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Hyperinflation
Money that will not wait
Seven steps, about ten minutes, a question at each. You need no economics and no preparation, only a willingness to guess before you are told.
Step 1 of 7
The question
This is the first part of seven, and it is about what a hyperinflation is like from the inside. Why it happened is part two, and nothing here is the answer to it: the banknotes in step 4 and the struck-off zeros in step 5 are things that were done, not reasons why.
A bus driver in Harare was changing his takings into hard currency three times a day. Zimbabwean prices at the peak were doubling in about a day, on two of the three published accounts. The Reichsbank printed a note for 100 Billionen Mark, which is a hundred million million, and Zimbabwe printed one for a hundred trillion dollars.
So these seven steps are the shape of it: a working day inside one, the money itself, and the dates that make it one event rather than a bad decade. The reasons start in part two.
What this module covers
Written for every level. Tap any underlined word for what it means, and open the boxes below for the economics behind each decision. If you already know the theory, skip both and the history reads straight through.
The Congressional Research Service records about seven million Zimbabweans requiring food aid in early 2009. By that January the Reserve Bank was pricing a basket of food in American dollars. Zimbabwe's episode had ended by then.
An essay in the Dallas Fed's 2011 annual report describes supermarket shelves standing empty while a black market traded goods at much higher prices. The Congressional Research Service says the local currency had become effectively worthless.
In January 2009 the Reserve Bank of Zimbabwe priced a sample basket in American dollars. Ten kilos of roller meal came to $6.00 that month and a litre of petrol to $0.60.
Venezuela's own figure comes from after its episode ended. Average pay in commerce and services in metropolitan Caracas was US$116.70 a month in April 2022. The Observatorio Venezolano de Finanzas, which publishes monthly price figures, put that at about 30 per cent of the cost of the food basket.
Take a guess. You are not expected to know the answers, and being wrong is what makes a number stick.
Rent still had to be paid while this was going on. What does the Dallas Fed essay record landlords often accepting instead of currency?
A Harare bus fare rose between the morning trip and the evening one, and it was the same money both ways.
Money worth less by the afternoon moves the same day a worker is paid it. The Dallas Fed essay has businesses in Zimbabwe quoting prices in local currency and changing them several times a day.
Brookings sets out what happens to the demand for money as rises. The public substitutes away from money and towards goods and other assets, and the speed at which money changes hands climbs.
So the money had a working life measured in hours. The Dallas Fed essay records the higher evening fare and the shop prices changing several times a day as the same thing at two sizes.
Three of these are things the record shows happening in Zimbabwe as the currency lost value by the hour. Which is the odd one out?
At the peak in mid-November 2008, prices in Zimbabwe were doubling in about a day.
The Cato Institute, a Washington think tank, publishes a table of hyperinflations that puts the time required for prices to double at 24.7 hours. The Congressional Research Service puts it at less than 24 hours, on the official inflation rate, which is close to Cato's figure and not the same one.
The table names its own basis in a column. Cato's Zimbabwean figures come from an implied taken from the price of an Old Mutual share, traded in both Harare and London, between August and November 2008.
The Dallas Fed essay puts it at every few days instead. Zimbabwe's statistics office published its last monthly figure for that year in July 2008.
Zimbabwe's prices were doubling in about a day at the peak. On the same table, how long did prices take to double at the peak of the German episode in October 1923?
The museum's own account records a note for 100 Billionen Mark, and writes the figure out as 100.000.000.000.000 M.
German breaks up a long number with full stops. English writes the same figure 100,000,000,000,000. A German Billion is a million million, the English trillion, and a Milliarde is a thousand million.
The Bundesarchiv's list of Reichsbank notes opens at 50 Mark in June 1919. Each note carries its own date: 200.000 Mark on 9 August 1923, 5 Millionen Mark eleven days later, 50 Milliarden Mark on 10 October and 1 Billion Mark on 1 November.
A note carrying the same figure was issued in Zimbabwe. The Dallas Fed essay calls its 100 trillion dollar note the largest denomination of currency ever issued, and the German note carries the same figure in a different currency.
The Bundesarchiv's captions include a note for 50 Milliarden Mark and one for 1 Billion Mark. Which is the larger, and by how much?
Zimbabwe struck ten zeros off its own currency on 1 August 2008 and issued a new series of banknotes with it.
