Sunday, 1 August 2021

the velocity of money

In the unfolding of the worst case of hyperinflation (previously here, here and here) and devaluation in history, the Hungarian pengő (an onomatopoetic word for the ringing of silver struck, the clinking of coins), itself a replacement currency for the Austro-Hungarian korona, liquidated under the terms of the Peace of Saint-Germain that dissolved the joint bank of the monarchy, battered and bashed by the ensuing Great Depression and a second world war, was pegged to the reintroduced forint (in use prior to the imperial union in 1892 and named for city of Florence) at an exchange rate on this day in 1946 of one Ft for four hundred octillion pengők, shedding twenty-nine zeros and starting over, notes in the millions and billions reused and reissued marked with exponentially higher values.

A last ditch effort to rescue the collapsing economy in January brought in a parallel currency that would hold its value called the adópengő for tax and postal payments—sort of like those forever stamps that aren’t subject to rate hikes or the specie of old pennies with high copper content, starting at parity with what was then in circulation but eight months later each was worth two sextillion. The largest denominated bank note issued was the one hundred quintillion (ten to the twentieth power, one million billion and worth about two US dimes) featuring an anonymous Hungarian woman wearing scarf on her head who back in March appeared one the one hundred million pengő bill.