Should we call this reverse monetarism?
An “answer” in the July 1 episode of Jeopardy was the following:
In the 1940s, this country’s Magyar Nemzeti Bank printed the million billion pengo note to fight inflation.
The contestants were expected to say, and one did, “What is Hungary?”
The problem, of course, is that you don’t fight inflation by adding a huge amount to the money supply; that creates more inflation. The people who come up with the clues are obviously smart and I don’t expect them to know a lot of economics, but how would one think that printing more money “fights” inflation rather than adding to it? I don’t understand their mental model.
One of my favorite articles on hyperinflations, not surprisingly, is the one I commissioned for my Concise Encyclopedia of Economics.
It’s Michael K. Salemi, “Hyperinflation.” Notice that in the third paragraph, he discusses the Hungarian inflation that Jeopardy alluded to. It was substantially more extreme than the German hyperinflation of 1921 to 1923.
READER COMMENTS
Craig
Jul 5 2024 at 10:07am
Red Army marching west would see them overrun the Axis forces in more than a few countries where the Red Army would then issue currency which apparently was relatively easy to counterfeit. I would speculate the currency was designed to at least try to stop counterfeiting? Though obviously the denomination itself is superficially obvious that they had a massive hyperinflation problem. But the Red Army did issue currency in Romania, Poland, Hungry, I think Manchuria as well.
steve
Jul 5 2024 at 9:30pm
Send them your CV!
Steve
Thomas L Hutcheson
Jul 6 2024 at 12:55pm
The question did not specify that there was an increase in the money supply as a result of printing the larger note. And printing a larger denomination bill given an increase in the price level is not an absurd interpretation of “deal with inflation.”
Not a world class solecism. 🙂
David Henderson
Jul 6 2024 at 4:47pm
I’m not sure where you got “deal with inflation.”
It said “fight inflation.”
Jim Glass
Jul 7 2024 at 3:12pm
Yes, but it did not say “reduce inflation”.
Fight is a word that can have many meanings. Especially in the most informal of contexts.
“Immediately after WWII this largest northeastern US city enacted rent control to fight a housing shortage.”
Though … I shan’t fight about this. 🙂
Anyhow….
… making Weimar look like a bunch of pikers.
Jeremy N
Jul 7 2024 at 3:06am
Perhaps the writers meant that it was the bank’s intention, not that the writers themselves thought it would work.
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