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In 1914, the German mark had about the same exchange rate of four or five to the U.S. dollar as the British shilling, the French franc, and the Italian lira.
However, by 1923, Germany’s exchange rate had ballooned to one trillion marks to one dollar. Newspaper photos captured German citizens pushing wheel barrels full of money to buy even the most modest of grocery items.
The causes of this financial firestorm included the German government's abandonment of the gold backing of its currency and a grueling, disastrous World War that lasted far longer than anyone expected and was financed through government borrowing.
Today, we look at this period as a classic example of hyperinflation. But hyperinflation is not something relegated to history books. It looms as a possible threat today. This article looks at what hyperinflation is and how you can prepare for it.
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What is hyperinflation?
We all have been feeling the brunt of high inflation in recent years. We've rising prices at the gas station, the supermarket, and other goods and services.
The U.S. has been grappling with inflation since 2021, mainly due to the pandemic-related issues such as supply chain problems and the war in Ukraine. Although some core goods prices are stabilizing in 2024, core services prices remain high, according to analysts.
The Federal Reserve, the nation's central banking system, aims to keep inflation at 2 percent. That modest percentage can actually be good for the economy.
However, when prices rise at a much faster rate, trouble can follow. Hyperinflation is the term for when the cost of goods and services increases very rapidly, such as 50% or more each month. That would mean the groceries that cost you $100 one month would cost you $150 the next.
The growing money supply causes money to lose its value. As a result, people start spending money faster in order to get as much value out of it as they can, and things can spiral downward in a hurry.
Historically, hyperinflation has been a rare occurrence that usually results from a natural disaster, war, or other significant event that leads a government to borrow money or print money to cover a deficit. Hungary experienced hyperinflation in 1945 and 1946, with a daily inflation rate of 207 percent. More recently, following a severe drought, Zimbabwe had a daily hyperinflation of 98% in the early 2000s.
In this country, the Federal Reserve and the government have tools they can use to prevent hyperinflation from happening. Still, with all the uncertainty in our world – from climate-related disasters to war and political unrest – it doesn't take much imagination to consider hyperinflation as a possibility in our future.
How can you protect your family from hyperinflation?
If you are striving to live a more self-sufficient lifestyle while storing supplies for an emergency, you are already on the way to helping protect your family from hyperinflation. Next, we'll list several categories of things you can do or buy to safeguard your homestead during an economic tornado.
Conservation methods
During a period of hyperinflation, the government may be low on tax revenue and may have to reduce many of its services. You can protect your family by becoming more self-sufficient. Here are some ways to produce your own resources or save the ones you have.
1. Grow and raise your own food
No matter the size of your property, you can take steps to grow fruits and vegetables or raise some livestock. Consider container and vertical gardening or raising chickens if you are limited in space.
2. Save water
Research rain barrels, filtering systems, and other ways to conserve water and be mindful of your water usage.
3. Preserve food
Whether you grow it yourself or buy it locally, learn and practice food preservation techniques, including canning, dehydration, freeze-drying, and more.
4. Purchase manual devices
If the grid goes down, you'll need other sources of power. Hand-operated devices ranging from can openers to washing machines can help you maintain your home.
5. Invest in solar panels
Harness the power of the sun with solar panels. You can find panels in all sizes and price ranges to heat your home and operate devices around your home and property.
6. Learn sewing skills
Knowing how to sew and repair clothing during hyperinflation can be invaluable, especially if you have growing children.
7. Tune up your bicycle
Consider how you would get around if using a car became utterly unaffordable. A bike may be the answer, so it's time to plan accordingly.
8. Buy a generator
During hyperinflation, you will not be able to rely on government-run utilities. You can purchase generators in sizes ranging from providing power to one room to the entire home.
Build an emergency food pantry
Stocking up on non-perishable foods now before they are out of stock or exorbitantly expensive is an investment in your family's security. Shelf-stable foods are those that are able to survive long periods of time if stored in airtight containers and kept in cool, dry environments.
Here is a beginner's list of shelf-stable food items to purchase and store.
Prioritize your family's needs
You'll also want to stock up on non-food items that are essential to your family's well-being. In hyperinflation, something as mundane as a toothbrush might be unaffordable or unattainable.
Consider your family members' ages and health needs when stocking up on non-food supplies like the following items.
Financial strategies
When currency is devalued, one way to protect yourself from hyperinflation is to invest in non-currency assets. These include taking the following steps if they fit into your means.
- Set money aside in an emergency fund.
- Use an account that pays a higher fixed interest rate.
- Pay down credit card debt and other debt aggressively.
- Build a diversified financial portfolio, including investing in precious metals.
- Curb spending.
Avoid panic buying
It's easy to panic when considering how to prepare for hyperinflation. However, as with other situations in life, panic makes things worse. We only have to look back four years to consider how panic buying led to shortages of things like toilet paper.
Every family's needs are different. A good place to begin is to take note of what you need every day in your household. Then, decide how much of your weekly budget you can set aside for buying extras of those things. Make a list and stick with it when you shop.
Keep in mind that you don't need to purchase everything at once, and you may be able to save by buying certain items in bulk.
It's also essential to consider your storage space. You may need to get creative with space – under the bed, in the back of a closet, on sturdy shelves in the basement, etc.
For more on hyperinflation and how to prepare for it, here are some resources.
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