The world is now amid the worst financial crisis since the Great Depression. It doesn’t look like we’re getting out of it anytime soon. With people’s salaries and savings diminishing with each passing day, it’s time we look at what will happen if this situation persists for too long or worsens even further.
There are two main scenarios as far as hyperinflation goes: One where hyperinflation happens very quickly (usually because there has been some kind of breakdown in society) and one where it takes much longer for inflation to reach such high levels. Let’s first talk about how rapidly things can change when hyperinflation hits quickly.
Hyperinflation could be due to any number of reasons. The most common are widespread unrest, war, or terrorism. Governments go back on their promises to finance the emergency measures required, which leads to much higher inflation rates because there is much less demand for money when people don’t trust banks or governments anymore.
In many developing countries, hyperinflation happens very quickly. Examples of hyperinflation countries are Germany in the 1920s, Hungary after World War 2, and Zimbabwe most recently. In all these cases, conditions rapidly got out of control as governments focused more on dealing with issues at hand rather than what might happen to the economy if they printed too much money.
Suppose people lose faith in a government or the banks. In that case, they start converting their local currency into some other form of money (usually US Dollars), which causes demand for the local currency to drop. The central bank begins printing more money to make up for lost faith but soon realizes that at some point, it isn’t worth the trouble anymore- if people don’t believe in your currency, you might as well not have one anymore.
Therefore, much of the money is created out of thin air. This continues until people start accepting local currency again because there are now so many notes in circulation that it’s no longer possible to buy anything with them. Of course, these higher denominations don’t fix all the problems, but once inflation is this high, everyone is aware of the situation, so they might as well just accept it.
When currencies are allowed to depreciate like this, their value in foreign currencies quickly dwindles to nothing. However, when you look at how much local currency is in circulation, there’s still a lot because most people also store money in foreign and local currencies.
What Is Post Pandemic Hyperinflation
Post-Pandemic Hyperinflation occurs when the money supply is so plentiful that it exceeds the economy’s ability to produce goods and services. This means more money is in circulation than demand for goods and services. This is a relatively new phenomenon that has only occurred twice before: once after World War I and again after World War II.
The world we live in now is vastly different from the one we lived in 100 years ago – or even 50 years ago – and we know that things change, industries shift, economies grow, evolve, mature, and shrink. If history could teach us anything, it would be that technology constantly changes things eventually. In the case of post-pandemic hyperinflation, it’s no different—except this time, technology is changing things faster.
In a hyperinflationary environment, prices skyrocket as money loses its value overnight. In 1923, a loaf of bread cost 25 billion marks. From 2008 to January 2009, inflation ran at an annual rate of 231 million percent in Zimbabwe! A loaf of bread could cost 3 million German marks in Germany’s post-WWI post-hyperinflation economy.
In a hyperinflationary economy, people rarely save money and usually try to spend it as quickly as possible. Because there is so much excess money in circulation, prices rise significantly to accommodate the extra cash people are willing to spend. When prices rise, so does the value of money, which is bad news for anyone who has any because it becomes less valuable with each passing day.
People hoard items that will retain their value or even increase in value (such as food, gold, and silver) during this time. These items become currency in times of hyperinflation because they are most likely to maintain most or all of their value for the most extended period possible.
Since currency is no longer valuable, bartering has become a necessary mode of transaction. People offer products and services directly in exchange for other products and services. For instance, you mow your neighbor’s lawn, and he gives you a shirt.
As post-pandemic hyperinflation worsens, the government must resort to drastic measures such as imposing price controls on essential items. However, this only exacerbates the root cause of hyperinflation since it encourages people to stop producing goods and services, which hurts the economy even further.
How to Prepare for Hyperinflation
The best way to prepare for hyperinflation is to diversify your assets and invest them in a broad range of products and currencies. If you have money, stocks and bonds, and other financial instruments that will hold their value during an economic crisis, then you should keep them. You should also plan if you know that you’ll need cash on hand for emergencies such as car repairs or medical bills. Make sure you can draw on these funds before they lose more of their value.
If you own real estate, then you’re in good shape. Even if the economy tanks, chances are your property will still be valuable so long as it’s not located in an area particularly affected by the crisis.
Bartering can get what they need for people who don’t have money to invest. This method requires some planning because you have to determine what you can offer that other people will want in return. You’ll also need to prepare for the possibility that there may not be anyone willing to swap goods with you, which means you’ll need other ways of getting what you need.
The Dangers of Hyperinflation
Hyperinflation, a monetary phenomenon where inflation rates exceed 50% per month, is a dangerous and destructive occurrence that can render an economy destitute.
