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The Annihilation of the Pengő: Inside Hungary's 1946 Hyperinflation Crisis
After WWII, Hungary endured history's worst hyperinflation. By 1946, prices doubled every 15 hours, rendering the pengő useless. The government issued a 100 quintillion pengő note—the highest ever—worth less than 20 U.S. cents, a stark lesson in currency collapse.
The Note with 20 Zeros
Imagine a banknote for one hundred quintillion dollars. That’s a one followed by twenty zeros. It’s a number so vast it feels fictitious, a figure most of us can barely comprehend. Yet, in July 1946, the government of Hungary issued exactly that: a 100,000,000,000,000,000,000 pengő banknote. At the moment of its creation, this note, the highest denomination ever put into circulation, was worth less than twenty U.S. cents. This wasn’t a joke; it was the surreal climax of the most intense hyperinflationary period in recorded history, a time when the very concept of money dissolved in the hands of an entire nation.
From the Ashes of War to an Economic Inferno
To understand how a country ends up printing quintillions, we must look to the devastation of World War II. Hungary emerged from the conflict in ruins. Its infrastructure was obliterated, its industrial capacity was a fraction of its pre-war level, and it was burdened with crippling war reparations owed primarily to the Soviet Union. The national treasury was empty. With no meaningful tax base to draw from, the government turned to the only tool it had left: the printing press. As one observer noted, at its core, currency is a stand-in for tangible value, a way for people to trade their labor and goods. But as the Hungarian government began printing money to pay its own bills, it massively diluted that value. More and more money was chasing the same, or even fewer, goods and services. This is the classic recipe for inflation, but what happened in Hungary was on a completely different scale.
When Prices Double Before Lunch
By mid-1946, the situation had spiraled into a vortex. The rate of inflation reached an astronomical 41.9 quadrillion percent per month. This meant that prices were doubling, on average, every 15 hours. A worker paid in the morning would find their wages worth half as much by the end of the day. Shopping became a frantic race against time. Citizens abandoned currency altogether, reverting to a barter system. The pengő, once a stable currency, was now treated as worthless paper. One common sentiment during such events captures the absurdity:
I can't even wrap my head around a 'quintillion'.
This disconnect between the astronomical numbers on the notes and their real-world value created a profound psychological break from the concept of money itself.
A Bizarre Lexicon of Zeros
The government’s response was to print ever-higher denominations, creating a strange new vocabulary for worthlessness. First came the milpengő, or a million pengő. Soon, that wasn't enough, so they introduced the b-pengő, which stood for a billion pengő—except in the long-scale numbering system used in Hungary, this actually meant a trillion (1,000,000,000,000) pengő. The situation became so extreme that they printed a 100 quintillion (százmillió b-pengő) note and even designed, but never issued, a one sextillion pengő note. To simplify daily transactions, prices were often quoted in "ezer milliárd b-pengő" (thousand billion b-pengő). The sheer mental gymnastics required for a simple purchase is difficult to fathom today.
The Adópengő: A Desperate Solution
In a fascinating but ultimately failed attempt to restore stability, the government created a separate, indexed currency called the adópengő, or "tax pengő." The value of the adópengő was adjusted daily based on inflation, making it a more stable unit of account for bank deposits and tax payments. For a short time, it became a parallel currency that held its value far better than the rapidly depreciating pengő. However, it was too complex for widespread public use and could not halt the underlying economic collapse. By July 1946, even the adópengő was losing value at a staggering rate.
The Forint and the Aftermath
The end finally came on August 1, 1946, with a radical currency reform. The government introduced a new currency, the forint, backed by gold reserves. The pengő was retired. The exchange rate was set at an almost unbelievable 400 octillion pengő to 1 forint. That's a 4 with 29 zeros. All the quintillions and sextillions of paper notes were swept away, becoming nothing more than historical oddities. The hyperinflation was over, but its scars on the Hungarian economy and psyche would last for generations. The crisis serves as the ultimate historical lesson on how quickly faith in a currency can be shattered when its creation is completely detached from the real production and labor it is meant to represent.