If you understand hyperinflation, you’ll understand the consequences that come with it. Hyperinflation increases the prices of goods and services, making it difficult for you to stick with typical buying habits. However, you can escape the effects of hyperinflation by putting necessary plans in place. And what plans would that be? What should you buy before hyperinflation hits?
Before hyperinflation hits, it’s crucial you stock your home with dry goods, canned foods, baking supplies, frozen-dried foods, and seeds. Other things to consider storing are things that use computer chips, wheat, corn, meat, potatoes, etc.
While others feel the harsh effects of hyperinflation, you can reduce its effects by planning ahead. In this post, I will offer you some valuable tips on what to buy before hyperinflation hits. However, before I do that, I would like to introduce you to what hyperinflation is first.
What to Buy Before Hyperinflation Hits?
Hyperinflation can affect your quality of life, so you must plan ahead. If you aren’t sure how to do that, this article is for you. However, before we delve into the main purpose of this post, let’s understand what hyperinflation is, its cause, and what occurs during a period of hyperinflation.
What is Hyperinflation?
You must have heard of inflation, right? But what do you know about its counterpart, hyperinflation? Nothing? A little? Regardless of what you know about hyperinflation, here is a little summary to boost your understanding of hyperinflation.
Hyperinflation occurs when the prices of goods and services skyrocket more than 50% per month. At such an astonishing rate, a kilo of beef could cost $30 in the morning and $50 in the afternoon. The severity of cost increases differentiates it from the other types of inflation. Aside from hyperinflation, another inflation you should be worried about is galloping inflation. This type of inflation sends prices up 10% or more per year.
Hyperinflation: Overview
Hyperinflation happens when prices have risen by more than 50% per month. For comparison reasons, the United States inflation rate, as measured by the Consumer Price Index (CPI), has averaged about 2% per year since 2011, based on the Bureau of Labor Statistics. The CPI is just an index of the prices for the selected basket of goods and services. Hyperinflation makes customers and businesses need more money to purchase products because of higher prices. Whereas normal inflation is measured in terms of monthly price increases, hyperinflation is measured in terms of exponential daily rises that can reach 5% to 10% daily. Hyperinflation happens when the inflation rate surpasses 50% for a month.
Imagine the cost of food shopping rising from $500 per week to $850 per week the following month, to $1,350 per week the next month, etc. If wages aren’t keeping pace with inflation in an economy, the standard of living for the people decreases because they can’t afford to pay for their basic needs and cost of living expenses.
Hyperinflation can result in several consequences for an economy. People may hoard goods, including perishables like food, as the rising prices, which, in turn, can lead to food supply shortages. When prices rise ridiculously, cash or savings stashed in banks reduce in value or become worthless since the money has less purchasing power. Consumers’ financial situation reduces and can lead to what is widely known as bankruptcy.
In addition, people might not store money in financial institutions, leading banks and lenders to stop business. Tax revenues may also plummet if consumers and businesses can’t pay, leading to the government failing to offer basic services.
Causes of Hyperinflation:
Hyperinflation has two primary causes: increased money supply and demand-pull inflation. The former occurs when a country’s government starts printing money to cover up its spending. As it raises the money supply, prices rise as in regular inflation.
The other cause, demand-pull inflation, happens when an increase in demand surpasses supply, shooting the price up. This can occur because of increased customer spending due to a growing economy, a sharp rise in exports, or more government spending. The two always go together. Instead of tightening the money supply to prevent inflation, the government or central bank might continue to print money.
With too much money flying around, prices go up. Once customers realize what is happening, they expect continued inflation. They stock their homes with more food items, so they don’t buy at a higher price later. That enormous demand increases inflation. It’s even worse if customers stock their homes with goods.
Credit Card Profitability Model
What Happens When There Is Hyperinflation?
The result of hyperinflation isn’t good. When prices keep rising, people tend to enter the hoarding mood simply to avoid paying more in the future. This type of behavior fuels even greater shortages and too much demand from those left without anything, paving the way for prices to keep skyrocketing.
As soon as a brutal cycle takes hold, it’s hard to control. Eventually, any savings you have stashed away in cash becomes useless as even the basic becomes affordable. In the worst-case scenario, companies will be forced to close shop, causing mass unemployment reducing government tax revenues, and the economy’s collapse.
Hyperinflation: As it Happened in some Countries
The chances of hyperinflation happening in the 21st century is slim. However, a few countries have experienced brutal or mild spells of this economic situation. Here are some of the countries and how they fared.
- Germany
Hyperinflation was one of the primary issues plaguing Germany’s Weimar republic during its last year of existence. Reaching a monthly inflation rate of around 29,500% in October 1923 and with an equivalent daily rate of 20.9% took about 3.7 days for prices to double. The hyperinflation experienced by Germany resulted from their refusal to back their currency with gold while financing their war operations via borrowing instead of taxation.
- Greece
In the fifth most severe inflation situation of all time, Greece in 1944 saw prices double every 4.3 days. The trend started in 0ctober 1943, during the German occupation of the country in WWII. But the most rapid inflation happened when the Greek government in exile regained control of Athens in Oct. 1944; prices increased by 13,800% that month and another 1,600% in November, based on a study by Gail Makinen.
So what caused Greece’s hyperinflation?
The primary cause of Greece’s hyperinflation was World War II, which drove the country into debt, dissolved its trade, and led to four years of Axis occupation.