People who aren’t prepared for hyperinflation will quickly find their salaries and savings dwindling to nothing. This can cause people to spend their savings irrationally just to get by for another month or two. As prices rise daily, people will need more money to buy food or pay for bus fares.
But some optimistic things are happening amid this financial crisis- namely, increased awareness of how important it is to prepare yourself financially to withstand the worst effects of hyperinflation. There are many online and offline avenues (such as this article) to learn more about how hyperinflation can affect you and your finances.
Perhaps the best way to prepare for hyperinflation is to develop a mindset where saving money gradually becomes an ingrained habit. This would mean people will keep their money in bank accounts rather than spend it frivolously. The next step is to learn how the value of money can be preserved over a long period.
To set yourself up for success in the financial realm, you should start with gold and silver investing. While these commodities have been proven to hold their values over many years, you need to know your options for buying, selling, and storing these commodities.
And to protect yourself from a hyperinflationary crisis, you must buy gold and silver coins. These items are considered the best form of money during inflation because they can be used in places where fiat currencies cannot. Furthermore, these precious metals will maintain their value as the currency devalues.
Other alternative forms of money may become helpful- bitcoins and other cryptocurrencies. While these items (coins and online currencies) aren’t considered legal tender, they can be traded at local exchange centers for fiat currencies. And if hyperinflation renders regular currency worthless, these alternative forms of money would hold their value for a very long time.
However, bitcoins are still in their infancy- this means that it is still not clear if they will hold value long-term or not. There are also some technical issues with this currency form- namely. You need access to an online connection and power source to use them. For the time being, it is best to keep a solid chunk of your savings in fiat currencies and gold- this will give you a good cash flow should hyperinflation get worse.
Hyperinflation can be classified as a disaster by some economists because it can obliterate people’s finances. While several steps can be taken to protect oneself from hyperinflation, it is best to use these options when the currency devalues.
The best way to prepare yourself for hyperinflation is to invest in alternative forms of currency that are believed to hold their values over time. Take this opportunity to earn more money with precious metals and ensure you stay financially solvent while everyone else is struggling to survive.
Strategies for Coping with the Effects of Hyperinflation
One of the first things a person can do is to become a part of a community. A local park, softball league, or other activity that allows you to meet new people can give you an understanding of someplace besides your home. You have to remember, though, that as long as you live in this community, its economy will dictate what you do and how much money you have, if any.
If you’re fortunate enough to be employed and your boss allows it, consider volunteering for one day per week. Volunteering is good for the soul and gives back to those who need us. If we all took this approach and volunteered our time without expecting anything in return, we would slowly turn this global crisis into a worldwide betterment of human conditions.
Many companies will accept food as payment for goods and services rendered. Supermarket chains such as Kroger, Safeway, and Trader Joe’s have all informed their employees that they can accept foodstuffs for groceries. Of course, the quality and brand may affect how much you receive in exchange for food.
It always helps to learn a new skill if there’s a work shortage and you can’t find a job. You may not know it, but most communities have any number of free classes available at community colleges, adult education programs, and even online through private universities. Search out what your surrounding area offers and learn a new skill.
Schools and Churches will also accept food as payment for tuition and financial assistance. If you’re college-aged or older, take advantage of this if you can’t find work. Once again, the quality and brand of the goods may affect how much money they receive, so consider that as well.
Use bartering as a form of trading goods and services. This can be done with friends, family, or your place(s) of employment. If you have a skill that other people need, then you can trade it for something that they have that you need. For example, You can cook, so let’s say I clean your house. You can have a friend bring over his lawnmower to mow my lawn in exchange for me cooking him dinner tonight at my home. It’s that simple and works great as long as you go into the arrangement with no expectations of anything but that particular favor occurring.
This is more of a temporary measure until the crisis passes and you can find work to support yourself, but the reality is that people will do just about anything to survive. You may not have any food or water available for two weeks, so if somebody knocks on your door and offers an unnatural amount of money for your food, then, by all means, take it! If you’re starving, dehydrated, or even concerned that you may become one of those things, then take what he’s offering and be happy.
In summary, do not allow fear to drive your actions because fear will only serve fear. Do the best you can with what you have when you have it and learn from your mistakes – if any.
The Cause and Effect of Hyperinflation
Hyperinflation is defined as the rapid increase in prices for goods and services. Hyperinflation can also describe a period in which consumer prices are rapidly increasing. This is more commonly seen when the inflation rates are more than 50% per month.