The Reserve Bank of Zimbabwe, the country's , says the local currency was revalued by removing ten zeros. The Dallas Fed essay counts thirteen zeros slashed across the two reforms of 2006 and 2008 together.
By January 2009 the Reserve Bank was writing about a note for 100 trillion dollars, in a statement issued that month.
So the notes carried ten fewer zeros from 1 August 2008, and a note for a hundred trillion dollars was current by January 2009.
Ten zeros came off the Zimbabwe dollar on 1 August 2008. What did the Reserve Bank's monetary policy statement of January 2009 do?
The German episode is dated from August 1922 to December 1923, and it is the shortest of the three.
The Cato Institute's table gives a start date and an end date for each one it lists. Zimbabwe's run is March 2007 to mid-November 2008, so the German episode ran sixteen months and Zimbabwe's twenty.
The Universidad Catolica Andres Bello dates Venezuela's episode from inside the country. A chart in its April 2026 report labels the episode hiperinflacion noviembre/2017-enero/2022.
The Observatorio Venezolano de Finanzas, which publishes monthly price figures, was still calling it hyperinflation in December 2021. The United Nations commission for the region calls that same December the end of it, on the twelfth month running with monthly inflation below 50 per cent.
The German episode ran sixteen months and Zimbabwe's twenty. Roughly how long did Venezuela's run?
The bar for a hyperinflation is 50 per cent a month, which is Phillip Cagan's and is not agreed.
The Dallas Fed essay states Phillip Cagan's threshold as beginning when monthly inflation first exceeds 50 per cent. The European Central Bank writes that there is no generally accepted definition, and then uses the same 50 per cent.
Brookings sets a lower bar for what it calls extreme inflation, at monthly inflation above 15 to 20 per cent sustained for several months. The has a phase beginning at 500 per cent a year, and Cato's table closes an episode once monthly inflation has stayed below the bar for a year.
Germany and Zimbabwe are both on Cato's table, which admits an episode only at 50 per cent a month. A dated event with a start and an end can be set beside another one; a bad decade cannot.
Prices rise by 50 per cent a month, every month, for a year. Roughly what have they done by the end of it?
Module 1 of 7 in Hyperinflation
Can you remember each figure? Tap to check.
What about seven million Zimbabweans needed in early 2009
How often a Harare bus driver changed his takings into hard currency
Time required for prices to double at the two peaks the table gives
The German note, and the Zimbabwean one that matches it
Zeros struck off the Zimbabwe dollar
How long each of the three episodes ran
What 50 per cent a month does to prices in a year
You met five terms in this module
, , , ,
A note for a hundred million million, and six dates across three episodes. Part two asks why.
[1] What life was like inside Zimbabwe's collapse, how fast prices moved, and the largest banknote ever issued: Federal Reserve Bank of Dallas, Globalization and Monetary Policy Institute 2011 Annual Report: Hyperinflation in Zimbabwe, by Janet Koech. Page 6, on the speed: "At the height of the hyperinflation, prices doubled every few days, and Zimbabweans struggled to keep their cash resources from evaporating." On the working day: "Businesses still quoted prices in local currency but revised them several times a day." And: "A minibus driver taking commuters into Harare still charged passengers in local currency but at a higher price on the evening trip home. And he changed his local notes into hard currency three times a day." On the shops: "While supermarket shelves were empty, a thriving black market developed where goods traded at much higher prices", and landlords "often accepted groceries and food items as barter for rent." Under the heading "Starving Billionaires": "When currency is almost worthless, the use of foreign exchange or barter frequently occurs." On the note, page 1: "One hundred trillion dollars - that's 100,000,000,000,000 - is the largest denomination of currency ever issued." And: "The Z$100 trillion note was issued after two currency reforms - in 2006 and 2008 - where a total of 13 zeros were slashed from currency." On the definition: "Phillip Cagan defined hyperinflation as beginning when monthly inflation rates initially exceed 50 percent." Page 4 gives the last official figure: "By July 2008, when Zimbabwe's Central Statistical Office released its last inflation figures for that year, the month-over-month (nonannualized) rate had reached 2,600.2 percent."
