Hyperinflation is inflation that becomes so extreme that the normal relationship between money and goods breaks down completely. There is no universal threshold, but economists typically define hyperinflation as monthly price increases of 50% or more — the equivalent of annual inflation of several thousand percent. At its worst, prices can double in hours.
The root cause of hyperinflation is almost always the same: governments printing vast quantities of money to fund spending they cannot finance through taxation or borrowing. When the government prints money faster than the economy produces goods and services, the value of each unit of currency collapses. As people realise what is happening, they spend money as fast as they receive it — which drives prices up even faster, creating a self-reinforcing spiral.
The Weimar Republic in early 1920s Germany is the most famous case. After World War I, Germany owed massive war reparations it could not afford. The government financed the payments by printing marks. By late 1923, the exchange rate had reached over 4 trillion marks to the dollar. Workers were paid twice a day and sent their wages home by wheelbarrow before prices rose again. The currency became worthless.
Zimbabwe in the 2000s and Venezuela in the 2010s are more recent examples. In both cases, severe economic mismanagement led governments to print money to cover spending shortfalls. Zimbabwe's inflation peaked at an estimated 89.7 sextillion percent annually in 2008.
The economic and social consequences of hyperinflation are devastating. It destroys savings, wipes out pension funds, prevents long-term planning, and ultimately makes economic activity impossible. Contracts denominated in the currency become meaningless. Trade reverts to barter or foreign currencies.
Hyperinflation ends when the government stabilises its finances, often by introducing a new currency, implementing strict monetary discipline, or receiving international support — as Germany did through the Rentenmark reform of 1923.