Hyperinflation has actually happened dozens of times before in many different great nations. During World War 1 1914-1918 in Germany, like in the US today, they went off the Gold Standard and made it illegal to redeem their currency, which was the mark, for gold. To fund the war the government had to turn up the printing presses to pay for the deficit spending. Over the 4 year period the Marks in circulation had quadupled.The main problem was that that people kept hold of every penny that they had in the bank. So there was huge amounts of money being printed into circulation but no one was spending it.
Retail prices finally caught up and rose by 10-20 times. People who still had savings left were left confused because their money now only bought just 10% of what it did a year or two earlier.
In the 1920’s there was a lot of recovery to be done in the economy but the government never stopped printing the vast amounts of money. By 1922 prices had risen another 700%. But the German population had learn’t this time and their attitude of money had changed. Having seen the purchasing power of their currency fall 90% only a few years before.
People knew that if they held on to their money they would get burned and nobody wanted to hold on to it.
The end came when Germany had to pay back its debts to France and they put there printing presses into overdrive. In february 1923 they were printing 45 billion marks per day. By November it was 500 quadrillion. But the value of the currency fell faster than the actual currency they could print. It was the beginning of the end for Germany.
It was reported that in 1923 the purchasing power had fallen 93%. A loaf of bread that cost 1/2 a mark before the war now cost 200 billion marks. The German stock market went from 88 points at the end of the war to 26,800,000,000 points.
It was only gold that had kept the pace with inflation. At the end of the war gold was 100 marks per ounce and by 1923 it was 87 trillion marks per ounce.
People still don’t realize today that hyperinflation has happened over and over again throughout history whenever country goes through financial upheaval, a bubble, war, a market crash or a currency crisis.
It didn’t matter whether you were poor, middle class or rich, it was the people who were smart enough to buy gold that saw there wealth grow exponentially.
