Imagine the price of your morning brew suddenly skyrocketed as you drank it. The harsh fact of hyperinflation is that prices rise sharply, and currency rapidly loses its buying value.

The studies found that the 20th century saw 17 hyperinflations, with five occurring in Latin America, 4 in Western Europe, 1 in Southeast Asia, and 1 in Africa. Even while hyperinflation has never happened in the United States, the country came dangerously near twice (during the Revolutionary War and the Civil War) when the government printed money to fund its war efforts. The monthly inflation rate of 50% is widely accepted as the unofficial threshold for hyperinflation, yet neither occurrence in the United States crossed that line.

Hyperinflations had never occurred when a commodity served as money or when paper money was convertible into a thing," the authors write in the report's opening for the CATO Institute. Hyperinflation only developed when the monetary supply was unconstrained and managed by a purely arbitrary paper money standard. Remember that hyperinflation can affect any fiat currency, but it requires a confluence of political and social extremes for it to take hold.

There is a monthly inflation rate peak

By 1944, Greece had the world's fifth worst inflation rate, with prices doubling every 4.3 days. Greece officially entered hyperinflation in October 1943, while the Germans still occupied the country. Nonetheless, according to Gail Makinen's research, prices increased by an astounding 13,800 per cent in October 1944 and by another 1,600 per cent in November.

By November 10, 1944, the typical Greek had only held on to a drachma note for four hours, down from a holding period of 40 days in 1938. The most significant bill issued in 1942 was for 50,000 drachmae, while in 1944, it was for 100 trillion drachmae. While the government officially gave new drachmai on November 11 at a rate of 50 billion to one, the people continued to use British Military Pounds as their means of exchange until about midway through 1945.

Price increases from January to May 1945 were only 140 per cent, largely thanks to stabilisation efforts after famed economist Kyriakos Varvaressos was appointed economic czar in June 1945. Varvaressos resigned on September 1 after the country's budget deficit ballooned under his watch due to his policies of increasing overseas aid, reviving domestic industry, and instituting price and wage controls by redistributing wealth.

After the civil war that lasted from January to December of 1945 and 1946, the British government proposed a plan to stabilise the country. The program's goals were to ensure fiscal responsibility by raising revenue through the sale of aid goods, modifying specific tax rates, improving tax collection methods, and establishing the Currency Committee (composed of three Greek Cabinet Ministers, one British, and one American). By 1947, Greece had emerged from the whirlpool of hyperinflation, with prices stabilising, public confidence restored, and national income increased.

The Roots of Greece's Price Hikes

Greece's hyperinflation can be traced back to the monetary burden of World War II, which saw the country's trade collapse, its currency devalued, and the land occupied by the Axis powers for four long years. Greece had a budget surplus of 271 million drachmae in the fiscal year 1939 before the outbreak of World War. Expenditures would keep going up while revenues stayed the same, meaning deficits wouldn't disappear.

World War II, which left Greece in debt, disrupted the economy, and culminated in four years of Axis occupation, was the primary cause of hyperinflation in the country. Greece had a budget surplus of 271 million drachma in the fiscal year 1939 before the outbreak of World War II, but this dropped to a deficit of 790 million drachma the following year as a result of increased trade deficits, decreased industrial production due to a lack of raw materials, and unexpected increases in military spending. The budget gaps would still be covered.

Greece had a budget surplus of 271 million drachma in the fiscal year 1939 before the outbreak of World War II, but this dropped to a deficit of 790 million drachma in the year 1940 due to trade and decreased industrial production because of scarce raw materials, and unexpected military expenditures. The Bank of Greece would continue to advance against the country's currency to cover the deficits, despite having doubled the money supply at that time.