Script §

Hello lecturer, hello everyone, we are group 5, including me, Somaneath, Phirun, and Rachany, and we are going to be talking about the case of hyperinflation in Hungary. As for our content, I will be introducing you to this case of hyperinflation and also give you some brief details of Hungary’s history with hyperinflation. Next we will be taking a look at what was the cause for the rapid inflation, explained by Somaneath, then how the inflation has impacted Hungary, as will be answered by Phirun, and Rachany will show the actions the Hungarian government has taken to deal with the problems. Finally, I will conclude the presentation with lessons learned and what could’ve been done better from this case of hyperinflation.

First off, to give you some background on this topic, you should know that even though Hyperinflation in Hungary is less acknowledged, this case of hyperinflation after World War II was the worse case in history. Hungary has had a history with hyperinflation once before though. After World War I when the Austro-Hungarian Empire broke up, in the period of just two years, from 1922 to 1924, Prices in Hungary had went up 263 times. If we take a look at the second case though, this will be the main event we will discuss here. This case of hyperinflation happened in the period of just under a year from 1945 to 1946 after World War 2. The rate of inflation, at its peak in July, was 41.9 quadrillion percent per month, this is 41.9 million billion percent every month. The Hungarian government went through many different currency exchange starting from the Pengo up until the Forint which finally ended the hyperinflation because the currency was backed by the stable US currency. This progression of currency will be explained in more detailed by Rachany.

In Conclusion, this case of hyperinflation shows that the injection of currency into an economy must be backed by ‘Safe-Haven-Assets’ which are materials like gold that don’t loose its value even in crises. The management of Hungary after World War 2 destruction was poorly done by the government. They wanted to rush the economy to recover while they could’ve taken a more gradual approach in injecting gold backed currency while stimulating the economy. Overall, this hyperinflation had badly impacted Hungary. The inflation had cut workers’ wage and impacted financial institutions.