlling prices, those greedy capitalist business owners just started charging whatever the hell they wanted for their goods and services, thus causing prices to soar over 2,500% in a single year?
There's a bit of a problem with that explanation. That 2,500% number doesn't just refer to what business owners in Russia were charging -- by economic logic, it also refers to what consumers in Russia were spending. In order for a voluntary transaction involving money to take place, there must be both a buyer and a seller. A business owner can charge whatever the heck he wants for his stuff, even $100 trillion if he's so inclined. But in order for him to actually get that $100 trillion, he has to find a customer who is not only willing to fork over $100 trillion, but also happens to have $100 trillion. Do you see where I'm going with this? If the price of everything is shooting up by 2,500%, it's not just because businesses are charging ridiculous amounts of money for their stuff. It's also because the consumers have ridiculous amounts of money with which to buy that stuff. Where is all that money coming from? Who prints the money in every country and forces the citizens to use it instead of alternatives like gold and silver coins? I'll give you a hint: it rhymes with "smothernment."
Do you think any country that was ever on a gold standard ever saw "hyperinflation" of its currency, so that its citizens began to push around wheelbarrows full of gold bars and sweep piles of gold coins into the gutter to keep the sidewalks clear? Sounds ridiculous, right? Precisely.
I know you weren't trying to draw an exact parallel to Germany. Like you, I thought it was a good comparison, and a good example of how rough life can be when a currency hyperinflates. Mises and the Austrian school have long held that no sound economy can last long under a fiat money system. In reality, the people who argue against a gold standard are partly right, but for the wrong reason. As an example, notice how the USA had a gold standard for a long time, but combined it with fractional-reserve banking and currency inflation. When a commodity-backed currency is inflated, the effect is more harmful (and the damage more obvious) than when you do it to fiat money. That's just one reason governments prefer fiat money. If you're going to have a genuine gold standard, government has to stay completely out of the picture, and inflation has to be avoided at all costs. Otherwise we could end up like one of the countries on your astutely compiled list.
ReplyDeleteEvery time I see that 100 trillion dollar note, I'm reminded of Dr. Evil, where the camera zooms up on his face with his pinky on his mouth. It would be almost as funny in real life if it weren't so tragically harmful to the citizens.
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