Hyperinflation occurs when a country experiences very high rates of inflation, which erodes the real value of the local currency, and causes the population to minimize their holdings of local money.
It is argued that hyperinflation often occurs as a result of some kind of stress on a Government’s budget. This is because the root cause is a large Government deficit which is financed by money creation rather than other options like increased borrowing or higher rates of taxation.
In the following infographic we look at 5 times that currencies crashed in a big way. In each of these scenarios, war was the primary cause or played a major role in the Government deficit that led to hyperinflation. Interestingly if we examine all the documented instances of hyperinflation throughout history (extending as far back as the Romans), the same is often true – funding wars or funding the clean up from wars creates a huge deficit that often leads to massive currency devaluation.
