"When Money Dies" By Adam Fergusson (spoiler alert) Highlights, Lowlights, Book Review

20 posts / 0 new
Last post
lilbromarky1
lilbromarky1's picture
Offline
Joined: 06/15/2011
Hat Tips: 2464
Posts: 292
"When Money Dies" By Adam Fergusson (spoiler alert) Highlights, Lowlights, Book Review

Finally finished this book. I started it back in the late winter of this year.  Its a historic, by the numbers account of the german hyperinflation.  Some sections will draw you in, and in some places he goes Rothbard style and murders you with numbers.  You'll be stick to your stomach as you read along and see the exchange rate fall off a cliff and never recover.  Some factoids that you all might find helpful.

-The heart of the book spans about a 6 year window from 1918 to 1924 when the german mark finally died

-At no point did any of the german political leaders, or the general public for the most part, establish a link between the printing press and the rising prices.  1 man did, Dr. Rathenau.  He got pinched in his car like Denzel at the end of the movie "Training Day".  Blocked him in the front with another vehicle, "riddled his body with bullets", then he was blown in half when one of the assassins threw a bomb into his car window.

-Stores stopped changing price tags on items and had a multiplier written on a board that they changed multiple times per day

-The author makes no mention of the people having access to bullion to buy or sell.  They only had jewelry to hawk for food.  Most people speculated in stocks and foreign currencies.  Making nominal gains but losing purchasing power almost always.

-Everyone young and old, had to learn how to avoid the govt's brutal taxation or else go hungry.

-People who visited germany from places such as the USA were called the "gold currency people".  They could empty out a merchant's entire shop in one visit

-One wealthy lady from Germany was forced to trade a grand piano for a sack of potatoes.  She rented a tiny room in her house and charged the man more for 1 month's rent than she paid 10 years ago for the entire house.  She also used her dead husband's cigar collections as barter for food for her children.

-In 1924 the mark was able to be exchanged at the banks for the newly issued Reichsmark at a ratio of 1,000,000,000 to 1.  (1 Billion to 1)

-Prior to the Reichsmark's issuance, in 1924 the total number of marks in circulation was 690,000,000,000,000,000,000.  That's 690 quintillion.

****************Some important quotes from the author in the epilogue: **********************

"what broke the germans was the constant taking of the soft political option when it came to matters of money"  <--- Sound Familiar?  Look out folks.

"the point of no return therefor, was not a financial one, but a moral one" "germans learned that their traditional repository for wealth had disappeared, and thus the only mechanism for determining the value of an item was its immediate necessity"

"mans values became animal values"

"a prositute in the family was more valuable than a baby, a kilo of potatoes worth more than a grand piano, clothing more essential than democracy, food more needed than freedom"

Edited by admin on 11/08/2014 - 06:04

__________________

Like my ideas? Check our blog at: http://backtobasicseconomics.blogspot.com/

UGrev
UGrev's picture
Offline
Joined: 06/14/2011
Hat Tips: 884
Posts: 168
Well crap.. you just gave us

Well crap.. you just gave us the ending to our current story.. oh well.. many people will be living the story and won't need the book.. :)

rock collector
rock collector's picture
Offline
Joined: 06/14/2011
Hat Tips: 2216
Posts: 178
Inflation back in the late 70's and now

In the late 70's, early 80's, I managed a small specialty/hobby retail store. Inflation was rampant at the time. Our suppliers were raising prices every two weeks or so.  Not necessarily in all categories though. Initially they raised prices only when they replaced warehouse inventory. Later, they raised prices preemptively even before they ran out of inventory they acquired at the earlier price.
We would typically *eat* the first price increase (not raise our shelf prices) but when the wholesale price repeatedly moved up a 2nd or 3rd time in the space of a month, we would be compelled to follow suit. Longtime customers occasionally became quite testy about it. Newer customers did not notice as much. Our gross margins got squeezed and it's important to note that all of these price increases took place in a recessionary environment.
There was a cascade effect as well. After retailers "broke the ice" and customers got somewhat inured to frequent price increases, sellers were further emboldened to raise prices all along the supply chain, from manufacturers to wholesalers to retailers.
Nowadays, we are seeing frequent price increases in the grocery arena along with smaller package sizes and sneaky tactics like raising prices and simultaneously putting the item "on sale".  The overuse of the 10/$10 price has conditioned some consumers to think that is a sale price but Snickers bars for 10/$10 is hardly a bargain.
The forces of inflation have a built in time advantage. Only long term and particularly alert consumers recognize when it is happening.  Newer (younger) consumers can't see that their currency has been and still is being debased.  I am afraid that we will be seeing much more of it.