- Hungary
The most severe case of hyperinflation happened in Hungary in the first part of 1946. But, in the middle of the year, Hungary’s highest denomination bill was 100,000,000,000,000,000,000 (One Hundred Quintillion) pengo, compared to 1944s highest denomination, 1,000 pengos.
At the peak of Hungary’s inflation, the CATO study estimates that the daily inflation rate stood at 195 %, with prices doubling approx. every 15.6 hours, coming out to a monthly inflation rate of 13.6 quadrillion percent.
Unlike Greece, Hungary’s inflation resulted from the tremendous hard depression and the aftermath of World War II.
| Country | Highest Monthly Inflation | Year | Price Doubled Every |
| Germany | 29,500% | Oct. 1923 | 3.7 days |
| Greece | 13,800% | Oct.1994 | 4.3 days |
| Yugoslavia | 313,000,000% | Jan. 1994 | 1.4 days |
| Zimbabwe | 79,600,000,000% | Nov. 2008 | 24.7 hours |
| Hungary | 13,600,000,000,000,000% | 1946 | 15.6 hours |
Storing the Basics before Hyperinflation:
Here are a few things to buy before hyperinflation hits:
- Dry Goods: Shortages of dry goods, such as pasta, rice, beans, and spices, cropped up during the early days of the coronavirus pandemic. Now, thanks to supply problems and continued high demand, we are starting to see some shortages again. So this is the time to include basic staples in your pantry.
- Canned foods, including vegetables, fruit, and meats, are pretty easy to store and usable in several ways. Individual ingredients need more work to make into meals, but they expand meal options, which is why knowing how to cook from scratch is essential.
Buying processed foods costs more and limits variety. But, if that is all your family will consume, then, by all means, get them! Note that processed foods are usually shorter in supply during hyperinflation, so it’ll make sense to source basic ingredients.
- Baking Supplies: you’ll want to add to your stock of ingredients for baking like flour, yeast, sugar, baking soda, and salt. The scarcity of these staples ebb and flow, so you might also store a few extra.
- Frozen Dried Foods: There are several good frozen-dried foods on the market these days. They can be stored for a long and last up to a year even after they are opened. This is an ideal way to compensate for shortages at the grocery store. They are, however, a little expensive right now, so you’ll have to choose if they fit in the budget.
- Seeds: One good way to make sure you have plenty of food on your table is to grow your own. Gardening requires thinking, time, and healthy labor, but there is nothing tastier or more satisfying than eating something you developed. If you think you want to try a garden this year, I recommend ordering some seeds now to prevent the spring rush. Gardening isn’t easy. If you are a novice, you can watch videos or read books to brush up on your skills.
How Banks Make Money From Nothing?
Other Supplies to Consider Buying Before Hyperinflation Hits:
Here are some supplies you should consider adding to your list before hyperinflation hits:
- Anything that uses computer chips
- Wheat
- Corn
- Meat
- Potatoes
- Dairy
Anything that Uses a Computer Chip: Chip production is at max capacity while demand continues to rise because of electric vehicles and 5G tech. If you want to buy a new car this year, you’ll have to plan for higher processes and longer delays. This problem will remain until new production facilities are constructed, so for the time being, plan ahead for any car or electronics purchases.
PS: If you are skilled in automobile rehab, check out closed auctions and search for vehicles whose repairs you know can be done with a not-too-expensive budget.
Wheat: Global wheat supplies are lower because of weather and high demand, driving up the price. Buying wheat berries and learning to make your bread and baked goods makes sense now more than ever. Another strategy is to learn to include more oats or quinoa in your diet.
Corn: There was zero reduction in the corn harvest in 2021. But, high global demand and shipping costs caused the price of corn to rise along with everything else. The actual culprit for us in 2022 and beyond is commercial fertilizers that have increased in price anywhere from 100% to 215%.
As you probably know, corn relies on fertilizers, but most commercial crops will be affected. Corn is used in many products (such as diapers and drywall) and does expect a trickle-down effect. For personal use, there are alternatives to commercial fertilizers.
Meat processing shortages, including shipping costs, helped increase the prices of all meats last year. This year that will continue as the cost of feed (corn) keeps rising. The best advice here is to buy local. Find a rancher or local supplier to buy from directly and cut out the middleman. Go in with another family or two if buying a whole animal is too much. A “half cow” should run anywhere between $1300-1800 or thereabout.
Potatoes: The rapid shutdown of all commercial markets for potatoes forced many potato farmers to destroy their harvest in 2020. These actions left gaps in the potatoes supply even as demand rebounded. Supply should meet up with demand after the next harvest, but potato products may still be challenging to locate. Purchasing a huge bag of rice or cans of beans can help compensate for the fewer potatoes in your diet.
Dairy: Dairy costs will also continue to skyrocket in 2022 because of higher feed, including shipping costs. This may also translate to a shortage of supply if farmers need to reduce production because of higher costs. Purchasing powdered milk or shelf-stable boxes of milk can close the gap if there are temporary shortages in your area. Another brilliant idea is to order milk delivered from a local dairy. It probably won’t reduce the cost but might be a more dependable source if you experience shortages at your stores.
Ensure you stock goods in the right amount. Don’t overstock (especially when it comes to perishable goods), and try not to understock—stock based on your family’s needs.
