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Hyperinflation

Hyperinflation is a form of economic inflation in which the general price level increases rapidly. No single definition is universally accepted. One simplistic definition requires a monthly inflation rate of 50%; an even simpler definition simply requires out-of-control inflation at an extremely high rate. The definition used by most economists is "an inflationary cycle without any tendency toward equilibrium". What differentiates hyperinflation from regular inflation is a vicious circle is created in which more and more inflation is created with each iteration of the cycle.

Hyperinflation was rare before the 20th century; older economies would revert to either specie metals or barter once inflation reached a certain level. The widespread use of fiat money created the possibility of hyperinflation as governments often tended to print larger amounts of money to finance their expenses. Inflation results where such an increase in money supply occurs without regard for the actual market demand.

Rates of inflation of several hundred percent per month are often seen. Extreme examples include Germany in the early 1920s when the rate of inflation hit 3.25 million percent per month; Greece in the mid-1940s with 8.55 billion percent per month; and Hungary during the same approximate time period at 4.19 quintillion percent per month. Other more moderate examples include Eastern European countries in the period of economic transition in the early 1990s and in Bolivia and Peru in 1985 and 1988, respectively.

Nations such as Ghana in North Western Africa continue to this day to have inflation in the order of 30% per annum.

Hyperinflation causes the production of some interesting banknotes.

One type has a big long row of zeros on the number. (like this: "10,000,000,000").

Another type uses words for part or all of the number (like this: "10 Billion" or this: "Ten Billion")

Still others avoid the use of large numbers simply by declaring a new unit of currency (so, instead of 10,000,000,000 Dollars, you might set 1 New Dollar = 1,000,000,000 old Dollars, so your new banknote would read "10 New Dollars".)

In countries experiencing hyperinflation it is common to see men and women bringing enormous grocery bags full of banknotes to the store, even for simple purchases like bread or milk.

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