BASEBALL 13
BASEBALL 13's picture
Offline
Joined: 06/14/2011
Hat Tips: 1181
Posts: 171
When Money Dies..

Isn't it a shame we can't use the Constitution anymore to determine the legality of government's actions? If we could there'd be a lot of trials for TREASON going on.

- "The tree of Liberty must be watered from time to time with the blood of patriots and tyrants"

Vic
Vic's picture
Offline
Joined: 06/14/2011
Hat Tips: 500
Posts: 26
You note that the book covers

You note that the book covers a 6-year span, ending when the Mark finally died.

How long was the time period from massive, crippling devaluation, through the grand-piano-for-potatoes time, to the return of some sense of normalcy? Does the book say?

lilbromarky1
lilbromarky1's picture
Offline
Joined: 06/15/2011
Hat Tips: 2464
Posts: 292
Vic wrote:You note that the

Vic wrote:

You note that the book covers a 6-year span, ending when the Mark finally died.

How long was the time period from massive, crippling devaluation, through the grand-piano-for-potatoes time, to the return of some sense of normalcy? Does the book say?

Vic to be honest with you, there's one aspect of the book that is confusing.  In the early chapters, the author mixes in stories from the concurrent Austrian inflation that's going on at the same time as the German inflation is just ramping up.  So the grand piano for potatoes scenario actually occurs early on in the book, 1918'ish and I believe that woman was austrian, not german.  The author's writing style was difficult to follow and I found myself re-reading portions and chapters to fully absorb.  I gave the book to my friend today to read so I cannot confirm it right now for you.

I can tell you that there are multiple chapters devoted to the years 1922 and 1923.  Specifically 1923 in the summer.  That's when the inflation went parabolic so to speak.  Thats when the grocery stores were using multipliers and the banks were issuing notes in bundles of multiple million marks per shot. 

The other item to note, workers in germany always had to fight for wage increases via riots and protests and shootings.  When they got their raises, the prices were already so far ahead that the workers had to again begin fighting for another increase.  This went on until the end and concurrently the german industry was dying so unemployment was on the rise until german industry almost came to a standstill.  Anyone who wasnt fit for survival such as seniors or someone who was disabled was in immediate danger of starvation.

If i were to try to apply this book to our current situation, I think we will start to see fireworks in the USA by 2013 or 2014.  That's my guess and I think that's the question that you were seeking an answer to right?

__________________

Like my ideas? Check our blog at: http://backtobasicseconomics.blogspot.com/

Vic
Vic's picture
Offline
Joined: 06/14/2011
Hat Tips: 500
Posts: 26
It depends on our definition

It depends on our definition of "fireworks" ;)

My real question would be If it happened to us today, how long would it last until it was over?

We'd have the preface phase where all the pieces are being set up, but before the actual fall (like from the last few years or so until current)

We'd then have the trigger event and subsequent slide (global selloff, currency collapse, massive default, whatever form it might take)

Then, there would be the immediate aftermath (new situations like hyperinflation, currency replacement or such things)

After that period, we'd experience some healing. The situation at least stabilizes, with no further hyperinflation, or the new currency is a success. The new normal is accepted.

Finally, there would be the healing time when things are essentially back to normal.

I'm wondering what their experience was going from the trigger event phase on through the beginning of the healing time phase, and the obvious speculation on how long that same span might be for us if it happens again.

