In economics, hyperinflation is inflation that is very
high or "out of control". While the real values of the specific
economic items generally stay the same in terms of relatively stable foreign
currencies, in hyperinflationary conditions the general price level within a
specific economy increases rapidly as the functional or internal currency, as
opposed to a foreign currency, loses its real value very quickly, normally at
an accelerating rate. Definitions used vary from the International
Accounting Standards Board's a cumulative inflation rate over three years
approaching 100% (26% per annum compounded for three years in a row) to Cagan's
(1956) "inflation exceeding 50% a month." As a rule of thumb, normal
monthly and annual low inflation and deflation are reported per month, while
under hyperinflation the general price level could rise by 5 or 10% or even
much more every day. A vicious circle is created in which more and more inflation
is created with each iteration of the ever increasing money printing cycle. Hyperinflation becomes visible when there is an unchecked
increase in the money supply (see hyperinflation in Zimbabwe) usually
accompanied by a widespread unwillingness on the part of the local population
to hold the hyperinflationary money for more than the time needed to trade it
for something non-monetary to avoid further loss of real value. Hyperinflation
is often associated with wars (or their aftermath), currency meltdowns like in Zimbabwe, and
political or social upheavals, plus an aggressive bidding against the money on
currency exchanges.
These are the five biggest hyperinflations in world history: