Yugoslavia’s Hyperinflation
Jul 17th, 2008 | By Doug Casey | Category: International InvestingHyperinflation is a common concept, but an illustrative example is necessary to show just how quickly it can wreak its havoc. A recent example would be the early 1990s in Yugoslavia when the nation was slipping into civil war.
If you plotted Yugoslavia’s retail prices, money supply and the black market exchange rate for its currency using a base of 100 in 1991, you’d see that all these measures inflated to 10,000,000,000,000,000,000,000 or more by 1994. It can happen that fast.
Compare this to today: while U.S. inflation runs between 4 – 10 % per year (depending on whom you believe), Yugoslavia’s inflation in 1993 reached 2% per hour, with retail prices doubling every two days.
The destroyed Yugoslavian dinar was finally pegged to the German Deutsche Mark on a one-to-one basis in 1994, secured by Yugoslavia’s scant foreign reserves and renamed the “novi dinar.”
But even though this move stemmed hyperinflation, it required 1.2 x 1027 of the pre-1990 currency to purchase just one novi dinar. So much for your dinari-denominated life savings. This hyperinflationary tsunami wiped out generations of accumulated wealth in three short years.
Source: Yugoslavia’s Hyperinflation
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Doug Casey is a contrarian investor, sought-after public speaker and author of several books. His work "Crisis Investing" held the position of # 1 bestseller on the New York Times list for 26 consecutive weeks. Doug's unusual views on the economy - and just about everything else - have gained a huge following in the investment community, and it certainly helps that his stock recommendations of undervalued junior exploration companies have made his subscribers millions. Now in its 27th year, Doug's monthly newsletter, the International Speculator, is one of the most established and esteemed publications on gold, silver and other natural resource investments. Together with the Casey Energy Speculator, it covers a broad range of carefully selected stocks with the very real potential of double- and triple-digit returns within 12 to 24 months.