Pax Argentum
Pax Argentum's picture
Offline
Joined: 06/14/2011
Posts: 86
Quick hat tip to you

Quick hat tip to you pardner.

I can't recommend this book highly enough.

For those that haven't read it, pick it up in EMP-proof paper and read it. It reads like today's headlines.

Best,

Pax

lilbromarky1
lilbromarky1's picture
Offline
Joined: 06/15/2011
Hat Tips: 2464
Posts: 292
Vic wrote:It depends on our

Vic wrote:

It depends on our definition of "fireworks" ;)

My real question would be If it happened to us today, how long would it last until it was over?

We'd have the preface phase where all the pieces are being set up, but before the actual fall (like from the last few years or so until current)

We'd then have the trigger event and subsequent slide (global selloff, currency collapse, massive default, whatever form it might take)

Then, there would be the immediate aftermath (new situations like hyperinflation, currency replacement or such things)

After that period, we'd experience some healing. The situation at least stabilizes, with no further hyperinflation, or the new currency is a success. The new normal is accepted.

Finally, there would be the healing time when things are essentially back to normal.

I'm wondering what their experience was going from the trigger event phase on through the beginning of the healing time phase, and the obvious speculation on how long that same span might be for us if it happens again.

Okay I get you now.  It was about 2-3 years of hell until the mark was replaced.  Was their healing afterward?  Yes some, but the Reichsmark was also destroyed due to inflation in the following 25 years.  The Reichsmark died in 1948 was then replaced by the Deutchmark.  Somewhere during the decline of the Reichsmark Hitler came to power

__________________

Like my ideas? Check our blog at: http://backtobasicseconomics.blogspot.com/

lilbromarky1
lilbromarky1's picture
Offline
Joined: 06/15/2011
Hat Tips: 2464
Posts: 292
Pax Argentum wrote: Quick hat

Pax Argentum wrote:

Quick hat tip to you pardner.

I can't recommend this book highly enough.

For those that haven't read it, pick it up in EMP-proof paper and read it. It reads like today's headlines.

Best,

Pax

Thanks Pax.  Did I do a good job of keeping the facts straight?  Feel free to make corrections.  There's alot in that book and if I screwed up a date or a number I'd like to know

__________________

Like my ideas? Check our blog at: http://backtobasicseconomics.blogspot.com/

Pax Argentum
Pax Argentum's picture
Offline
Joined: 06/14/2011
Posts: 86
You captured the gist of it.

You captured the gist of it. Lots of numbers, dates and factoids in this book but care should be taken so as not to lose sight of the moral message...which you also captured above.

Folks, there is a point where ANY people, no matter how cultured or educated will trade their freedom for food (if hungry) and security (if afraid). The Germans did it willingly, and we here in the States are well down that road.  The dangerous financial waters we navigate today, while challenging, can all too easily lead us to the same dark place.

Hope and work for the best, but prepare for the worst.

Pax

Vic
Vic's picture
Offline
Joined: 06/14/2011
Hat Tips: 500
Posts: 26
Good stuff, thanks! Now I

Good stuff, thanks!

Now I need to build a 3-years store of supplies...

thebumproject
thebumproject's picture
Offline
Joined: 08/05/2011
Hat Tips: 91
Posts: 1
Well written LM- I think I'll

Well written LM-

I think I'll look for this on my nook!

Dr. Sandi
Dr. Sandi's picture
Offline
Joined: 06/14/2011
Hat Tips: 368
Posts: 33
When Money Dies PDF here

This is where I found it online in PDF:

http://www.scribd.com/doc/45060880/When-Money-Dies

MikeScouter
MikeScouter's picture
Offline
Joined: 06/16/2011
Hat Tips: 192
Posts: 9
Dying of Money

Another Book that deals with the same subject is "Dying of Money: Lessons of the Great German and American Inflations by Jens O. Parsson" . Both books were written in the mid seventies. I managed to get PDF copies of both books Before they were reprinted and before the links disappeared. I read "Dying of Money" and started "When Money Dies", but did not finish it. Now that you have reminded me, I am going to have to finish this book.  It was easy to see the mistakes that Germany made and that we are making now.

