In 1956, Phillip Cagan wrote The Monetary Dynamics of Hyperinflation, the book often regarded as the first serious study of hyperinflation and its effects. In his book, Cagan defined a hyperinflationary episode as starting in the month that the monthly inflation rate exceeds 50%, and as ending when the monthly inflation rate drops below 50% and stays that way for at least a year.

After WWI(1914-1918) Germany as the losing side signed a treaty saying that they had to pay for all of the casualties.This basically collapsed Germany’s economy.As a result the government printed out more and more Marks which they thought would strengthen their economy.This led to rising prices which made the people spend their money as fast as they could which led to more rising prices and so on and so forth.At the same time the government was printing out money of higher and higher denomonations like the 10000 mark at the end of 1922, and in 1923 the 1 trillion mark.

German Mark

The graph of how many paper marks one gold mark is worth


Another real example of hyperinflation is in¬†Hungary in 1946 where the rate of inflation was 3×10^26.That was the highest ever documented rate of inflation so far!10^20 pengo

U+2191.svg100000000000000000000(10^20) pengo!



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