Highest inflation in history. Current inflation rate in different countries
World inflation
What inflation will be in the next ten years? This question is currently the most incomprehensible for the world economic community.
While investors are guided by the "compass", the government uses a special "calendar".
While we are in the "Spring" zone - at the stage of the growth of world savings and the growth of national debt.
How the ratio of accumulated deposits in the world to world GDP is shown in the following diagram.
We see that over the past two decades money savings grew from 60% of GDP to 100%. Sooner or later, the growth trend of savings will reverse.
At this point, consumer demand will skyrocket. If nothing is done, then "Autumn" will come. There will be strong inflation. "What we sow, we will reap." Printed money - received a sharp increase prices.
If everything is done on time - to carefully withdraw the "extra" money from the economy at the time of an increase in demand, then we will find ourselves in the zone of happiness - "Summer". The national debt will fall against the backdrop of insignificant inflation and a decent level of profit for companies. "Spring has passed, summer has come, thanks to the party for that!"
But if you start tightening the screws too early, sharply reducing the state deficit, without waiting for an increase in consumer spending, then the "Winter" will begin - not only snow will fall, but also the profits of companies. We will get depressed.
Overall, governments face a daunting task. “Russia has excellent agriculture - but there are four very serious problems. It is spring, summer, autumn and winter. "
To withdraw money from the economy, the state has two main instruments: tax increases and reduction of government spending.
It is dangerous to increase taxes - you can lose your competitiveness.
Nowadays there is a war two worlds. On the one hand, these are multinational corporations such as Microsoft, Procter & Gamble, General Electric or IBM, and on the other, governments.
The state represents the interests of the socially disadvantaged strata of society, which constitute the majority of voters. Naturally, the government wants to impose high taxes on corporations and their high-paid employees, and give money to the poor. But if corporations are faced with high taxes, they immediately find refuge in other, more malleable countries.
And this is very unpleasant, because today, unlike what was 50 years ago, all scientific thought is concentrated in large corporations. State scientific institutes do little serious research. Therefore, if there are no international companies in the country, then there are no scientific developments. Just look at modern Russia... We complain that our science is dead. And how many international companies in our country conduct scientific research? Zero. Hence the result.
It turns out that the country should either levy low taxes, increasing the national debt, or have high taxes, while ignoring scientific research. But the latter is fraught with defeat in another war. And since being ruined is always better than losing a war, governments tend to keep taxes low. At the same time, money for maintaining living standards ordinary citizens borrowed on the market. And it turns out that first, states give large corporations to earn money, and then they themselves borrow money from their owners. Such is the vicious circle.
Reducing government spending is also a painful procedure, always causing a storm of protest.
But you still have to choose between increasing taxes and cutting costs. After all, to extinguish the potential growth in demand by standard measures, due to the rise bank rates, today is impossible. The reason is that governments are too much in debt today. Height interest rates will lead to an increase in the cost of their maintenance, which is hardly acceptable.
What should governments do to remove money from the economy, but in a way that doesn't hurt anyone? I like the worldwide tax. As soon as consumers spend more than they earn, it automatically increases. Spend less - it goes down. How do I enter it? And he actually already exists. Oil price. Producers can be given $ 100 a barrel - they'll be happy. Anything on top will be a worldwide tax. By manipulating it, you can keep the system in balance for a long time. Since there is world profit and world inflation, then the world tax suggests itself.
In the meantime, each state fights potential inflation with its own unique methods, the situation remains unpredictable.
Nevertheless, we believe that in the next few years there will be no strong growth in prices in the world. Reserves will be saved from it - high unemployment, immigration, accumulated stocks, incomplete loading equipment. In addition, as usual, prices will decline due to technological advances.
Which groups of goods will be affected by reserves and new technologies with an increase in demand is shown in the table below.
Inflation is very simple: the prices of goods and services in your country are rising because money loses its value. The reason for this economic "trouble" leading the economy to collapse today can be anything: wars, diseases, coups, cataclysms, mistakes of politicians (the most common reason), etc. You can explain the causes of inflation and so. The level of production and exports in the country is falling, respectively, the state earns less or nothing at all. Banks, the currency of the state, and the state itself, is less and less interested in anyone as a business partner, and it begins to gradually waste its resources ( gold and foreign exchange reserve), if any. Accordingly, a difficult time is coming for the people of this country, and they go to the store for groceries not with "trifles", as before, but with paper bills, if the people have any. Which countries have experienced the most powerful, galloping inflation?
