Each of the people in various countries certainly expect the price of goods and basic necessities affordable. Unfortunately, it was not felt by the people of Hungary who lived during the period August 1945 to July 1946. At that time, the Hungarian economy is really falling apart as a result of World War II. As one of the country into a war zone, 40 per cent of the money and capital expenditure reserves depleted state due to the conflict. Before the war going on, Hungary has also been indebted in high amounts in order to support Germany in the World War. Unfortunately, Germany never pay the entire debt in Hungary that make the country worse off in a ravine endless borrowing. After the war, Hungary experienced a tremendous rate of inflation is terrible. The inflation rate per day reached 207 percent. Because of that, the prices of goods and basic necessities in Hungary more than doubled every 15 hours. How the lives of the people and the Hungarian economy is fairly awful at that time?
The following short review as quoted by Business Insider, Global Financial Data and Economic Journal and a number of other sources: Hungarian industrial Destroyed Hungary is one of the countries that suffered the worst devastation in World War II, which lasted until 1944. At that time, Hungary became the location of a war between Russia and Germany. As a result, half of Hungary’s industrial capacity was destroyed and another 90 percent were severely damaged. Transport is also difficult to obtain because most railways, roads and badly damaged locomotive. Prices began to rise in Hungary after the war lantasan production capacity destroyed by the war. Without the tax, the Hungarian government decided to stimulate the economy by printing more money. Whereas a number of bankers in the Hungarian central bank has warned the government not to print too much money. But because of the political impetus, the government closed the ears and continue to produce a lot of money. Hungarian government also borrowed a lot of money into the bank with low interest rates. The government also borrowed money in a number of companies.
State flood of money
Government hiring workers directly. Then they provide loans to consumers and give the money directly to the people. In general, the government flooded the country with money so that the economy moving again. To see how much the government printed money, the circulation of money in July 1945 still amounted to 25 billion PENGO.But the circulation of money in Hungary increased by 1,646 trillion fantastic PENGO in January 1946 to 65 million billion PENGO (quadrilion). Even money in Hungary increased by 47 trillion trillion (47 septitriliun) five months later.
Prices shot up
Due to the high circulation of money in Hungary at that time, prices began sped up absurd. The inflation rate reached 207 percent per day. At that time, the price rose to 150 thousand per cent per day. Just imagine, an item that sells for 379 PENGO in September 1945, rose to 72 330 PENGO in January 1946. The price continued to rise to 453 886 in February, and then increased to 1.87291 million in March, and 35,790,276 in April. More surprising than that, the price of goods sold for 379 PENGO it rose up to 1 trillion trillion PENGO in July. When inflation was certainly chaotic and very challenging. Of course, the Hungarian government proved wrong step in reducing inflation. But then the Hungarian government took other steps to fix the high taxes and issuing new currency denominations in order to reduce the supply of money in the community.