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Imagine yourself in a scenario. You wake up in the morning, walk to the café, buy a cup of coffee, it costs 600 dinars. Later that night, you come back to the same café, buy the same cup of coffee, and it costs 1200 dinars. Sounds familiar? You might be thinking of the hyperinflation that took place in Weimar Germany, in the period after World War I and before the rise of Adolf Hitler. However, you would be wrong. What was never taught in the schools in the US, and mostly overshadowed and forgotten by the rest of the world, was the hyperinflation in former Yugoslavia that took place between 1993 to 1995. At its peak, “the inflation rate was 313 million percent, 4 orders of magnitude higher than the Weimar hyperinflation” (a few thousand times worse) (Hanke), second only to the Hungarian hyperinflation crisis and on par with the recent Zimbabwean hyperinflation crisis. The circumstances of the hyperinflation were compounded by the political instability and secession of Slovenia, Croatia, as well as the ongoing war in Bosnia and Herzegovina. For a sense of the severity of the inflation, the 500-billion-dinar bill was practically worthless in 1994. For comparison, “on November 12, 1993 the exchange rate was 1 Deutsche Mark = 1 million new dinars, and by January 4, 1994 it was 1 Deutsche Mark = 6 trillion dinars. Between October 1, 1993 and January 24, 1995 prices increased by 5 quadrillion percent.  This number is a 5 with 15 zeroes after it.” (Watkins)

Talking to my host mother about life during those three years, I was able to gain insight from a first-hand perspective of the hardships during those times. She had been running a traveling agency with her husband in the early 90’s and was off with a decent income and comfortable life. However, gradually she noticed that prices were rapidly rising from week to week and realized that the money was becoming less and less valuable. Then, in the second half of 1993, prices began to spiral out of control. Prices doubled every day, and social structures began to collapse. She talked about how every time there was any form of payment or income, she would have to immediately run to the store to buy tangible goods, assets, and food. This is because even from day to day, prices would skyrocket and double. In addition, whenever she would go out to a restaurant or bar, there would not be any menus. This is because the prices need to be negotiated beforehand as it is constantly increasing.

“We would buy 2 bottles of beer at a time, as by the time you would finish one bottle the second bottle would be more expensive to buy,” she remarked. “In fact, you would see people using the money as toilet paper as the toilet paper costs more than the money itself!”

I was utterly struck by her description of life under a crumbling society. Life savings were rendered useless, goods were scarce, and frankly, simply nothing worked. She told me about some of her family members, who had their life savings stored in banks. When the inflation started, they did not take the money out for use, due to the belief that the inflation will end, and that the currency will return to normal. However, it did not. She said that the amount of money they had was enough to buy a small apartment or a luxury car, and by the time they realized that the currency was not going back to normal, the same amount was enough to buy just one liter of milk. The government tried to remedy this situation by repeatedly releasing new issues of the dinar that gets rid of the zeroes that have accumulated behind the currency, only for the new dinar to spiral out of control again. This policy rendered any savings under the old dinar essentially worthless. My host mom said the only way to preserve any of your money was to try to exchange the money for foreign currencies such as the Deutsche Mark or the Dollar. However, people such as farmers not living in the cities did not have this luxury, and as such they lost any money they had saved over the years. Ironically, it seems to me that these farmers were arguably better off as they grew their own food, something that become scarce and sought after in the city.

Reflecting on my conversation with my host mom, I cannot even begin to imagine the adversities that she had to endure during those few years. It really put things into perspective, as her children, who are only a few years older than me, had also lived through this period. It shocks me how this all happened so recently and how it is still ingrained in the memories of even the people born in the same generation as me. This conversation really made me feel privileged about my situation, as I am reminded of the many things that one takes for granted but are perceived as a dream for some others. It also really made me appreciate the strength of the Serbian people, as they were able to endure such times of economic hardship and conflict, only to come out stronger. The fact that they are able to accept, forgive, and seek membership into the EU is another testament to their perseverance. I hope to incorporate this very mentality into my own life, to be strong and to stay determined, no matter what life may throw at you.

“Being from Serbia makes us tough and eager to prove that we can come from this country that has been through so much and still be successful.” Ana Ivanovic



Hanke, Steve H. “The World’s Greatest Unreported Hyperinflation.” Cato Institute, 7 May 2007,

Watkins, Thayer. “The Worst Episode of Hyperinflation in History: Yugoslavia 1993-94.” Yugoslavia, Roger Sherman Society,

One response to “Holding 500 million in the palm of my hand

  • claudia koonz says:

    Hi David, What a vivid depiction of a truly unimaginable situation — did your host mom talk about whether the deep uncertainty affected her views of Milosevic and his government? Your comparison with Germany in 1922-3 is spot on — and what makes both events parallel is that both resulted from government decisions. So i hope you follow up on the immediate and maybe long range impact of hyperinflation. Maybe your observations will inspire you to take a course on irrationality & economics….

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