[2] A table of hyperinflations that dates each one and gives the time prices took to double, with the basis declared in its own column: Cato Institute, the Hanke-Krus World Hyperinflation Table, and Working Paper 8: World Hyperinflations, by Steve H. Hanke and Nicholas Krus, August 2012. The table's columns, in order: "LOCATION", "START DATE", "END DATE", "MONTH WITH HIGHEST INFLATION RATE", "HIGHEST MONTHLY INFLATION RATE", "EQUIVALENT DAILY INFLATION RATE", "TIME REQUIRED FOR PRICES TO DOUBLE", "CURRENCY", "TYPE OF PRICE INDEX". The Zimbabwe row: "Mar. 2007", "Mid-Nov. 2008", month with the highest rate "Mid-Nov. 2008", daily rate "98.0%", "24.7 hours", "Dollar", "Implied Exchange Rate". A daily rate of 98.0 per cent and a doubling time of 24.7 hours are not the same quantity to two figures, and the table prints both; the module prints the doubling time, which is the column's own. The Germany row: "Aug. 1922", "Dec. 1923", month with the highest rate "Oct. 1923", daily rate "20.9%", "3.70 days", "Papiermark", "Wholesale". The footnote on the Zimbabwean basis: "The authors calculated Zimbabwe's inflation rate, from August to November 2008, using changes in the price of the stock, Old Mutual, which was traded both on the Harare and London stock exchanges." Working Paper 8 gives the rule the table is built on: "a price-level increase of at least 50% per month", with an episode ending when "the monthly inflation rate drops below 50% and stays there for at least one year."
[3] How many people needed food aid, what the local currency was worth by then, and one account of how fast prices were doubling: Congressional Research Service, RL34509: Zimbabwe: The Transitional Government and Implications for U.S. Policy, 27 October 2011. On the speed: "After several years of hyperinflation, the country's official inflation rate had risen to a level at which prices doubled in less than 24 hours." The report gives no locator for the figure and no basis beyond the word official. On food: "Some 7 million Zimbabweans required food aid in early 2009, and, while the situation has since improved, localized food insecurity persists." On the money: "The local currency has become effectively worthless."
[4] What a basket of food cost in American dollars, and the two occasions the bank struck zeros off its own currency: Reserve Bank of Zimbabwe, Monetary Policy Statement, January 2009, and the 2008 Annual Report. The January 2009 statement, section 5.3: "removal of 12 zeroes, with immediate effect". On the note: "The current $100 trillion note will be equivalent to the re-valued $100 note." Its table "Sample Basket Price Decreases: October 2008-26 January, 2009", priced in American dollars: "10kgs Roller Meal" at $12.00 in October and $6.00 in January; "2kg Sugar" at $5.00 and $3.00; "750 ml Cooking Oil" at $3.00 and $1.50; "1 litre Petrol" at $1.25 and $0.60. The 2008 Annual Report: "the local currency was revalued by removing ten (10) zeros and the introduction of new currency", with "a new series of bank notes which came into effect on 1 August 2008". The same report puts monthly inflation "recorded in July 2008" at "200%", where the Central Statistical Office's own figure for the same month is 2,600.2 per cent.
[5] The dates a Venezuelan university puts on its own country's episode: Universidad Catolica Andres Bello, Instituto de Investigaciones Economicas y Sociales, Informe de Coyuntura Venezuela, April 2026. The label on the country-risk chart at page 31, in full: "hiperinflacion noviembre/2017-enero/2022". The April 2025 edition of the same report does not carry it.
[6] Whether Venezuela was still inside its episode in December 2021, and what an average wage bought afterwards: Observatorio Venezolano de Finanzas, Diciembre 2021: baja la inflacion pero Venezuela aun sigue en hiperinflacion; and La remuneracion promedio del sector privado apenas compra el 30% de la canasta alimentaria. On December 2021: "la tasa de inflacion correspondiente a diciembre de 2021 se situo en 6,0% y la tasa anualizada en 660%", and "todavia persiste el cuadro de hiperinflacion que ha mantenido la economia venezolana por cuatro anos y un mes consecutivos" - still in hyperinflation, four years and one month in. On wages: "en abril de 2022 la remuneracion promedio de los trabajadores del sector comercio y servicios del Area Metropolitana de Caracas se situo en US$ 116,7 mensuales", and "la remuneracion promedio apenas representa el 30% del costo de la canasta alimentaria". Both pages carry a publication date of 25 May 2018 in their metadata, which is a site migration resetting the dates on a block of posts. The period each figure covers is stated in the text of the post and is what is printed above.
