Hyperinflation is a term used to describe the event where inflation reaches a point where it goes beyond control. Compared to ordinary inflation, hyperinflation causes prices to increase at a much more rapid rate while the currency of the suffering country loses value. Despite its nature, no one really takes notice of the possibility of this event happening soon because we have all been accustomed to a controlled inflation.
Can Hyperinflation Happen in the United States?
Although the last case of hyperinflation in the United States was recorded almost 150 years ago, we can never be sure about the strength of our present economy. We were left in the dark, never expecting the recent recession that greatly crippled the economy. If we had never known about the recession happening, the same can also be said about the possibility of a hyperinflation.
How Bad Can Hyperinflation get?
To give a clear view of the effects of hyperinflation, we can take Belarus as an example of one country that experienced hyperinflation lately.
Belarus experienced a steady inflation rate from the late 1990’s towards 2002. The highest currency denomination in Belarus in 1993 was 5000 rublei. Six years later, this grew to 5,000,000 rublei. However, the new ruble implemented after the 2000 currency reform had an exchange rate of 1 new ruble is to 1000 old rublei. By 2008, the country’s highest currency denomination was 100,000 rublei, which is equivalent to 100,000,000 of the old rublei.
As expected, the citizens of Belarus had to put up with constantly rising prices that in contrast were much higher compared to the rising costs of their neighboring countries.
By now, you should have realized that the US dollar, despite being considered the international currency, is vulnerable to economic changes as seen in the recent US economic trend. At present, the dollar is no longer considered by many to be a stable worldwide trade currency.
The only way to survive hyperinflation is to keep making more money at a rate higher than how the currency is losing its value. Sadly, this is close to impossible if hyperinflation takes place. The only other way to go around this problem is to not rely on paper currency but on precious metals like gold.
Why Can Gold Help You Survive Inflation?
Gold is the perfect substitute to traditional currency. Like all other material objects, currency slowly loses value with time. Gold, on the other hand, increases in value as it ages. With gold, you no longer have to worry about your assets decreasing in value.
If you really want to secure yourself in the event of an economic meltdown, you should increase your assets by purchasing gold through gold backed savings accounts. This way, you will be protected and profit massively when the dollar loses it’s value and becomes a worthless piece of paper.