“Everyone loves an early
inflation. The effects at the beginning of inflation are all good. There is
steepened money expansion, rising government spending, increased government
budget deficits, booming stock markets, and spectacular general prosperity, all
in the midst of temporarily stable prices. Everyone benefits, and no-one pays.
That is the early part of the cycle. In the later inflation, on the other hand,
the effects are all bad. The government may steadily increase the money
inflation in order to stave off the latter effects, but the latter effects
patiently wait. In the terminal inflation, there is faltering prosperity,
tightness of money, falling stock markets, rising taxes, still larger
government deficits, and still roaring money expansion, now accompanied by
soaring prices and an ineffectiveness of all traditional remedies. Everyone
pays and no-one benefits. That is the full cycle of every inflation.”
- Jens
O. Parssons, ‘Dying of Money: Lessons of the Great German & American
Inflations’.
“Is there any reason why the
American people should be taxed to guarantee the debt of banks, any more than
they should be taxed to guarantee the debts of other institutions, including
the merchants, the industries, and the mills of the country ?”
- Senator
Carter Glass during Senate debate on the Banking Act of 1933 (the Glass-Steagall
Act).
“We contend that for a nation to
try to tax itself into prosperity is like a man standing in a bucket and trying
to lift himself up by the handle.”
-
Winston
Churchill.
Adam
Fergusson begins his magisterial analysis of the Weimar collapse (‘When Money
Dies..’) as follows:
“When
a nation’s money is no longer a source of security, and when inflation has
become the concern of an entire people, it is natural to turn for information
and guidance to the history of other societies who have already undergone this
most tragic and upsetting of human experiences.”
As
Fergusson points out, studies of the period, of all kinds, tend to come with a
common shortfall: they ignore the human element. Here, then, are some of the
human stories recounted within his work..
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