1. Zimbabwe (2000-2009)
The “talk of the town” of all economists and bankers of our time is precisely Zimbabwe. This predominantly agricultural country grew and exported tobacco, cotton, tea and sugarcane. In 2000, the Zimbabwean authorities began illegal confiscation of land from European farmers in order to give it to local "businessmen", most of them veterans of the civil war of the 70s. As a result, production and export almost completely stopped. The country has suffered huge losses because foreign investors they simply stopped investing in the economy of this country and imposed numerous sanctions and trade embargoes. For 2008, inflation in Zimbabwe was 231,000,000% per year! Those. prices doubled every 1.5 hours !!! All these years, the authorities did nothing except print new bills with more and more zeros. In July 2008, three chicken eggs in the store were worth 100 billion Zimbabwean dollars. In 2009, the president of the country (who, in fact, brewed this mess) "got an insight", and the country refused own currency in favor of the US dollar. The situation has improved a little, and the land that was forcibly taken from the farmers is still empty.
2. Hungary (1945-1946)
Devastated by the Second World War, Hungary was left without production and as a "Hitlerite accomplice" fell into economic dependence from the USSR. After paying huge reparations to the participating countries, Hungary became bankrupt with huge debts and devastation in the country. Inflation did not have to wait long. When it began in 1945, the largest denomination in the country was the ten thousandth pengö (the currency of Hungary before the forint). A couple of months later, a note of 10 million pengö was printed, a little later - 100 million, and then 1 billion. At that time, inflation reached 400% per day - prices doubled every 15 hours! There were notes in 1 trillion, 1 quadrillion and 1 sextillion ... The National Bank of Hungary, perhaps, would have continued to search for the largest number, but in August 1946 it all ended with the introduction of a new currency - the forint.
3.Greece (1944)
In 1941, Germany, together with Italian troops, occupied Greece. Prior to that, the Greeks successfully repulsed the attacks of the Italians. By forcing Greece to pay a huge amount of "occupation costs", Germany paralyzed the entire economy of the country. Agriculture, the main artery of the economy, and foreign trade have completely disappeared. Hunger began. Back in 1943, the largest banknote was 25,000 drachmas, and a year later, a denomination of 100 billion drachmas appeared. Prices doubled every 28 hours. The population survived only thanks to barter and natural exchange. Only thanks to the competent actions of the Greek authorities, the country's economy got out of the "debt hole". It happened after 7 long years.
4. Yugoslavia (1992-1994)
After the collapse of the USSR, Yugoslavia also began to disintegrate. The process was actively supported by the West, and the negative result was not long in coming. Serbia, Croatia and, in fact, Yugoslavia itself appeared. Civil war broke out, and the UN imposed all possible sanctions and embargoes against Yugoslavia. Production and trade, even within the country, practically stopped. Prices rose every 34 hours, and the government started printing money ... From the largest denomination in 1992 of 5,000 dinars, Yugoslavia reached 500 billion dinars in two years. The economy has withered completely, despite the apparent attempts of the government. Only the German mark, introduced into circulation in 1994, could revive it.
5. Germany (1922-1923)
After the defeat in the First World War, Germany also experienced all the "delights" of poverty. Having paid huge reparations to the winners, the authorities for some time did their best to restrain the rise in prices, but to no avail. Every 49 hours people saw new price tags, and every month they looked at new bills of even larger denomination with surprise. The largest was the 100 trillion mark, which actually cost less than $ 25. In November 1923, a new currency was introduced - the "rental stamp". She saved at that time the economy, which later became one of the strongest in the world.
6. France (1795-1796)
The French Revolution (1789-1799) happened at a time when France's debt reached 4 billion livres! The colossal amount was mainly due to the reign of the most wasteful king in history - Louis XV. The main means of dealing with such debts, the revolutionary government chose the nationalization of church lands under a bond loan - of course, with the subsequent sale. In the "revolutionary impulse" they printed as many bonds as there was never any land in France. At the peak of inflation, prices rose every 5-10 days, and a pair of boots, which once cost 200 paper livres, had a price of 20,000. The coin, the franc, saved the day. The authorities publicly burned on the Place Vendôme all the paper notes in the treasury (about 1 billion livres) and all the machines for their production. Having thus begun the general exchange of "paper" for "metal", by the end of 1797 the French made the franc a stable currency for many years.
7. Peru (1984-1990)
In the distant past, the great Inca Empire, the Republic of Peru, already in the twentieth century, knew the disadvantages of economic progress. Due to problems in production and foreign trade, the currency of Peru - "salt" - began to rapidly fall in price. In 1984 the most large bill in 50 thousand salts turned into 500 thousand. The authorities conducted monetary reform and introduced a new currency - "inti". But this move is nothing without reanimating production and trade ties. A bill of 1 thousand inti by 1990 became a bill of 5 million of the same long-suffering inti. In 1991, through many reforms, it was possible to stabilize the situation and at that time the “new salt” was equal to 1 billion salts of the 1984 sample.
