When Money Dies, a 1975 cautionary tale from the Weimar Republic

Remember the three day week, miners strikes and the glories of fixing British Leyland cars, where every motor was a Friday afternoon job? No, you probably don’t because you weren’t born then ;) To be honest I was a kid then so I didn’t really understand the horror.

This was after the 1973 oil shock, and there was this thing called inflation stalking through the land. A chap called Adam Fergusson looked back in time, to 1930′s Germany, to garner information about inflation, and this book encapsulated what he found.

Though the stage had been set for the inflation by the conditions set at Versailles, the story has curious resonances with now. In the initial stages, the inflation took the form of a slow-motion economic train wreck, which is similar to now in terms of the middle classes slowly being destroyed by their purchasing power dropping. Some people who either have non-financial capital, particularly businesses connected abroad, do quite well, and foreigners do particularly well as their hard currency is highly sought after.

Now of course the German experience was far worse that anything we have experienced in recent times, and has had a deep effect on the German psyche, with a low tolerance of debt and a low tolerance of Club Med profligacy at the moment. This book is a powerful cautionary tale of what may lie ahead if we don’t get a grip on inflation.

It’s a pity that the writing is rather turgid – it is a tough read, with the overview swamped in a welter of detail at times. I had to extend it three times at the library to be able to get through it, one to be taken on in small bites at a time.

The essential message is the same as the exhibition in Cambrdge. Once inflation has destroyed half the purchasing power of your wealth, you are stuffed, you can’t do anything to head it off. This is because the decline becomes exponential, each future halving occurring in smaller and smaller intervals. It is well worth reading despite being hard going.

I have been reading the book online, and it’s meticulous in its detail, but I think I’ll keep it for a summer read when I have more time to ponder all the details. I read I think about 8 or 9 chapters, but felt myself getting bogged down in all the detail.Helpful in understanding the politics of the time, too.

ermine,
Let’s not talk about certainties. Paper money crash is a “sound of inevitability, Mr. Anderson”! ;-)

Instead we need more pictures and journals from your big-oak permaculture club and more window frame DIY ;-). Yea, guv. That’ll inspire roof-top dwellers like me to get off my bum and do Sq. ft gardening.

Votes, readers?

Hey Surio,

You don’t need cold frames, because you get real sunshine, not the watery stuff we get up here :)

In India you must be able to grow so much more stuff than we can because you have more light, you have more warmth, and you probably have a longer growing season because of the much lower latitude. So you have no excuse at all – I look forward to seeing a photo of your rooftop garden in Autumn :)

@g – you’re right, it is one to take in small bites. I had to get my skates on reading it because somebody else had reserved if from the library, which meant I couldn’t renew it any longer. It is good, and one of a kind, but a really tough read.

@Surio, ah, inevitability, but the big question is when, and how quickly you can call the impending doom without being spooked by the general noise of the currency markets. Therein lies the art of financial acumen, and why Mr Buffett is sitting on a bigger pile than you and me ;)

1. Ah, Got me there with the garden thing, guv! Hunter has turned hunted, Damn, we’re in a tight spot! :-| :-). But I am genuinely interested in your permaculture posts. I’ll do my best to fulfill your request. I suppose it’s more therapeutic than wringing about the ills of the world. DW feels I’ve grown more depressed since starting on the series!
2. Well, agreed on all you said on Buffett! That jammy b*%^*&d with his “indefensible”! ;-) And I’m still holding the can on my mortgage……

However, in a semi-serious note, he made a small pile (undisclosed fee for entrance!) by talking to the great Indian unwashed and sold them the same old B.S about more growth, and exhorting people into buying insurance from his company in an already overcrowded and desperate Indian insurance market! When he decides that we are “good enough” for him now, then he’s already beginning to scrape the barrel to ensure that (in)famous “year-on-year growth” on any costs. Time to get spooked?

Groucho spelled it more eloquently

[...] History has a lesson, though you need balls of steel to use it. German stockholders saw their investments plunge to a hundredth of their value in the hyperinflation of the Weimar Republic. It might not have felt that bad because of the [...]

[...] their value. Curiously enough, nor do shares. This enabled the courageous investor to survive the German hyperinflation with some value intact.Whether nominee accounts would have the same staying power as real share [...]

[...] yes. Tolerating the world of work less as you get older, yes. Collapse of the welfare state, hyperinflation, or the value of money becoming destroyed by the inherent inconsistencies in the assumptions we [...]

 

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