Era 05 · 1914 — 1971

Hyperinflation Century

Loss of purchasing power

By the trillion

Pulse cycle

2.5s

With gold constraints effectively removed after World War I, the 20th century produced the most spectacular currency collapses in recorded history. Weimar Germany, Hungary, Greece, China, Yugoslavia, and dozens of lesser-known cases all reached true hyperinflation — monthly inflation above 50 percent, continuing for months or years. The Hungarian pengő collapse of 1946 remains the worst on record, with prices doubling every 15 hours at its peak. The era ended with Nixon's closure of the gold window in August 1971, which made every major currency in the world fully fiat for the first time in history.

Events in this era

Nov 15, 1923

Weimar mark peaks at 4.2 trillion to 1 USD

On November 15, 1923, the German Rentenbank issued new currency (the rentenmark) at a conversion rate of 1 rentenmark per 1 trillion (10^12) old marks. The old mark had been trading at roughly 4.2 trillion to the U.S. dollar the previous day — compared to 4.2 marks to the dollar in mid-1914, the start of the war. German prices had risen by a factor of roughly one trillion in nine years. Workers were paid twice a day and rushed to spend wages before they lost value. Photographs of children building stacks with bundles of marks became the iconic images of 20th-century monetary collapse.

German currency destroyed by factor of 10^12

Jul 1946

Hungarian pengő — worst hyperinflation on record

The Hungarian pengő reached its peak hyperinflation in July 1946, with monthly inflation of 4.19 × 10^16 percent — meaning prices doubled every 15 hours. By the end, the government was issuing a 100 quintillion (10^20) pengő note, the largest denomination ever printed anywhere. A special parallel currency, the adópengő ('tax pengő'), was introduced to allow government accounting to continue amid the chaos. The pengő was replaced by the forint on August 1, 1946, at a conversion rate of 4 × 10^29 pengő to 1 forint — the largest monetary exchange ratio ever enacted.

Worst hyperinflation ever recorded

Aug 1948 — Apr 1949

Chinese gold yuan collapses

The Nationalist Chinese government introduced the gold yuan in August 1948, attempting to stop runaway inflation of the existing fabi currency. The new note was promised to be backed by gold and foreign exchange reserves, and all Chinese citizens were ordered to exchange their gold, silver, and foreign currency holdings for the new yuan. Within eight months, the gold yuan had lost 99 percent of its value and people were back to using silver dollars and barter. The collapse of confidence in Nationalist money contributed directly to the final Nationalist defeat and the Communist victory in October 1949 — the People's Liberation Army entered cities where merchants had already stopped accepting Nationalist currency.

Hyperinflation contributes to regime collapse

Jul 22, 1944

Bretton Woods dollar-gold peg

At Bretton Woods, New Hampshire, 44 Allied nations signed the agreement on July 22, 1944 that established the postwar international monetary system. The U.S. dollar was pegged to gold at $35 per ounce. All other currencies were pegged to the dollar. The system was designed to avoid the competitive devaluations and monetary chaos of the interwar period. It worked for about 25 years — a period of historically low monetary volatility — before the U.S. began issuing dollars faster than it could realistically redeem in gold, setting up the collapse of 1971.

Dollar becomes global reserve currency by treaty

Aug 15, 1971

Nixon closes the gold window

President Nixon announced on national television on Sunday, August 15, 1971 that the United States would 'temporarily' suspend the convertibility of dollars into gold. The suspension was never reversed. The Bretton Woods system collapsed over the next two years as other currencies were forced to float against the now-unconvertible dollar. For the first time in the history of the world, every major currency was fully fiat — backed by nothing but the issuing government's word. Gold rose from $35 per ounce to over $800 within eight years.

First fully fiat global monetary system in history

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