Memories From My First Hyperinflation

CULTURE, MONEY / Monday, December 20th, 2021

By lontivero on Github


Inflation is a phenomenon that changes your life. This change happens slowly at the beginning, you cannot even notice it clearly and in many cases it could be that you fail to see the storm that could be unleashing.

During six out of my forty-three years in this world I was able to experience what other people call “normality”, I mean, very small inflation rate. The rest of the years were years of high, or very high, inflation besides two hyperinflation crisis during my youth.

Currently I survive in an environment with yearly inflation around fifty percent and with a hyperinflation around the corner. This is what is normal in Argentina, in fact, inflation is part of our life, it’s always there with us all the time, during the family meetings, daily job and it is also in the beds in the middle of the couples.

I want to tell you how inflation looks like from a common human’s being point of view and how your life is going to change if it catches you. Sincerely, I cannot teach you anything that you won’t learn by yourself eventually but it could be wise to learn from others when possible. However, it is also true that what it is obvious for me, that have lived all my life with inflation, could be no so obvious for you if you have never experienced it and it is not in your DNA. So, I want to share a few strategies that are critical important.

The focus of this text is inflation. Hyperinflation crisis are much more interesting but they don’t last too much time and, inflation comes first. I have to start with hyperinflation anyway because my idea is to tell you my memories first..

Inflation and Hyperinflation

We don’t really need to define these terms but let me share a non-scientific definition for the purpose of this text anyway.


Inflation occurs when the currency loses value continuously. At the beginning that is the result of the government printing money mania, something that can last many years without major problems. However, after a while, and given the currency is not useful for saving (it loses its store of value property) people stop demanding it, the production of goods and services falls and with that the state incomes fall too, what “forces” the government to print more to cover its deficit and for its stimulus programs. This is what produces the “spiralization” of the inflation.


Hyperinflation occurs when the currency dies, it doesn’t work anymore. At this point nobody want to sell and most people cannot buy, the lack of coordination of the economy is so huge that hyperinflation episodes are short in relatively free countries.

Importance of being prepared

In the book The Hyperinflation Survival Guide the author explains the strategies that companies can follow to survive a hyperinflation. I recommend you to read it. Everything in that book is true and useful, at least if you have a company. But, what if you don’t have a company? Well, in that case there are many things you can do but they really depend on your particular situation. Are you young or old? Are you retired? Are you an employee, merchant, trader, public school teacher?

Inflationary economic creates a few winners and a lot of losers. Low qualification workers, retired people and creditors are among the bigger losers while speculators, state contracts, debtors (and politicians) are among the bigger winners.

Let me give you an example. Twelve years ago I bought my house with a mortgage which had to be paid in twenty-five years, the monthly fee represented about fourth percent of the family’s income, I was working as a senior software engineer at Motorola. Three years ago I cancelled the mortgage with only two salaries. It wasn’t a good deal for me at all because it was clear that after a few more years I would end paying a few cents of dollars a month but the constant harassment from the bank was enough. Another factor that helped me to decide to cancel my debt was that during inflation, the government intervenes by altering the contracts so, better to pay and forget.

This is exactly the way how my parents bought their first house too, the one where I was born. My mother always paid rigorously month after month but after a few years she stopped paying every month because the taxi was much more expensive than the payment she had to do so, she used to pay three or four months at once.

At this point you could think inflation is wonderful. Real states for free! Well, you could be on the other side of the desk and be the creditor, the investor who bought the mortgages or, as in this case, the tax payers. Inflation is always bad.

As you can see, understanding the logic of an inflationary economy makes the difference, and sooner you smell the inflation, better you can take advantage.

Memories from my first hyperinflation

I was ten years old and my memories are incomplete but there are many things that are behavioral patterns that repeat again and again, they are always the same and I would like to share here.

Bread and Milk

I never understood why in Argentina kids have to go to school before the sun rises, specially taking into account that in the state where I live the days are long even during the winter. Anyway, the point is that my father used to wake my brother and me up and sent to me to the almacen (small food stores close to home) to buy bread and milk. Every single day he gave me the exact amount of money but, it was impossible for me to keep track of the prices but my father’s guesses were always right. One day I asked him how was possible for him to know the exact price of the bread and the milk every single day without a single mistake; he told me that the prices early in the morning any given day are the same to those in the evening a day before.


It was more or less common for kids to take a little money to school and buy something there, cookies, juices, candies and football figurines. We kids learnt that money that we don’t spend at that moment could be useless next day (this was specially true on Fridays). In other cases I had enough money to buy something I wanted but it was no so clear whether it could be enough after school or not. The solution to all these problems was paying for the thing now in exchange of a “vale”, a small piece of paper signed by the seller with a legend like “a coke”. In this way, after school (or next day) you presented that “vale” to the seller and he gave you the coke.