Three leading causes of hyperinflation are monetary expansion, government fiscal policy, and exchange rate depreciation. A country’s central bank will generally implement monetary expansion by lowering interest rates or printing money to combat an economic downturn. Government fiscal policy includes heavy borrowing from abroad or various levels of taxation that lead to unsustainable public debt levels. Exchange rate depreciation occurs when a country’s currency rapidly loses value against foreign currencies because of its weak economy. This also leads to a decrease in the foreign capital inflow.
For hyperinflation to occur, all three variables must be present. It does not necessarily require a rapid decline in the value of a nation’s money supply but rather an increase in prices that outstrips the growth rate in the money supply. Hyperinflation generally occurs when the inflation rate is more than 50% for over one month.
There are three stages that hyperinflation goes through. The first stage occurs when the citizens lose confidence in the nation’s currency. The second stage is characterized by rapid increases in prices and widespread bartering. The third stage consists of severe shortages of goods, rationing, and all the economic chaos associated with hyperinflation.
To stop hyperinflation, it must take measures that focus on stabilizing prices and avoiding fiscal deficits or printing excess money. If a government chooses not to deal with these problems, they risk a total loss of confidence in its currency, resulting in its collapse.
How to Protect Yourself From Consequences Of Hyperinflation
One can take precautions to protect themselves from the consequences of hyperinflation. To do so, it would be prudent to keep a store of supplies in case one’s source of income is significantly reduced. This will require having some cash on hand and purchasing tradable goods or assets- for example, gold bullion. It may also be wise to invest in businesses, property or even speculate in forex markets to earn additional income. One should also be aware that currency risk is a potential downside in these investments.
How Hyperinflation Happens
When inflation rises, it can quickly become hyperinflation if the government does not curb it. This type of economic situation usually occurs when there is either a loss of confidence in the government’s ability to maintain the value of its currency, an increase in the supply of money without a corresponding growth in the supply of goods and services, or when there is a loss of faith in the economy. If demand for an economy’s goods and services drops significantly- i.e., during times of war or crisis- prices tend to rise significantly, and it becomes harder to maintain business and consumer confidence. Suppose the government cannot “print” more currency for whatever reason. In that case, hyperinflation can persist until there simply isn’t enough money in circulation to keep up with the number of transactions happening.
The Consequences Of Hyperinflation
In a situation where hyperinflation persists for too long, it can harm the economy in several ways. Savings will significantly lose value, and the population may resort to bartering for goods and services since this would be far easier than using a rapidly losing currency. Businesses would find it extremely difficult to operate in such an environment, investments would likely depreciate, and any current assets will lose value. Unemployment would be extraordinarily high, and inflation may run rampant, especially since wages tend to lag the actual cost of living, which is constantly rising due to hyperinflation.
Hyperinflation does not happen overnight, but it can quickly create a vicious cycle in an economy when it occurs. It can occur when a government is trying to get out of an economic slump or other crisis. Argentina, Bolivia, Brazil, Hungary, and Poland have all experienced hyperinflation in the past century.
Hyperinflation can be described as having very high rates of inflation that are considered abnormally high by most economists. If it continues, the economy will suffer as a result, and people’s life savings may become reduced to nothing. To protect yourself from its negative consequences, it would be recommended that you have a store of goods on hand if your source of income is significantly reduced or eliminated.
Why You Should Care About This Issue
We live in a world of debt-driven economic growth. That means that all our countries depend on more and more borrowing to keep things going, but how many people know what would happen if the world’s central banks ever stop creating new money? Post pandemic hyperinflation is what would happen.
Post pandemic hyperinflation has been defined as “severe” or “high” levels of inflation which occur after an economy has had a significant health crisis, such as an influenza pandemic or natural disaster. This type of economic crisis is different from runaway inflation because it typically doesn’t happen overnight- instead, post-pandemic hyperinflation can take years to develop and usually occurs after a long period of high inflation.
Post pandemic hyperinflation is one of the biggest threats to national economies these days, as we can see from history: most post-pandemics have produced major economic crises that severely affect people’s lives.
The Spanish Flu pandemic of 1918 was one example: it killed about 5% of the world’s population, and its impact on global economies was catastrophic. The worst-hit areas were those where war had caused significant loss of life (which meant labor was scarce) and where large numbers of young men had been drafted to fight (which meant a significant gap in the workforce).
Post pandemic hyperinflation is the worst-case scenario for our world’s economy. It typically takes years to develop and can happen after a significant health crisis such as an influenza pandemic or natural disaster. In this article, we’ve gone over post-pandemic hyperinflation, how it happens, and why you should care about it.