Many have learned about the inflation in Zimbabwe that peaked around 2008 because it was the most recent case of hyperinflation with prices doubling daily, and you may also know about a similar situation in Yugoslavia in 1994, but these situations pale in comparison to the inflation in Hungary in 1946 when prices were doubling in under 16 hours.  It was the perfect storm of an already struggling economy after WWI, hurt further by damage to industry and transportation at the end of WWII in battles between Russia and Germany on Hungarian soil.  The final nail in the coffin was poor government response to try to boost the economy by printing a huge amount of currency.  To give you some idea how bad it was – in July 1945 Hungary had 25 Billion Pengo in circulation, and in just one year, July 1946 it was up to 47 septillion (trillion trillion) Pengo in circulation.  I don’t know about you, but it boggles my mind to try to imagine that many zeros!

Prior to WWI the Austro-Hungarian Empire used a currency called Kronen (or Korona in Hungarian).  After WWI the empire split, and Hungary printed currency to try to meet the new country’s monetary needs.  This of course created inflation and Hungary replaced the Korona with the Pengo in 1946 (1 Pengo = 12,500 Korona).

Then in the aftermath of WWII a great deal of Hungary’s industry was destroyed, and the lack of supply caused prices to increase.  The government tried to stimulate the economy by printing currency which they loaned to banks at low rates, who then loaned to companies and consumers.  Milpengo (Pengo with 6 zeros added) and B Pengo (Pengo with 12 zeros added) notes were created to reduce the number of zeros required to be printed on the notes.  Currency flowed into the country at such a high rate that the Pengo completely lost any value and collapsed.  The government introduced the Adopengo, but this denomination too could not keep up with the rate of inflation.  Just to give an idea, if you brought a house that was 100,000 Pengo-pre inflation, it would now be: 1,000,000,000,000,000,000,000,000 Pengo.  And we thought housing prices were bad now!

Finally, the Forint was introduced to replace the Pengo on August 1, 1946 (1 Forint = 400,000 Quadrillion Pengo).  This finally succeeded in stabilizing the economy and prices remained stable for many years going forward.  The Forint is the currency used in Hungary today. (See Hungarian Notes)

During inflation, workers in Hungary were hurt the most, losing about 80% of their wages and being forced into poverty even though they were employed.  Eventually production did recover, the railroads were rebuilt, and the industrial capacity of Hungary did increase – but the people paid a huge price to get there. 

While researching this I have been thinking about how countries around the world have needed to strategize about how to boost their economies during this pandemic and make up for revenue lost while people were in lockdown.  I hope we have learned from history and do not repeat mistakes that would force inflation (or hyperinflation!) and push many people into poverty.

Here are examples of Pengo and B Pengo notes:

Country: Hungary
Denomination: 10,000 Pengo
Pick #: 119a
Year: 1945
Grade: aUNC/XF (see large scan)
Coloration: Brown/Green
Depictions: Oak and Olive Branches; Coat of Arms; Head of Woman Wearing Tiara in Profile; Guilloches
Note Size: 6 3/4″ x 3 1/4″
Continent: Europe
Watermark: None Discernible

Country: Hungary
Denomination: 100,000 B Pengo
Pick #: 133
Year: 1946
Grade: aUNC/XF (see large scan)
Other Info: B Pengo was introduced to reduce zeros. One B pengo is equal to 1,000,000,000,000 pengo (so you can add 12 more zeros to the current value to get the pengo value)
Coloration: Red
Depictions: Koloman Moskos portrait of Valiku Rudasovu; Coat of Arms; Hungarian/Russian Text
Note Size: 7″ x 3 1/4″
Continent: Europe
Watermark: None