Excitement has been growing about a long out-of-print book Dying of Money: Lessons of the Great German and American Inflations by Jens O Parsons and currently costing $749 at Amazon.
The author vividly and thoroughly recounts the influence of inflation throughout history with special emphasis on the U.S. economy and the hyperinflationary events of the 1920s in the Weimar Republic, Germany.
Readers of this blog can read the book online right here!(see, this blog just saved you $749!……you’re welcome!)
In short, Keynesian economics says the governments should intervene in recessions by printing money and lowering interest rates, in order to stimulate the economy. Sound familiar? Bernanke and Obama are strict Keynesian economists.
In the 1920’s, “When the debacle was finally stopped, the old (German) mark, which had once been worth a solid 23 cents, was written off at one trillion old marks to one new one of the same par value. The most spectacular part of that loss was lost in the mark’s final dizzy skid; all the marks that existed in the world in the summer of 1922 (190 billion of them) were not worth enough… to buy a single newspaper or a tram ticket.”
The US if following the same political and economic patterns as 1920’s Germany, 1980s Argentina, 1990’s Russia, 2000’s Zimbabwe and a score of other countries who’s well-intentioned policies resulted in a period of wealth-destroying inflation and hyperinflation. The most important lesson for individuals (as opposed to politicians and government bodies) is to see what people did who survived and even profited from the chaos of hyper-inflation.
While money had no value, some things actually grew in value. While most people lost their entire savings (since money was worthless) and stocks crashed, some people made fortunes. The 2 categories that actually grew in value were:
- Commodities – gold, silver, metals, agriculture, raw materials
- “Real estate is a classic hedge against inflation. The name is apt. Real estate is a real value. The intrinsic value of real estate is indestructible… If a man owns a piece of land to live on, it is equally good for living on before, during, or after an inflation. Its intrinsic value for living on is not affected by prices, even land prices.”
It’s a great book. Not an easy read, but worth every minute. It’s available to read online here. (thanks to Aloha Tony, my Hawaii Real Estate Agent for the excerpted paragraphs)
Final Thought: Anyone else caught the supreme irony of a book about hyperinflation going for $749? AAARRRRRRGH!