My grandparents visited us on Sundays and my mother was always caring to give a good impression by serving abundant food. I remember that ten, or quarter past ten, she called me by my name loudly:

-- mom: Lucas, go to the almacen and buy noddles, onions and tomatoes!
-- me: sure mom. Give me the money?
-- mom: no, I have no money. Ask fiado. Go. Go.

It doesn’t matter how much a worker receives as payment for his work, the money is not enough. Everybody knows that the salary has to be spent immediately, faster is better. The problem is that when you spend all your money in a few days, how do you survive the rest of the month? The secret is in credit but given the creditors always lose money during inflationary periods and knowing we have inflation since ever, there is no credit.

Local almacenes (small food store) owners use a credit system, that is in some way still alive here, called “fiado”. It is simple, you buy a kilogram of potatoes (30_000 $/kg) and instead of paying for that at the moment, the owner register the operation as follow: “Lucas’ mother: tomatoes 1kg”. Note that no money is involved here, it is not paid and it is not recorded neither.

Next month, when my mother received her salary, she rushed to pay to the almacen owner the kilogram of potatoes priced at that specific time. This is the only way credit works in real life during hyperinflation because it is the only way creditor can protect himself from losing.


I remember that when I was a young kid my mother moved with me and my brother by bus and the payment mechanism was simply cash (bills and coins). The system was messy because even when in those years bus drivers were able to make mental multiplications with large numbers lightning flash, the need to have coins for change and dealing with big denomination bills was painful. I suspect that for this reason the local government created a prepaid system consisting of a special coin called “cospel” only useful for paying the bus trip.

In those years there was a huge amount of industrial worker that used the only available public transportation system in the city: the bus. The cospel made the payment experience much much better than before, it was great. One could buy a cospel for twenty five cents of american dollar if i remember well.

The problem came with the hyperinflation. It didn’t matter how high and crazy the inflation was, the cospel’s value was always the same: a bus trip. With lots of workers needing cospeles to go to their workplace and prices raising all the time, one of the first things to buy were cospeles, the most stable coin in the history of the planet earth, the gold of the poor.

I suspect it could be hard for someone in a healthy economy to imagine what it means to have access to something that doesn’t lose value, that is portable, highly demanded and that looks like a gold coin (they were made with bronze). One was able to buy almost anything with cospeles, I bought a bike for twenty cospeles by the way. Some merchants received it with discount but it was okay.

The government was receiving pesos cash that depreciate really fast in exchange of something that didn’t lose value and for that reason people started to hoard cospeles and small mafias entered into the market resulting on scarcity of cospeles preventing people to translate by bus. For this reason the local government decide to devaluate the cospel. “After next Monday 6AM the bus trip cost will be two cospeles instead of just one”. Workers loose half of their money in a second.

Devaluing the cospel didn’t change the fact that it was a stable coin anyway, except that after that governmental decision you needed two cospeles instead of one. It is the exact same situation so, hoarding cospeles was still a good idea and people continue doing it. A month later the government repeated the measure and announced that four cospeles would be needed to pay the bus trip and everything repeated again. Of course the “solution” didn’t scale well and for that the government decided to make a hole in the center of each cospel and announced that only cospeles with holes where valid, assuming probably that the technology required to make a hole in a coin was too complex for normal people as it was for them (politician). It is easy to know how the story follows.


In those years there were no computers. In the supermarket the products didn’t have a barcode, instead they have a small piece of sticky paper with the price stamped on it. Every supermarket had at least one young woman updating the prices all the time with the help of a tool/machine specially crafted for putting prices quickly. Those girls were extraordinarily efficient, we all hate them, and sometimes there were some tense moment between the girls price and customers. Anyway, the point is that to avoid any problem my mother sent me and my brother to walk ahead the price women and take whatever we knew was in the buying list. I remember we followed our mather’s orders as best as we could because we understood it was important and we were doing our part to help the family.

While writing this my great grandmother came to my mind. My great grandmother was always old for me, I mean, when I was a kid she was in her eighties and I felt curiosity about her childhood since ever, for that reason many times during my youth I wanted to know about her hobbies, games and daily activities but she didn’t remember much except one specific memory about of her as a pretty young girl hiding the food so that the soldiers do not take it.

Note: Children do not suffer

For your peace of mind let me tell you that kids do not suffer inflation as a tragedy, they experience it as just as a reality and a problem to solve, it is simply what it is and it doesn’t prevent them to be happy. Basically they do not understand what happens nor its consequences but they do understand the system, they know their savings are not safe in the local currency and they develop their own strategies to fight it. Keep that in mind.

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