Hyperinflation is inflation that spirals out of control. Prices rise so fast that money loses value by the day, sometimes by the hour. People rush to spend their paychecks before they are worthless. Workers demand daily wages. Shops reprice goods constantly.

The classic cases are Germany in 1923, Zimbabwe in the late 2000s, and Venezuela in recent years. In each, governments printed money to cover massive deficits. The money supply exploded. Prices followed. Savings were wiped out. The middle class was devastated.

Hyperinflation ends only when the underlying cause is fixed. Governments must stop printing money, balance budgets, and often adopt a stable foreign currency. The costs are severe: unemployment, cuts to public services, and political instability. Recovery takes years.

Warning signs

• Rapid money supply growth
• Large government deficits
• Loss of confidence in the currency
• Indexation of wages and prices
• Flight to foreign currency or goods