Highest inflation by country: let’s discover the countries with the highest inflation rates in history, and what you can do to protect your assets from inflation

In this post we will analyze some of the highest inflation rates by country in history, and the reasons behind it. Hyperinflation is often the result of government inefficiency when determining its monetary policies. It is not that uncommon, and has happened multiple times during the past one hundred years.

00:37 What is inflation?

Before we list the countries with the highest inflation in history, let’s understand what is inflation, and what causes it. In economics, inflation is when prices rise and the value of currency decreases over a period of time. 

Usually, inflation is neither high nor harmful. In fact, a small, controlled inflation might even be good for the overall economy. However, a number of reasons can push a stable economy into a two digit yearly inflation, and in some extreme cases, into hyperinflation territory.

The main reasons forcing a country into hyperinflation are: wars, government instability and poor monetary policies, often expressed through excessive money printing.

01:15 Germany

Who would have thought that Germany, a stable and wealth country nowadays, was once the setting for an inflation crisis. It happened in the 1920’s, in the aftermath of the First World War, which Germany lost to the allies.

The inflation in the Weimar Republic, which then became a hyperinflation were a result from Germany suspending the gold standard during the war, and mass printing money after the war to pay for reparations.

A loaf of bread in Berlin that cost around 160 Marks at the end of 1922 cost 200,000,000,000 (billion) Marks by late 1923.

01:42 Hungary

The end of the First World War also cause another inflation, this time in Hungary. The cause for this inflation was mostly the political instability in the country, coupled with the government mismanagement in their monetary policy. 

One quintillion Hungarian pengő.

One of the critical events that pushed the country into hyperinflation was the so called Hegedüs reform. Among other things, the reform imposed a 20% levy on bank deposits, making people less likely to save. On top of that, the government was printing money like crazy, forcing the country into hyperinflation.

The hyperinflation that struck Hungary from 1945 to mid 1946 was the highest recorded in history. 

02:21 Zimbabwe

Zimbabwe is another country notable for its staggering inflation rates. The history of Zimbabwe’s hyperinflation started in the 80’s. Zimbabwe’s government poor decisions, an inefficient land reform and rampant corruption had a key role in the country’s inflation and economic failure.

In 2004, Zimbabwe’s inflation was already at 624%. But it was during 2008 and 2009 that things spiraled out of control in Zimbabwe. In November 2008, the inflation peaked at 89.7 sextillion percent (89,700,000,000,000,000,000,000%). Zimbabwe issued a 100 trillion Zimbabwean dollar banknote in 2009.

03:05 Venezuela

Venezuela is a good example of absolute government economic mismanagement. Apart from failing in virtually all of its public policies, Venezuela managed to have some of the highest hyperinflation ever recorded in the last decade.

The cumulative inflation from 2016 to April 2019 was estimated at 53,798,500% in Venezuela. With its monetary policy completely in shambles, Venezuela is shifting towards the dollarization of the economy.

03:45 How to Protect Against High Inflation?

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Highest Inflation by Country (And How You Can Protect Your Wealth Against It)

Inflation is a term that strikes fear in the hearts of economists and individuals alike. It refers to the continuous rise in the prices of goods and services over time, eroding the purchasing power of money. While most countries experience some level of inflation, there are certain nations that have witnessed astronomical levels of inflation, causing significant economic and social turmoil. In this article, we will explore some of the countries with the highest inflation rates and discuss strategies to protect your wealth against such economic instability.

1. Venezuela:
Venezuela has gained notorious fame for having the highest inflation rate in recent years. With inflation reaching unimaginable levels, prices were skyrocketing daily while the value of the Venezuelan bolivar was plummeting. Citizens struggled to afford basic necessities, leading to severe shortages and widespread poverty. To protect your wealth in such an environment, consider diversifying your assets internationally, investing in stable and reliable currencies, or opting for inflation-protected securities.

2. Zimbabwe:
Zimbabwe experienced hyperinflation in the early 2000s, which reached a staggering estimated peak of 89.7 sextillion percent per month in November 2008. This extreme inflation was driven by a culmination of economic factors, including fiscal mismanagement, political instability, and excessive money printing. To protect your wealth in a country with high inflation, it is crucial to invest in tangible assets such as real estate, precious metals, or even foreign currencies, as their value tends to appreciate during periods of inflation.

3. Argentina:
Argentina has a long history of inflationary pressures, with periods of high inflation recurring over the years. In 2020, the country faced an inflation rate of around 36%, prompting citizens to look for ways to preserve their wealth. During times of excessive inflation, it is advisable to minimize exposure to cash and instead invest in assets that tend to retain their value. Consider diversifying your investments by including stocks, bonds, or commodities.

4. Sudan:
Sudan has had a history of high inflation, primarily due to political instability and economic turbulence. Inflation rates soared to approximately 225% in 2020, making it one of the highest in the world. In order to shield your wealth against inflation, it is recommended to consider investing in foreign assets or seeking alternative currencies that have a more stable track record.

To protect your wealth against the highest inflation rates, it is crucial to adopt a diversified investment approach. Here are some strategies to consider:

1. Diversify Your Assets:
Spreading your investments across different asset classes and geographical locations can help mitigate the impact of inflation. Include stocks, bonds, real estate, commodities, and even international investments to reduce your dependency on a single currency or country.

2. Invest in Real Assets:
Real assets such as real estate, gold, silver, or other precious metals tend to preserve their value during inflationary periods. These assets have intrinsic worth, making them a tangible store of value.

3. Consider Inflation-Protected Securities:
Some countries offer inflation-protected securities, also known as inflation-indexed bonds. These bonds adjust their returns based on changes in the inflation rate, effectively protecting investors against loss of purchasing power.

4. Diversify Your Currency Holdings:
Holding a portion of your wealth in stable, international currencies like the US dollar, euro, or Swiss franc can provide a hedge against hyperinflation in your home country.

In conclusion, several countries have faced the challenges of high inflation rates that can erode the value of wealth. By adopting a diversified investment approach, considering real assets, investing in inflation-protected securities, and diversifying currency holdings, individuals can protect their wealth against inflation and enhance their financial stability during turbulent times.