(Reviewed by David, M.A., Political Science)
What is hyperinflation?
Hyperinflation is a situation where the value of a currency rapidly decreases, usually due to economic instability or a government’s inability to print new currency. This can lead to massive monetary shortages and runaway price increases, which can devastate the economy.
Here I discuss hyperinflation and prepping, and steps you can take to get ready for hyperinflationary pressures.
What causes hyperinflation?
There can be a variety of reasons why an economy experiences hyperinflation.
In some cases, an abnormally high level of economic activity results in the printing of large amounts of new money, which drives up prices. Additionally, businesses may be unable to provide goods and services to customers, which results in a large increase in the demand for goods and services. When the same amount of customers seek to buy a decreased supply of goods, this drives up prices for everyone.
In other cases, a foreign country may interfere with the economy, causing a surge in the value of the currency.
What are some historic examples of hyperinflation?
Some historic examples of hyperinflation are the Weimar Republic in Germany, modern Zimbabwe, and the Russian Federation in the 1990s.
According to Investopedia, “Consumer prices in Venezuela grew at an astounding rate of more than 65,000% from 2017 to 2018.”
Consumer prices in Venezuela grew at an astounding rate of more than 65,000% from 2017 to 2018Investopedia
How does hyperinflation affect food and housing costs?
The hyperinflationary spiral occurs as the rate of inflation greatly increases beyond a certain point. This causes massive increases in food and housing prices, as well as other costs of living. This can have a devastating effect on the livelihoods of the all members of society–with the poorest hit hardest–as well as on the global economy as a whole.
Homelessness is also likely to greatly rise with increased inflationary patterns.
How can an average person prepare for hyperinflation?
While there is no surefire way to prepare for hyperinflation, individuals could stock up on goods at current prices, before hyperinflation kicks in to drastically raise product costs.
Stocking up on food, fuel, medications, and basic household goods before the prices increase is a common theme among those preppers who see hyperinflation as a potential danger. Of course there is no way to completely avoid rising prices, so having a reasonable stash of food and household goods is always a good idea.
The best foods for long-term food storage are those that are shelf stable with a long life. Some of the best foods that are good choices for long-term food storage include canned goods, freeze-dried food, and dehydrated food.
Are precious metals good to have for hyperinflation?
Some have suggested that precious metals will be a valuable asset in the event of hyperinflation.
There is no definitive answer to the question of hyperinflation and precious metals as it depends on many factors, including factors like the type of hyperinflation and the country in question. Generally speaking, it is safe to say that precious metals will be worth having in cases of hyperinflation as they are often used as a store of value in times of uncertainty.
How much food should you store to prepare for hyperinflation?
This is a tough question to answer without knowing your specific needs and storage habits. Generally speaking, you should aim to store at least a three-month supply of food for yourself, your household, and your pets.
How will hyperinflation affect money stored in banks?
If hyperinflation occurs, the value of money stored in banks will rapidly decrease as the purchasing power of each dollar decreases. This could lead to people losing their savings, widespread bank runs, and eventually financial institutions going bankrupt.
Can hyperinflation be reversed?
The short answer is yes, but this is never easy. History shows that hyperinflation is almost always extremely painful to the economic well-being of a country’s citizens.
In the early stages of hyperinflation, the National Bank of Hungary increased the amount of currency in circulation from 100 trillion to 1,000 trillion in a very brief period. This led to an increase in prices as well as an overall decrease in the value of money. With the passage of time however, prices stabilized and the currency became more valuable. In other words, the National Bank of Hungary’s strategy of expanding the currency supply in order to counteract hyperinflation was successful.
However, other countries have not had success with combatting the scourge of hyperinflation.
Final thoughts on prepping and hyperinflation
With the U.S. economy currently facing sharp inflation trends, it only makes sense to look ahead and prepare accordingly.
Stocking up on food and other items while prices are still affordable is one of the best ways to guard against inflation stealing your money’s buying power.