In The Event Of Hyperinflation
It's happened to many countries. Don't think it can't happen to yours | Issue 15 / July 2026
It’s ok to be a doomer if it is justified.
It’s just called being a realist.
Just ask the parents of the 120 Iranian school children that were bombed and killed on 28 February 2026. They could feel a little ‘doomer’ about the world at the moment and justifiably so.
If you correctly diagnose and can accurately predict the outcomes of a doom and gloom scenario, you can position yourself to protect your wealth, your family and your personal freedom going into the future.
In matters of finance, a scenario worth talking about is currency hyperinflation. Most people know what hyperinflation is, but they are less aware of the mechanics of how it occurs. Let alone fathom that it could occur in their country unless they have previously experienced it themselves.
I think it useful to present a brief overview. How it applies to countries that are susceptible today and how you can protect yourself from its consequences.
The German Hyperinflation Of 1921-1923
If you were a German citizen that experienced the hyperinflation of your currency between 1921-1923; you may have thought that being part of an advanced developed economy would mean that you did not have to worry about the purchasing power of your currency.
At the time Germany was the second-largest economy in the world and the second-largest industrial producer.
It was an industrial powerhouse, not a banana republic.
Although they did have a currency at the time that had recently become fiat.
The German Mark until 1914 was backed by gold and fully convertible. In their desire to stay involved in the first world war while not being able to pay for it, The Reichsbank suspended the convertibility of the German Mark into gold in 1914.
The central bank was then able to print Marks and fund the government by buying German government bonds at will. With no constraint.
The currency conceptually changed from being the Goldmark with fixed gold backing (1 mark = 0.358 grams of fine gold) to the Papiermark, a pure fiat currency.
This is crucial to understand as they wouldn’t have been able to hyper-inflate their currency if it was backed by gold.
If they tried, once holders of Goldmarks witnessed that the government were printing Marks without increasing their gold reserves, there would have been a ‘run on the bank’. Holders of Goldmarks would have been incentivised to instantly convert their Marks into gold domestically and internationally to avoid being caught ‘holding the bag’.
So what they did was pre-emptively suspend the convertibility before a run could occur.
In August 1914— 4.2 Marks bought you 1 U.S Dollar. In November 1923— 4,210,500,000,000 Marks bought you 1 U.S Dollar.
This constituted a decrease in the value of the Mark of 100.25 trillion percent relative to 1 U.S Dollar over nine years.
The Process
Over the course of the first world war (1914-1918) Germany steadily printed currency to fund the war and inflated their currency supply by roughly 500 percent. After signing the Treaty Of Versaille in 1919, Germany was forced to pay war reparations of 132 billion Goldmarks for the damage they caused.
The reparations commission demanded payment in Goldmarks or foreign currency, not Papiermarks which were not backed by gold.
Germany decided to print papiermarks and buy foreign currency to fund their reparations payments and fiscal deficits. This caused the value of the Mark to steadily fall on the foreign exchange. The cost of essential imports rose due to this fall and the Reichsbank printed more currency to pay for domestic debts, wages and reparations.
This created a vicious doom loop which led to the eventual destruction of the currency.
Governments face similar problems today that Weimar Germany faced around 100 years ago, especially considering the implications of current wars and supply shocks.
Today zero countries have currencies backed by gold.
Recency bias affects everyone, so it is essential to know that for roughly 2,600 years (7th century BCE to 20th century), minted gold and silver coins were the backbone of daily monetary exchange. The use of fiat currency is a relatively recent phenomenon.
Of course there are many other currencies that have been hyperinflated. In the U.S the Continental Dollar and the Confederate Dollar were both hyperinflated and failed.
In Hungary in 1946 the Pengő was hyperinflated— prices for goods and services doubled every 15 hours.
If you are interested, check out the Hanke-Krus hyperinflation table— where you can see which countries have experienced the worst hyperinflations over history.
Hyperinflation may not occur to the fiat currencies you hold and use. But it is possible. It is entirely dependant on the actions of the people that can print your currency at will.
To be clear on the definition and mechanics, hyperinflation is typically defined as the expansion of the money supply resulting in consumer price increases exceeding 50% per month.
This is key to understand as your government and mainstream media will tell you that inflation is rising consumer prices. Not the expansion of the money supply.
Think of a balloon as the money supply within a country. The size of the balloon is one measurement. If you blow it up it gets bigger, if you let air out it gets smaller. This is inflation. The millions of prices within an economy that change constantly are a separate measurement, prices can be affected by monetary inflation alongside other variables.
Monetary inflation occurs through central banks printing new currency and injecting it into the financial system or through private banks issuing credit.
Where the money flows is of interest to you. It can flow into assets like stocks, bonds, foreign reserves or real estate which are generally omitted from consumer price index calculations. It can also directly flow into goods and services.
Remember hyperinflation is one end result of a fiat currency crisis and requires certain events to occur.
It depends on how governments deal with their current problems— high debt levels, war financing, fiscal deficits, currency weakness and potentially falling tax revenue. These factors can lead to debt servicing costs that can not be paid and can result in the money printer getting turned up to 11 to compensate.
When politicians face a choice of reducing spending or printing currency to solve their problems, I personally am going to bet that they print currency.
In the event of a crisis in the financial markets similar to what occurred in 2008, the government will most likely bail out failed banks and do all they can to print and inject money to keep the system going. Possibly leading to a forced transition to a new digital currency and increased control which may prevent a traditional hyperinflation scenario. If this were to occur it may include a massive wealth stripping event if they do not convert the old currency to the new digital currency on a 1:1 basis.
This is one scenario. Another is that the gradual loss of fiat currency purchasing power could continue without a crisis event occurring.
No one knows exactly how this will play out. If you can scenario cast and position yourself accordingly it will be beneficial.
How To Protect Yourself
Buy your protection early
I will bet that governments will inflate before the thought of reducing spending. Act early even though it may feel uncomfortable to do so.
Keep a cash reserve
Before a hyperinflation occurs you may be presented with an opportunity to buy real assets cheaply. Before they really rev up the money printer. Stay a little under-invested as a strategy.
Hold real things
Hold different types of real assets to avoid being stuck on single points of failure that can be easily frozen or stolen by the system. Accumulate physical gold and silver bullion. If you hold cash digitally, spread it across multiple bank accounts to reduce risk.
Obtain multiple passports, citizenships and residencies
To diversify political risk, potentially reduce taxes, increase your optionality to choose where you are domiciled and to increase your day to day personal freedom.
Become a renaissance man
You can be an artist, an entrepreneur, a designer, a sartorial aesthete, a fighter, a writer, an investor, a philosopher and a mathematician. You can become competent in each discipline even though your surrounding culture will tell you you can’t.
When you increase your knowledge and skill you increase your ability to provide a useful good or service which could get you through a period of hyperinflation or financial crisis.
For all the doom and gloom remember to live and enjoy your life to its fullest. If you position yourself well you will be better able to do this leading into the future.
-Shernon
*Not to be construed as financial advice. This newsletter is for informational and entertainment purposes only. Please perform your own research when making financial decisions.
Cover photograph by Plato Terentev