Читать книгу Investing For Dummies - Eric Tyson - Страница 35

You think 6, 8, or 10 percent annual inflation rates are bad? How would you like to live in a country that experienced that rate of inflation in a day? Too much money in circulation chasing after too few goods causes high rates of inflation.

A government that runs amok with the nation’s currency and money supply usually causes excessive rates of inflation — dubbed hyperinflation. Over the decades and centuries, hyperinflation has wreaked havoc in more than a few countries.

What happened in Germany in the late 1910s and early 1920s demonstrates how bad hyperinflation can get. Consider that during this time period, prices increased nearly one-billionfold! What cost 1 Reichsmark (the German currency in those days) at the beginning of this mess eventually cost nearly 1 billion Reichsmarks. People had to cart around so much currency that at times they needed wheelbarrows to haul it! Ultimately, this inflationary burden was too much for the German society, creating a social climate that fueled the rise of the Nazi party and Adolf Hitler.

During the 1990s, a number of countries, especially many that made up the former USSR and others such as Brazil and Lithuania, got themselves into a hyperinflationary mess with inflation rates of several hundred percent per year. In the mid-1980s, Bolivia’s yearly inflation rate exceeded 10,000 percent.

Governments often try to slap on price controls to prevent runaway inflation (President Richard Nixon did this in the United States in the early 1970s), but the underground economy, known as the black market, usually prevails.