Friday, September 14, 2012

Hyperinflation in Hungary

Most people know about Zimbabwe's trillion dollar notes or have heard stories about Germans using worthless Marks for wallpaper, but what few realize is that Hungary broke all the records.

Between 1945 and 1946, Hungary was in a state of hyperinflation, with inflation rates reaching 41.9 quintillion percent. (That's 41,900,000,000,000,000,000%)

During this time Hungary printed 2 record-shattering banknotes. One would be the highest denomination ever issued, and the other the highest ever printed.

The 1946 Szazmillio-B Pengo (Pick #136) had a value of 100,000,000 B or 100 million million million, 10^20 and was the highest denomination ever issued in history. In un-circulated condition its collector value is worth about $50.

The 1946 Egymilliard-B Pengo (Pick #137) had a value of  1 milliard B or 100 million trillion, 10^21 was printed but never released. However, some made their way into collectors hands and in un-circulated condition would be worth $200+.

Shortly after they began printing a new note, the Adopengo (tax pengo), but it too suffered from rampant inflation creating the need to print a 10,000,000 Adopengo note.

In the end, Hungary had to reintroduce the Forint. The Forint's value was so high (4x10^29) that the combined worth of all pengo's in circulation came to 1/1000th of a single Forint. The exchange rate for Adopengo's to Forints was set at 200,000,000:1. At the time $1 was worth 11.74 Forints.

All of this reminds me of our current situation in the US. Since the introduction of the Federal Reserve Dollar in 1913, it has lost nearly all of its value  - being worth only $0.04 today compared to 1913. The Federal Reserve announced today that it would initiate a new round of quantitative easing (QE3) which basically means printing more money without any real value behind it. Even experts doubt it will help our economy and will bring commodity prices higher and higher. Could we too be on the verge of a 100 quadrillion dollar note?


  1. I don't think I would would worry much about the possibility of a 100 quadrillion dollar US note (though it would make a cool collectable some day). An inflation rate of 3% per YEAR would account for the "loss of value" of the dollar from $1 to .04 between 1913 and 2012.

  2. Thanks for your comment. The issue isn't that we're experiencing hyperinflation, obviously we're not, but that our monetary policy is one that could lead to hyperinflation in time. And while 3% inflation doesn't sound bad and maybe even good, in my estimation any inflation rate that isn't totally connected to the marketplace is bad. The Federal Reserve has in essence divorced our currency from the free market and the bulk of American "wealth" is totally false (not based on productivity, goods etc), and in time I think we will either undergo rampant inflation or a severe correction.

  3. where would i get this one any im in india so its very hard to find it...

    1. You should be able to find most of these on eBay. The 1946 Egymilliard-B Pengo #137 note may be harder to find.

    2. Guy Lévesque: I have one bill of EGYMILLIARD MILPENGO Budapest 1946 evi junius ho 3-an MAYGAR NEMZETI BANK Unciculated condition
      signed by Fontanacsos Elnok and vezérigazgato.
      To contact me by email:
      I live in the privince of Québec in Canada