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Consider these Historic Examples

Historic Examples

We would be remiss if we did not consider America in our discussion of famous inflations. One of the most common causes for inflation and rapid issuance of money is war, which obviously requires vast sums of money from a national government to fund.

The two big conflicts to pass on American soil—the American Revolution and the Civil War—are both marked by a dramatic increase in the rate of inflation during these times. Regarding the Revolutionary War, this was a direct result of the mass generation of what are known as bills of credit—state-generated bills that essentially served as a surrogate for money. During the Civil War, meanwhile, it was actual paper money that saw expansion in a major way. In both cases, the high rate of inflation was followed by a corresponding period of severe deflation.

For yet more grievous inflations, though, we may go outside the United States and visit other continents. An oft-cited example of inflation because of the enormity of the situation occurred in 1920's Weimar Germany. Following its defeat in the First World War, Germany was at the political and economic mercy of the war's victors.

Their (the other countries') demand for reparations in the Treaty of Versailles was crippling, especially in light of the London Ultimatum, which mandated that as many as two billion gold-backed mark (the currency of the country at the time) per month be forfeited as a compensatory sum.

Logistically, this turned out to be beyond the country's means, and consequently, an era of hyperinflation swept the Republic. At its worst, the rate of inflation was such that the price of goods would double once, twice or more times over, and just within the span of a week. Moreover, the collapse of Weimar Germany paved the way for the ascendancy of Adolf Hitler to the nation's proverbial throne.

As far as more recent inflations go, another stand-out from a historical standpoint despite its novelty is that of Zimbabwe. The African nation, which is still trying to fight its economic demons, has encountered a rate of inflation at several points in its timeline that easily exceed the millions of percent above the baseline rating.

As is often the case with inflation, the devaluation of the domestic currency will lead to its retirement, if only temporarily. As of this writing, the Zimbabwean dollar is yet out of commission in favor of more stable foreign denominations, namely the U.S. dollar and the South African rand.

NEXT: Easy Guide to Understanding Inflation

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