This book, which even some normal people I know have heard of, was originally published in the 1970s and is about the Weimar hyperinflation of 1923.
It’s a bit fact after fact. Sure the thousands become millions and millions become billions (or milliards as they said at the time) and the our billions become the their billions. And it’s good at describing how some do badly then most do badly while a small minority who have borrowed at nominal rates do very well for themselves indeed. But there’s not enough space given over to consider the debates of the time or the principal actors. Thus we never get to find out anything about key figures like Hugo Stinnes, the industrialist or Rudolf Havenstein, the Ben Bernanke of the day.
What is odd is what the Germans do not do. They do not refuse Reichsmarks. They do not seriously examine how they got into this mess. They do not question the existence of a united Germany [Incidentally, why is it that the appeal of German unity has never been dimmed by its rather less than stellar reality?]
Actually, that’s not quite true. Towards the end there are nascent secessionist movements in Bavaria, the Rhineland, Hamburg and Saxony. It is at this moment the government gets its act together.
The other feature of the final stages was the food situation. Farmers stopped supplying the towns which led to the towns coming to the farms. And not in a nice way.
At root of it all was a government deficit. Fergusson never really explains how this comes about. One can speculate that it’s the consequence of the Germans having to pay not only for their own war but for everyone else’s (through reparations) as well as propping up inefficient state industries like the state railway and post office. But Fergusson never does the sums so we don’t know.
[Afterthought. Actually, he does point out that towards the end even the government had given up trying to do the sums. Another impact of hyperinflation.]
One of the odd things about that time was the virtual absence of unemployment. But then it struck me - in a hyperinflation you have to keep working. If you are unemployed your savings won’t last 5 minutes. Unemployment can be a “good” which hyperinflation denies.
The end is also rather odd. Normality - or what passed for it in Weimar Germany - came with the introduction of the Rentenmark backed not by gold - they’d run out of it - but by mortgages and rye contracts. And, bizarrely enough, it worked.
1. Why would a failure to raise the debt ceiling lead to default?
2. Why would default be a bad thing?
“So, libertarians don’t believe in government. Why don’t you go and live in Somalia then?”
How often have we heard that one? [OK, perhaps not that often but it does hover there at the back of your mind.] And how often have we been able to come up with a decent response beyond some coughing and spluttering?
So, it was good to see Robert Murphy giving it a go. He starts by making a good point:
The Rothbardian doesn’t claim that the absence of a state is a sufficient condition for bliss. Rather, the Rothbardian says that however prosperous and law-abiding a society is, adding an institution of organized violence and theft will only make things worse.
He then quotes the stats which apparently show rises in life expectancy and adult literacy. Which alarms me. How sure can you be that these statistics bear any relation to reality? Hey, I’m not convinced by our own government’s stats. But in a war-torn country with a multi-sided civil war? At very least they have to be taken with a pinch of salt.
Me? I would give them on credence whatsoever. My test is have any (of the surprisingly many) Somalis I know or have known in recent years expressed any desire to go back? Answer: no. Not on your Nelly.
Murphy then says this:
Farah and other advocates of a central state might retort that right now security costs are particularly high for Somali businesses because of the fighting between rival factions ("warlords") in their attempt to control the government.
So, there are rival factions/armies/gangs are there? And what, precisely, is the difference between a gang and a state? I suppose it’s to do with predictability but my guess is that after a few years any gang - so long as it is unmolested by the state - will start to establish rules and thus predictability.
Or, to put it another way: Somalia does not want for government.
This all feeds into my worries for this country. It is not difficult to see the central government collapsing but while libertarians may hope for a golden age of liberty my suspicion is that they will get gangs roaming the streets. So long as people believe in the state they will continue to create them.
At least, that’s how it starts. But soon enough we’re talking about the Battle of Jena and all points between, which include the Franco-Prussian War, the siege(s) of Paris and the Dreyfus Affair.
This is the cartoon I mention:
“Above all, let us not discuss the Dreyfus Affair!”