8.Ukraine (1993-1995)
Ukraine has experienced one of the worst inflation rates in the post-Soviet space. Within 2 years, inflation reached 1400% per month. The reasons are the same as in other cases - a drop in production and export profits. The largest bill after the declaration of independence was 1000 coupons. By 1995, there were already 1 million coupons. Without reinventing the wheel, the National Bank withdraws coupons from circulation and introduces hryvnia, changing at the rate of 1: 100,000. At that time, this was equal to about 20 American cents.
At that time, amazing stories happened, people who took out loans for the purchase of a car or housing, after a while extinguished these loans from their monthly salary.
9. Nicaragua (1986-1991)
After the 1979 revolution, the new Nicaraguan authorities nationalized most of the economy. Given the enormous external debts countries, it caused economic crisis and inflation. The largest bill of 1 thousand cordobas in less than a year became a bill of 500 thousand. In 1988, the old cordoba was replaced with a new one. It certainly didn't help. In mid-1990, a “golden cordoba” was introduced, equal to 5 million new cordobas. It turned out that 1 gold cordoba was equal to 5 billion cordobas issued before 1987. This "fermentation of cord" slowed down a little, and later almost stopped when the agrarian sector of the economy was resumed.
10. Krajina (Serbian) (1993)
Krajina is an unrecognized country, annexed to Croatia in 1998. But while still independent, it underwent an economic decline, tk. could not establish, nor own production nor trade with neighbors. In just a year, 50,000 dinars turned into 50 billion! Gradually, with battles and negotiations, Krajina was returned to Croatia, however, many Serbs left ...
Inflation as a result of the authorities' illiteracy can be easily defeated, provided that these very authorities really look at things. Borrowing money from other countries, the country can live without troubles, but for a very short time. Only by setting up production and setting up trade in your own goods, along the way accumulating resources, you can not only not be afraid of this phenomenon, but also successfully help others. Of course, for your own benefit. These are market relations that man came up with.
Most people believe that everything can be bought for money. But what happens if the money depreciates? V modern world inflation can make you pay twice as much for your favorite espresso the very next morning.
For each of us, the word "inflation" has its own meaning. Most often, it is interpreted as a "general increase in prices", and with them - an increase in prices for all kinds of services and consumer goods.
Inflation in the countries of the world manifests itself in different ways. Therefore, to determine its value, the so-called consumer price index (CPI) was developed: it measures the average price of goods and services, thereby making it possible to calculate the inflation rate around the world.
Simply put, the rate of inflation is the rise in world prices and prices in each country. During inflation, money tends to depreciate, which means that the capacity of the population as consumers decreases. It's simple: you pay more, but you get the same amount as you received before.
As for, directly, the inflation rate in the countries of the world, then we can say with confidence that it has no boundaries. For a good example: in 2007, Zimbabwe recorded the highest inflation in the world - 230,000,000%. In the morning, people bought a bottle of water (by the way, which is a really vital product in African countries) for 100 billion Zimbabwean dollars, and by evening - already for 200 billion.
Why is inflation coming?
Inflation rate in different countries the world can be drastically different. It depends, first of all, on economic policy country, as well as from its development as a whole. Nevertheless, there are several main ones:
- Economic instability
- Too much money issue (issue).
- Budget deficit
- A global crisis (raw materials, energy, etc.)
- Problems in the tax system
Inflation in the world: who pays more?
From year to year, indicators of the level of growth or decline in prices change, along with this, countries change their place in the financial ranking.
In 2016, Venezuela became the country with the highest inflation rate in the world - 181%. Its closest neighbors are Ukraine (49%), Yemen (32%) and South Sudan (41%).
Simply put, in countries with severe economic situation depreciation national currency will go much faster. Due to this, ordinary people suffer, including you.
Is inflation eating up my savings?
Yes. But only if you keep them in your secret home safe or plastic card. But why?
Every year you can buy less and less with your savings. If you want to save your money from depreciation, it should be kept in currencies or else.
Using statistical forecasts, one can only try to predict what the level of future prices will be, because it can be completely unpredictable.
The biggest inflation in the world happened in Zimbabwe. In 2008, in this small African state, according to official data, inflation was 231 million percent per year, and according to unofficial data - 6.5 quinquatrigintillion percent !!!
To make it clear how big inflation was in Zimbabwe, it is easier to give a few examples. In December 2007, a 750 thousand Zimbabwean dollar bill was put into circulation in the country, and in January 2008 - ten million. And away we go ... in April appeared new banknote 50 million dollars (at the time of its appearance, it cost about 1 US dollar), in May - 100 and 250 million, then more - soon citizens were paying for basic necessities in 5, 25 and 50 billion bills.
The government did not have time to draw zeros, and citizens did not have time to keep track of the increase in the cost of food and goods. Here is one of illustrative examples the biggest inflation in the history of mankind - on July 4, 2008 at 17:00 local time, the price of one bottle was one hundred billion Zimbabwean dollars, and in an hour it was fifty billion more.
