how to prepare for hyperinflation
it s critical to remember that hyperinflation doesn t happen very often especially in developed countries where a central bank focuses on reigning in and controlling inflationary periods however there are some actions you can take to reduce the effects normal or high inflation have on your portfolio a balanced and diversified portfolio can help you reduce losses through inflationary periods commodities and real estate can reduce the adverse effects of inflation because they tend to increase in value during these times treasury inflation protected securities tips can hedge against rising inflation because the principal you have invested in a tips adjusts with inflation mutual funds and exchange traded funds that practice inflation swaps can also be used to combat the effects of inflation on your portfolio real world examples of hyperinflationone of the more devastating and prolonged episodes of hyperinflation occurred in the former yugoslavia in the 1990s on the verge of national dissolution the country had already been experiencing inflation at rates that exceeded 76 annually in 1991 it was discovered that the leader of the then serbian province slobodan milosevic had plundered the national treasury by having the serbian central bank issue 1 4 billion of loans to his cronies the theft forced the government s central bank to print excessive amounts of money to take care of its financial obligations as a result hyperinflation quickly enveloped the economy erasing what was left of the country s wealth and forcing its people into bartering for goods the inflation rate nearly doubled each day until it reached an unfathomable rate of 313 000 000 per month the government quickly took control of production and wages which led to food shortages as a result incomes dropped by more than 50 and production crawled to a stop eventually the government replaced its currency with the german mark which helped to stabilize the economy hungary experienced hyperinflation after world war ii at the peak of hungary s inflation prices were rising 207 per day in march 2007 zimbabwe entered a period of hyperinflation that equaled a daily rate of inflation of 98 until early 2009 the country s hyperinflationary period began in 1999 after the country experienced several periods of drought and a following reduction in gdp as a result the country was forced to borrow more than it produced and the government began spending more it increased taxes to pay bonuses to independence war veterans became involved in a war in the congo and borrowed from the international monetary fund to improve development and living standards for citizens the government began printing money to pay for the expenses causing an inflationary rise and residents began to move to other countries to escape the economy by 2010 millions of people had left the country and the economy was in shambles 