Greece now in the spotlight because of the European Central Bank to stop the flow of liquidity to fund its government. It turns out, Greece has also been drawing attention of the world one of the worst hyperinflation in history hit the country. Greece’s fiscal budget balance once dropped from a surplus of 271 million drachmas (Greek currency at that time) in 1939 into a severe deficit of 790 million drachmas in 1940. faltering Greek economy occurred because of World War II. The inflation rate in the period 1941 – 1945 skyrocketed so quickly. Even the prices of goods in Greece rose to 13,800 percent in October 1944 and continued to rise to 1,600 percent in the next month. Fractional currency greek highest ever even reached 100 trillion drachmas. How is the story of one of the worst hyperinflation ever hit Greece? Here’s his review as quoted by Business Insider, Karlwhelan.com, jstor.org, and a number of other sources, on Friday (6 // 2/2015)
Cause of hyperinflation
World War II made Greece mired in debt bondage in which the government must cover expenditures by printing more money. At that time, the Greek government prefers to print more money than impose a tax on residents. Occupancy Germany-Italy when it really destroyed the Greek economy. Massive printing of money is also intended to meet the shortage of currency in the community. Central Bank of Greece and then began to launch gold coins are quite trim franc currency needs of its people. In 1938, Greece also drastically reduced income of 67.4 billion drachma to only 20 billion drachmas. The conditions which then makes the government adopted a policy to print a lot of money, as well as to overcome the deficit.
Hyperinflation era begins
In 1938, the Greek government usually holds new money for 40 days before it is spent. But in November 1944, the pace of issuance of a new currency to move more quickly from 40 days to 4 hours. In 1942, the highest nominal currency in Greece is 50 thousand drachmas. But in 1944, the highest nominal money skyrocketed to 100 billion drachmas. On November 1944, the Greek government did convert currency redenomination before with a new drachma in which fractions 50 billion drachmas equivalent to one drachma. Although at that time the people still continue to use the British pound as currency de facto until mid-1945.
The period of currency stabilization
In times when hyperinflation hit, the average price rose to 13,800 per month. The prices of goods can be up to double that in a matter of days. The Greek government continues to pour some stabilization in the middle of the hyperinflation exposure. Several efforts to success. In the January to May 1945, prices rose only 140 percent. Even deflation of 36.8 percent in June 1945 when a reliable economists involved in the economic struggle. After the 1945-1946 civil war in January, the British offered a plan to stabilize the Greek economy. To end the hyperinflation, the Greek government has finally joined the international Bretton Woods system in 1953 in which the exchange rate is connected with a variety of other currencies against the US dollar.