One more interesting fact- in Zimbabwe, the cheapest cost $ 100,000. If we take into account the fact that on average there are about 72 pieces on a roll, and 100 thousand can be exchanged for $ 5 and get 20,000 bills, it turns out that in Zimbabwe it is 278 times more profitable to use money instead of toilet paper than to buy this the very paper.
The reason for inflation in Zimbabwe and the last straw that filled the bowl of the collapse of the economy was the rise in prices for bread and cereals. This happened after the permanent dictator of this small African state, Robert Mugabe, confiscated land plots from white farmers.
In August 2009, the government of Zimbabwe carried out a denomination that removed ten zeros from the local dollar bill. However, inflation in Zimbabwe continued to rise, the country was running out of paper for printing money, and the leadership of this African state was forced to ban the circulation of the Zimbabwe dollar and allow the circulation of the Euro, American dollar, pound sterling and currencies of neighboring countries with more stable economies.
Venezuelan hyperinflation
Venezuela became the undisputed leader of the anti-rating this year. Hyperinflation in the country has reached truly monstrous proportions and even exceeded the latest forecasts of the International Monetary Fund. At the end of 2017, the country's authorities estimated it at 2616%, while according to the IMF, it was predicted at 652.7% by the end of the year. In December alone, prices rose 85%. But the worst is expected to lie ahead for the country. Member of the Finance Committee of the National Assembly Raphael Guzman noted that if the calls of the parliament are ignored, then in 2018 Venezuela will face hyperinflation of 14,000%.
The crisis in Venezuela was exacerbated by a sharp drop in oil prices in 2016. Production declined, prices rose, and the country's government also overdue payments on international debts, and therefore turned on the printing press in order to somehow pay off its obligations to the population.
Now Venezuelans are forced to stand in giant lines for basic necessities - food, washing powder, medicines. Many goods are in short supply. Meanwhile, in stores, money is already taken by weight, and wallets have become a completely unnecessary item - Venezuelans carry money in boxes and bags.
What kind of inflation does the IMF expect?
After the New Year holidays, states are still only calculating the actual size of inflation, but for now, let's see where in the world, according to the IMF, prices are growing the fastest, besides Venezuela.
According to the report "Prospects for the development of the world economy" for October 2017, extremely high inflation at the end of 2017 is expected in South Sudan - 182.2%. After it seceded from Sudan as a result of a bloody war, inflation in the country continued to rise, and its membership in international organizations, because of which the country began to grow overgrown with international debts.
A similar situation occurs in the Congo, Angola and Libya - military operations on the territory of these countries in conjunction with low prices on oil led to inflation of 30 to 40%. This is already the rate of galloping inflation, since it fits into the interval from 20% to 50%.
Prices in Yemen are expected to rise by 20% over the year. The situation in the country is far from ideal - the economy was destroyed by the civil war, production in agriculture and the production of hydrocarbons practically ceased. Naturally, tax revenues to the budget dropped sharply.
In Argentina, inflation is expected to be even higher - 26.9%, according to the IMF estimates. But for the country this is already a great achievement, because over the past thirty years it has been a serious problem. Within 15 years - from 1975 to 1990. - the average inflation rate was an impressive 300% per year.
Harvard University professor Martin Feldstein in his article on Project Syndicate, using the example of Argentina, showed how inflation can from once one of the most promising countries create a “third world territory” that, even in the distant future, has no chance of getting into the bloc of developed countries.
Inflation in Argentina was driven by large external borrowing, and when external borrowing was refused, the government devalued the currency in order to increase its trade balance. For all the time, many reforms have been carried out, some of them were effective, others were not. At some point, the country's authorities decided to publish fake inflation statistics, but this did not help.
Today economists point out that due to the outflow of investments, it is extremely difficult for Argentina to increase production and increase its capital, and therefore we will not hear about the victory over high inflation soon.
At the other end of the rankings
At the very end of the list with a negative indicator are Saudi Arabia and the Republic of the Congo, Brunei Darussalam and Saudi Arabia. This means that over the year, prices for goods and services have decreased, rather than increased. However, what is good for the population is bad for the state. The fact is that prices are falling, and people continue to buy as much as before, which means that producers' incomes are getting lower and they are going bankrupt. At the same time, it becomes unprofitable for banks to provide loans, so this sector is also sinking. Deflation is often a harbinger of economic stagnation.
In 23 countries, including Ecuador, Thailand, Japan, Finland, Switzerland, this year almost zero inflation was recorded, and in a number of countries it is less than one. In general, the inflation rate in most countries of the world turned out to be quite low this year. In 137 countries, it does not exceed 5%.
The distribution of countries in the world by inflation rate is shown on the map below.
