WHEN I am driving on my own, I often turn to the BBC World Service for company.

Working on tiny budgets, its best programmes are positively Reithian, entertaining and informing me. (BBC Scotland could usefully follow its example.)

On Thursday mornings, Bridget Kendall presents The Forum. In format, it is very like Melvyn Bragg’s Ín Our Time, broadcast an hour earlier on Radio 4, but the subject matter is far more esoteric, and nothing seems to be beneath the producers’ notice. Last week’s episode on the great Hungarian hyperinflation of 1945-46 was an excellent example.

At its peak, prices in Hungary doubled in rather less than a day. Although they were never issued, near the end of the hyperinflation the national bank printed notes with a face value of one billion trillion pengos. That meant that after the digit one, no fewer than 21 zeros followed.

This was probably the most rapid inflation of a currency in history but also an extreme example of what can go wrong in a country on the losing side in a war.

War is almost always destructive of economic stability. As well as the direct costs, in terms of equipment which was quickly destroyed, the Soviet Union imposed harsh reparations on Hungary at the end of the Second World War, having captured and deported hundreds of thousands of civilians to labour camps in the Soviet Union.

There was also a need to resolve the imbalances which had built up during the war because of the need for military production.

For all those reasons, the country was close to economic collapse, and that meant the government lost fiscal capacity. It simply could not generate tax revenues and so it turned to the printing press to create almost an infinite amount of money.

When the hyperinflation ended, with the introduction of a new currency, the forint, all the bank notes that had been printed were worth less than a penny. The guests on The Forum explained that the old notes were simply swept up and disposed of as rubbish.

If you type “hyperinflation” into an online search, the episode in Weimar Germany comes up top, along with the Austrian hyperinflation of 1919, the Zimbabwean experience of the early 2000s, and the Venezuelan record of high inflation, which has never crossed the boundary into hyperinflation.

Hungary’s experience, sandwiched between the end of a brutal war and the onset of Communist repression, has been largely forgotten.

Money is valuable because everyone believes they will be able to use it to make purchases.

When inflation is low, the value of a pound today is about the same as the value of a pound at the beginning of last year. People will happily maintain credit balances in their bank accounts.

In a hyperinflationary situation, money becomes pointless as it becomes worthless. No one would want to be paid in cash if they could avoid it. The currency ends up with less staying power than Liz Truss, never mind a lettuce. Barter takes over, and there will often be a thriving black market in foreign currencies.

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To stay ahead of the situation, the government issues more money, in denominations of ever-higher value. Issuing the money feeds into expectations of inflation, causing people to set still higher prices. Since money is a financial security, there is no limit to the amount of money which can be produced.

Money is valuable only so long as it can be exchanged for goods. Sooner or later, people will realise there is too much money in circulation and prices will go up. Any uncontrolled monetary expansion will lead to price rises.

Almost every period of hyperinflation (and there have only been 55 of them, meeting the requirement of monthly inflation reaching 50%) has ended in the same way.

The government has had to set up a new currency and scrap the now worthless one. The government also had to find ways of generating tax revenue, so it can slow down the printing presses. That is what the Hungarians did in 1946.

To “credit-backed asset-price inflation”, which was last week’s marker of a crisis, we should add “monetary financing of the deficit”.

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Maybe it is just because I am getting older, and looking forward to retirement when I can live off my savings, but my tolerance of inflation is much less than it was when I first studied economics.

Even modest inflation quickly erodes the value of savings. Without savings, there cannot be investment – and without investment, there cannot be economic development.

If we want to address climate change, then we will need to mobilise savings and investment on almost a wartime scale. Persistent, but still low inflation, would then not be evidence of a crisis of capitalism, but an existential threat.

At the same time at the Hungarian hyperinflation, the Attlee government in the UK had to look economic crisis in the face – and averted it. Its caution on economic matters did not prevent it from being bold in other ways. As well as the NHS, his government implemented the social reforms proposed in the wartime Beveridge Report.

Despite widespread fears at the time, there was no return to pre-war levels of unemployment. Instead, the post-war government laid the foundations for persistent economic growth throughout the 1950s. Conventional economics ensured that it could be politically bold.