Best of the Week
Most Popular
1.London House Prices Bubble, Debt Slavery, Crimea 2.0 - Russia Ukraine Annexation - Nadeem_Walayat
2. Gold And Silver – 2014 Coud Be A Yawner; Be Prepared For A Surprise - Michael_Noonan
3.Sheffield, Rotherham Roma Benefits Plague, Ch5 Documentary Gypsies on Benefits & Proud - Nadeem_Walayat
4.Glaring Q.E. Failure Spotted - Money Velocity Is Falling Rapidly - Jim_Willie_CB
5.Don't Miss the Boat on Big Biotech Catalysts: Keith Markey - Keith Markey
6.Gold Prices 2014: Do What Goldman Does, Not What It Says - David Zeiler
7.Bitcoin Price Strong Appreciation to Be Followed by Declines? - Mike_McAra
8.Gold Preparing to Launch as U.S. Dollar Drops to Key Support - Jason_Hamlin
9.Doctor Doom on the Fiat Money Empire Coming Financial Crisis - Andrew_McKillop
10.The Real Purpose Of QE - It’s Not Employment - Darryl_R_Schoon
Last 72 Hrs
Stock Market Bears Wrong Again, Apple to Push Dow to New All time High - 24th Apr 14
Gold Prepared for the Attack of the Short Sellers - 24th Apr 14
Weak U.S. Housing Data Supports Euro - 24th Apr 14
Killing the Maximum-Wage Myth - 23rd Apr 14
U.S. Quarterly Economic Review - Optimism at the Fed - 23rd Apr 14
Why Mohamed El-Erian Left Pimco - Video - 23rd Apr 14
QE Is A Fraud Perpetrated By Made Men - 23rd Apr 14
Gold and Miners Outperform Once Again - 23rd Apr 14
G-20 and the US Tell the Bank of Japan to End Quantitative Easing - 23rd Apr 14
How to Get in the Trading Game and Profit - 23rd Apr 14
Fed Follies, U.S. Housing Market Fiasco - 23rd Apr 14
What Will December 31, 2014 Financial Headlines Look Like? - 23rd Apr 14
Why Gasoline Prices are Surging Again - 22nd Apr 14
Cold War 2.0 - 22nd Apr 14
The JIS – Junk Ideology Syndrome - 22nd Apr 14
How to Avoid Losing All Your Money - 22nd Apr 14
Silver Up, Stocks S&P Down - 22nd Apr 14
U.S. Mainstream Media Propaganda Setting the Stage for War With Pakistan - 22nd Apr 14
U.S. Interest Rates are NOT Rising! - 22nd Apr 14
A Crisis vs. the REAL Crisis: Keep Your Eye on the Debt Ball - 22nd Apr 14
Bitcoin Implications of Lack of Price Action - 22nd Apr 14
Japan - The Twilight Of The Rising Sun - 22nd Apr 14
Is This What a Credit Bubble Looks Like? - 22nd Apr 14
The Dark Side Of The Silver Mining Industry - 21st Apr 14
Strong U.S. Dollar Rally Could Pull Rug From Under Gold and Silver - 21st Apr 14
Silver Feeble Rally Fails to Hold Breakout, Falling Back Towards Support - 21st Apr 14
Stock Market Smart Money – All Out or More to Go? - 21st Apr 14
Fast Rising Pump Prices Counterattack - 21st Apr 14
Extreme Climate Change And Life On This Planet - 21st Apr 14
Gold and Silver Stocks Sitting Tight - 21st Apr 14
Stock Market Minor Correction Imminent - 21st Apr 14
Gold and Silver - Counting Blessings and Tender Mercies - 20th Apr 14 - Jesse
The CIA Through The Looking-Glass - 20th Apr 14 - Stephen_Merrill
Gold And Silver - Gann, Cardinal Grand Cross, A Mousetrap, And Wrong Expectations - 20th Apr 14 - Michael Noonan
Nikkei Stock Market - Sell Japan - 20th Apr 14 - WavePatternTraders

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Tracking World Hyperinflation - The Data from Argentina to Zimbabwe

Economics / HyperInflation Oct 04, 2012 - 03:19 PM GMT

By: Submissions

Economics

Best Financial Markets Analysis ArticleSteve H. Hanke writes: Hyperinflation is an economic malady that arises under extreme conditions: war, political mismanagement, the transition from a command to market-based economy. There are barriers to the recording and publication of reliable inflation statistics. Overcoming these barriers is an arduous and painstaking process. This article and attached table – an abbreviated version of a Cato Working Paper – supply, for the first time, data on all 56 episodes of hyperinflation, including several which had previously gone unreported.


