Hyperinflation and War

Courtesy of Ian Vasquez, the top 10 hyperinflations in world history.

I think this is an important list because it helps clearly highlight that under the list of causes of hyperinflation, you don’t really have “used aggressive monetary stimulus while in a steep recession.” Instead the main theme here is war, with hyperinflation either occuring during a major military conflict or else in its aftermath. And along those lines you could probably add the American Civil War to the list. After all, the price level in the U.S. South as measured in Confederate dollars featured something like an infinite increase as the Confederate government collapsed and Confederate fiat money’s status as legal tender vanished.


At any rate, not every war leads to hyperinflation—even in defeat. There are better and worse ways to handle the problems of wartime finance. But if you’re conquered by the Nazis (as in the Greek case here) or if you join the Axis and then are overrun by the Red Army (as in the Hungarian case) or embroiled in civil war (as in the Chinese and Yugoslov cases), then you’re going to have a serious economic problem. These kind of hyperinflations, in other words, are typically the result of a severe economic catastrophe rather than its cause.