[7] The month a United Nations commission counts as the end of the Venezuelan episode: United Nations Economic Commission for Latin America and the Caribbean, Economic Survey of Latin America and the Caribbean 2022, Venezuela country note. "Inflation was down again in 2021 compared to the prior-year level, from 2,959.8% in 2020 to 687% in 2021. December 2021 marked the twelfth month in which month-on-month inflation closed below 50%, bringing an end to the hyperinflationary trend that had emerged in late 2017." The twelfth month below the threshold is the same exit rule Cato's table is built on.
[8] The dated list of Reichsbank notes, from fifty Mark to one Billion: Bundesarchiv, dated captions for Reichsbank note denominations. The captions, as printed: "Reichsbanknote 50 Mark, 24. Juni 1919"; "Reichsbanknote 100 Mark, 1. November 1920"; "Reichsbanknote 500 Mark, 27. Maerz 1922"; "Reichsbanknote 10.000 Mark, 19. Januar 1922"; "Reichsbanknote 200.000 Mark, 9. August 1923"; "Reichsbanknote 5 Millionen Mark, 20. August 1923"; "Reichsbanknote 20 Millionen Mark, 1. September 1923"; "Reichsbanknote 50 Milliarden Mark, 10. Oktober 1923"; "Reichsbanknote 1 Billion Mark, 1. November 1923". The captions are not printed in date order: the 500 Mark note of March 1922 is listed before the 10.000 Mark note of January 1922.
[9] The largest note the Reichsbank printed, written out in full by the museum that holds it: Deutsches Historisches Museum, LeMO: Inflation 1923. "einen Geldschein ueber 100 Billionen Mark (100.000.000.000.000 M) drucken" - the museum prints the digit string beside the word. On the whole issue, which is a total and not a denomination: "Insgesamt sind ueber 700 Trillionen Mark (700.000.000.000.000.000.000 M) als Notgeld und rund 524 Trillionen Mark (524.000.000.000.000.000.000 M) von der Reichsbank verausgabt worden." German Billion is ten to the twelfth and is the English trillion; German Trillion is ten to the eighteenth.
[10] What fifty per cent a month does to prices over a year, and whether there is an agreed definition at all: European Central Bank, Price stability: why is it important for you?, April 2009, Box 3.3: Hyperinflation. "Although there is no generally accepted definition of hyperinflation, most economists would agree that a situation where the monthly inflation rate exceeds 50% can be described as hyperinflation." And: "An inflation rate of 50% per month implies an increase of more than 100-fold in the price level over a year and an increase of more than two million-fold over three years."
[11] What happens to the demand to hold money as inflation rises, and one more threshold that is not the others: Brookings Institution, Brookings Papers on Economic Activity 2:1990: Extreme Inflation: Dynamics and Stabilization, by Rudiger Dornbusch and others. "Cagan defined hyperinflation as an inflation rate of 50 percent per month, or 12,875 percent per year." Its own bar: "We take extreme inflation to be rates above 15 to 20 percent per month, sustained for several months." On what people do: "As inflation increases, the public substitutes away from money toward other assets and toward goods", and "The combination of these forces leads to the dramatic rise in velocity, or demonetization, in high inflation economies." Its payment-interval result is a model prediction rather than an observation - "For an inflation rate of 15 percent per month the model predicts a pattern of payments twice per week" - and is not used here.
[12] A fund's own threshold, which is annual where the others are monthly: International Monetary Fund, Working Paper 18/266: The Modern Hyperinflation Cycle, December 2018. Its four phases are all on an annual average basis: phase one at "higher or equal to 50 percent, but less than 500 percent", phase two, which it calls hyperinflation, at "greater than or equal to 500 percent", and stabilisation when inflation "falls below 50 percent and remains below this threshold for a minimum period of five years". It records Cagan's rule separately: hyperinflations "begin in the month in which monthly inflation exceeds 50 percent" and end "in the month before the month in which monthly inflation is less than 50 percent for at least one year". Its Table 2 dates Zimbabwe's cycle 1999 to 2013 on that annual basis.
[13] Why contracts written in money get shorter when inflation is high: Bank for International Settlements, Annual Economic Report 2022, chapter II: Inflation: a look under the hood. Page 54, on what a persistent inflation rate does to the way agreements are written: "And, the more persistent the inflation rate, the greater the incentive to index wages and, more generally, to reduce the length of contracts that are fixed in nominal terms." The conditional is persistence and not level, and the module states it that way.
Country data from the World Bank (CC BY 4.0) and the UNDP Human Development Report (CC BY 3.0 IGO)
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