The literature on hyperinflation is replete with ad hoc definitions, vague, ill-defined terminology, and a lack of concern for clear, uniform metrics. We attempted to fill the void.

The Hyperinflation Table is compiled in a systematic and uniform way. It utilises clean and consistent inflation metrics, indicates the start and end dates of each episode, identifies the month of peak hyperinflation, and signifies the currency that was in circulation, as well as the method used to calculate inflation rates. We soon learned why no such table exists. We frequently found leads suggesting new episodes, only to discover that the proper documentation of their source was lacking. Even in cases in which we thought replication would be straightforward, it was not.

The former Soviet bloc countries were a particular source of frustration. The data had seemingly been lost in time. After scouring the Library of Congress and the Joint World Bank-IMF Library, as well as a variety of online databases, we finally came across a series of World Bank publications that ostensibly contained the requisite information. But, much of the data were not presented in a usable form. The challenges we faced with the Soviet Bloc were compounded as we looked to the Balkan States and began to investigate hyperinflation episodes of the 1990s. Bosnia and Herzegovina and the Republika Srpska posed the most difficult problems.

In another case, we were able to overcome data deficiencies in a different way. We knew that the Free City of Danzig engineered a currency reform in 1923, following inflationary developments similar to those that had visited Germany. Suspecting that this currency reform was enacted in response to a case of hyperinflation, we were forced to employ creative methods to estimate Danzig’s inflation rate, using purchasing power parity (PPP) to overcome the obstacle.

One 'missing' case was easier to find. We discovered the data for the Democratic Republic of Congo’s August 1998 hyperinflation using the IMF’s International Financial Statistics database. Another largely unreported hyperinflation episode occurred in the Philippines. In 1942, during its occupation of what was then the Commonwealth of the Philippines, Japan replaced the Philippine peso with Japanese war notes. Over-issuance of these notes, dubbed ‘Mickey Mouse money’, resulted in a hyperinflation that peaked in January 1944. The US Army added a small amount of fuel to the Philippine hyperinflation fire by distributing counterfeit Japanese war notes to Philippine guerilla troops.

One of the biggest problems encountered when discussing hyperinflation is the extreme size of the monthly inflation rates. For example, in July 1946, Hungary had a monthly inflation rate of 4.19 × 1016 %. We included two metrics that help put hyperinflation into perspective: the equivalent daily inflation rate and the time required for prices to double. After years of disorder in the study of hyperinflation, we can now, with The Hyperinflation Table, finally let the data speak for themselves.

This article and the table on p. 11-12 represent an abbreviated version of "World Hyperinflations, a Cato Working Paper" by Steve H. Hanke and Nicholas Krus, August 2012, available from Cato Institute, 1000 Massachusetts Avenue, N.W.Washington, D.C. 20001. Their working paper is available at http:// tinyurl.com/worldhyperinflations. Steve H. Hanke and Nicholas Krus are respectively Professor of Applied Economics at The Johns Hopkins University and research associate at the Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise. Contact: hanke@jhu.edu.

By Steve H. Hanke and Nicholas Krus

www.cato.org/people/hanke.html

Steve H. Hanke is a Professor of Applied Economics and Co-Director of the Institute for Applied Economics, Global Health, and the Study of Business Enterprise at The Johns Hopkins University in Baltimore. Prof. Hanke is also a Senior Fellow at the Cato Institute in Washington, D.C.; a Distinguished Professor at the Universitas Pelita Harapan in Jakarta, Indonesia; a Senior Advisor at the Renmin University of China’s International Monetary Research Institute in Beijing; a Special Counselor to the Center for Financial Stability in New York; a member of the National Bank of Kuwait’s International Advisory Board (chaired by Sir John Major); a member of the Financial Advisory Council of the United Arab Emirates; and a contributing editor at Globe Asia Magazine.

Copyright © 2012 Steve H. Hanke - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014