When naysayers warn of the perils of inflation, what they’re really talking about is hyperinflation, a condition defined by economist Steve H. Hanke as “a rate of inflation per month that exceeds 50 percent.” This is a chaotic period of economic upheaval, when fixed incomes become worthless, when wheelbarrows are required to transport paper money to the market for simple transactions, when restaurants write menu prices in pencil because they change every hour. Think Germany in 1923, Greece in 1944, Hungary after World War II, or Yugoslavia in 1994.
The most recent example of hyperinflation occurred in Zimbabwe in 2008. At its worst measurable moment, the rate of inflation doubled every 24 hours—meaning Monday’s wages were worth half as much on Tuesday, a quarter as much Wednesday, and were effectively worthless in a week. Needless to say, this wreaked havoc on the economy, devastating the people of that country for years. Banknotes of unusually high denominations were issued.