Central Europe, Europe, Hungary

Hungary (1946) – The Days of Hyperinflation

 

100,000,000,000,000,000,000 = 1 hundred quintillion.

Hungary (1946), Szazmillio B.-Pengo, FRONT, the highest denominated currency ever circulated.

This is a Szazmillio B.-Pengo banknote. “Szazmillio” is Hungarian for one hundred million, so, this is a hundred million B.-Pengos.  “B.-Pengo” means a billion pengo. But Hungary used the “long scale” as did much of eastern Europe at that time. Thus “billion” means a million million, or a trillion. (“Short scale” billion means a thousand million. See here and see below). Thus our banknote is the equivalent of 100 million million million pengos, or one hundred million trillion pengos, or one hundred quintillion pengos.

How much is one hundred quintillion? If in individual pengo banknote was 2″ wide x 4″ long, 100 quintillion banknotes would completely cover our planet, 2000 layers deep!

If those individual banknotes were laid end to end, 100 quintillion banknotes would reach to our nearest star Alpha Centari and back again to Earth, 90 times!

Here is someone’s illustration of what just one quintillion pennies would look like……… 1 quintillion pennies. Envision that multiplied by one hundred!

But a pengo was worth far less than a penny in those days.

Hungary (1946), Szazmillio B.-Pengo, BACK, the highest denominated currency ever circulated. This is the Hungarian Parliament Building on the Danube River.

What did hyperinflation feel like? The worst year was from August 1945 through July 1946 during which prices increased an average of 19% per day. On the worst days, prices would triple from one day to the next. A loaf of bread that cost a dollar yesterday costs 3 dollars today and nine dollars tomorrow and 27 dollars the day after tomorrow.

Says the Technical People: “Hyperinflations are caused by extremely rapid growth in the supply of “paper” money. They occur when the monetary and fiscal authorities of a nation regularly issue large quantities of money to pay for a large stream of government expenditures. In effect, inflation is a form of taxation in which the government gains at the expense of those who hold money while its value is declining. Hyperinflations are very large taxation schemes.” http://www.econlib.org/library/Enc/Hyperinflation.html

How fast did they grow the money supply during that fateful year? How fast did they print more paper money? From what I’ve read, the money supply in July 1945 was 25 billion pengo, and then in January 1946 1,646 trillion pengo, and then in May 1946 65 quadrillion pengo and then in July 1946 47 septillion pengo. They were printing money like it was going out of style. They were printing money so fast that halfway through they stopped collecting taxes (now That had to be Fast!), because the tax value of collections one day late had lost so much value.

It stopped in August 1946 when a new currency was introduced, the florint, at the rate of 1 florint equal to one octillion pengos. And of course, they unplugged the printing presses too.

1,000,000,000,000,000,000,000,000,000 = 1 octillion

Whew!

From Wikipedia…..

“The long and short scales are two of several large-number naming systems for integer powers of ten that use the same words with different meanings. The long scale is based on powers of one million, whereas the short scale is based on powers of one thousand.

Short scale

Every new term greater than million is one thousand times larger than the previous term. Thus, billion means a thousand millions (109), trillion means a thousand billions (1012), and so on. Thus, an n-illion equals 103n + 3.

Long scale

Every new term greater than million is one million times larger than the previous term. Thus, billion means a million millions (1012), trillion means a million billions (1018), and so on. Thus, an n-illion equals 106n. ”

…..from Wikipedia.

 

 

As always, if you have something to add to this story, or a recommended landmark for visiting, I welcome your comments!

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