Mike 

Trader
Trader's picture
Offline
Joined: 06/14/2011
Hat Tips: 268
Posts: 26
Ralph Foster: Fiat Paper Money...

You guys should check out this book.  I read it a few years ago and it is simply stellar.  Frankly this should be required reading for any high school student, but that obviously is my opinion only.  Fascinating resource and well worth the expense.

http://www.amazon.com/Fiat-Paper-Money-Evolution-Currency/dp/0964306611

MikeScouter
MikeScouter's picture
Offline
Joined: 06/16/2011
Hat Tips: 192
Posts: 9
Fiat Paper Money

I just received my copy of Fiat Paper Money. The author, Ralph Foster, is selling copies on Ebay. He even pesonalized it and signed it. I have read maybe 15% of the book and so far it is interesting.

Mike

lilbromarky1
lilbromarky1's picture
Offline
Joined: 06/15/2011
Hat Tips: 2464
Posts: 292
Adam Fergusson talks to Casey

Adam Fergusson talks to Casey Research:

__________________

Like my ideas? Check our blog at: http://backtobasicseconomics.blogspot.com/

dropout
dropout's picture
Offline
Joined: 06/14/2011
Hat Tips: 4840
Posts: 627
When one studies the 'Great

When one studies the 'Great German Hyperinflation' by itself, without looking at the two decades of history either side of this event, you get a skewed view of the ultimate cause and effect.

You will find that the ultimate cause of the 'Great Hyperinflation'  was World War I and the onerous cease fire treaty (The Treaty of Versailles) that was forced on Germany for "Causing the War" and the demands for reparations which crippled the German economy.    

This treaty rankled the German people, especially the War veterans who felt they were betrayed by the politicians, causing great unrest at the grass roots level. Which paved the way for a little known, self styled "savior" by the name of Adolph Hitler to seize power. He had been a Corporal during the War serving on the front lines and like other veterans held a hatred for the "Treaty."

Anyone reading "When Money Dies" would be well advised to study the ten years each side of that occurrence to gain a wider understanding of the cause and effect.

lilbromarky1
lilbromarky1's picture
Offline
Joined: 06/15/2011
Hat Tips: 2464
Posts: 292
OutLookingIn wrote: When one

OutLookingIn wrote:

When one studies the 'Great German Hyperinflation' by itself, without looking at the two decades of history either side of this event, you get a skewed view of the ultimate cause and effect.

You will find that the ultimate cause of the 'Great Hyperinflation'  was World War I and the onerous cease fire treaty (The Treaty of Versailles) that was forced on Germany for "Causing the War" and the demands for reparations which crippled the German economy.    

This treaty rankled the German people, especially the War veterans who felt they were betrayed by the politicians, causing great unrest at the grass roots level. Which paved the way for a little known, self styled "savior" by the name of Adolph Hitler to seize power. He had been a Corporal during the War serving on the front lines and like other veterans held a hatred for the "Treaty."

Anyone reading "When Money Dies" would be well advised to study the ten years each side of that occurrence to gain a wider understanding of the cause and effect.

That's a great point sir.  Thank you for contributing to this thread.  The "reparation" payments are mentioned many times in Adam's books as the back-breaking measure that started the downward spiral of defecit spending.

I am betting on either an official devaluation of the dollar here in the USA, or hyperinflation sometime this decade we are in.  The recklessness in 2011 will sow seeds for currency mayhem once the money starts to trickle, bit by bit into hands of everyday people, and velocity starts to pick up.  Bottom line, debts too big to cover, monetization of debts must occur. 

It really is an unsolvable problem by its very nature.  I know most of you all here know this, but sometimes I have to remind myself that principal plus interest always greater than principal.  Problem is unworkable.

__________________

Like my ideas? Check our blog at: http://backtobasicseconomics.blogspot.com/

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Topic locked
Syndicate contentComments for ""When Money Dies" By Adam Fergusson (spoiler alert) Highlights, Lowlights, Book Review"