"When Money Dies" Author Adam Fergusson And James Turk Discuss (Hyper)Inflation In The Past, In The Present And In The Future

Tyler Durden's picture

When it comes to discussing monetary history, and specifically what happens when it all goes horribly wrong, there are two must read tomes: one is "The Dying of Money" by Jens Parsson (pdf link) and the other one is "When Money Dies" (pdf link) by Adam Fergusson. Today, we are lucky to bring to you a must watch interview between James Turk of the GoldMoney Foundation and the author of the former, Adam Fergusson. They discuss the fateful decisions that led to hyperinflation in post-First World War Germany, and how central bankers as well as ordinary members of the public today would be well advised to heed this warning from history. Fergusson discusses how the hyperinflation affected different groups in German society in different ways – with debtors benefiting and huge numbers of middle-class savers wiped out. Riots, corruption and political extremism were just some of the malignancies encouraged by the hyperinflation. He points out that those who held hard currencies as well as people who held tangible assets like gold and silver were in-large part protected from the worst economic consequences of the hyperinflation. In his words: “gold remained at all times in Germany the measure of what was important to them.”

James and Adam discuss whether or not today there is any way for governments in the developed world to repay their huge debts. Both men conclude that inflation is the only politically viable method of repudiating these unmanageable obligations. Fergusson highlights the importance of velocity and the demand for money in determining whether or not inflation turns into hyperinflation – though points out that this tipping point can take a surprisingly long-time to arrive; in Germany, people kept confidence with the rapidly devaluing mark throughout the First World War, despite clear signs that the country was heading for a currency crisis.

Fergusson thinks that we are heading for high inflation in many countries, but is doubtful that Weimar Germany’s nightmare currency collapse can be replicated in a sophisticated modern economy. He concludes with a quote from Jean-Claude Juncker, prime minister of Luxembourg, who recently commented with respect of the sovereign debt crisis: “we all know what has to be done; what we don’t know is how to get re-elected once we done it.”

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GeneMarchbanks's picture

Great explanation of how it is a process as oppose to an event. Interesting times...

 

 

ratso's picture

Great expostion of the topic.

This has always been the only way that the debt probelms in the developed countries will be handled.

DormRoom's picture

errr... its hyperinflation in BRICS, especially China.  Western countries have to contend with high-hyperstagflation.  It's a more unmanageable beast.  And that is what the US is headed towards with every injection of QE.

Also, China's economy is not diverse enough to deal with hyperinflation, so it's going down for the count, if the US continues with QE.

 

XitSam's picture

Can you explain how a diverse economy affects hyperinflation?

earleflorida's picture

QE3 was implicitly telegraphed by author "Bob Woodward" as obama,' pulls-out-all-stops', late 1st qtr 2012

SRSrocco's picture

HYPERINFLATION AND THE DEATH OF THE US TREASURY MARKET

I put a comment in one of the SILVER POSTS on ZeroHedge in the beginning of last week showing how silver was heading higher.  This was not due to Technical Analysis which I believe is DEAD, but due to fundamentals.  Future money printing and hyperinflation will make the current price of $35 silver seem like a blip on the screen.

I have written a new post which you can find at the SGS website, SILVERGOLDSILVER showing the amount of leverage between the US Treasury Market and GOLD-SILVER.  Here is the Link: http://www.silvergoldsilver.com/index.php?option=com_smf&Itemid=39&topic=499.0

Hyperinflation is coming.  The only Deflation I see on the horizon is the Deflation of IQ's.  You can't have deflation when the world is printing money hand over fist...and the money they are printing is worthless fiat currency.

Lastly, I also wrote the PEAK SILVER REVISITED article that was published on ZeroHedge here a few weeks ago.  Peak Silver is coming, so it's best to own that real physical metal in ones own sweating palms.  I have a new article coming out that I hope Tyler will publish on the COLLAPSE OF ROME and THE USA due to a FALLING EROI.

Times are a changing....

SamuelMaverick's picture

Awesome link SRSocco, puts things in perspective, it is amazing how small the actual gold / silver market is, and one has to appreciate the future consequences if a percentage of the treasury market money starts going to PM's.  Sadly the future looks bright for those with enuf intestinal fortitude to ride out the PM voliltility during the next year or so, the average joe is going to get financially hurt with this slow and steady currency debasement / inflation.   I do not think the breakout for PM's will take much longer than that.

Bollixed's picture

"Hyperinflation is coming.  The only Deflation I see on the horizon is the Deflation of IQ's." 

That's a great line.

DarkestPhoenix's picture

I'm sorry, pardon my ignorance....what are IQs?  Assuming not intelligence quotient.  Mine is 36, re-re level.

FEDbuster's picture

So if debtors win in a hyper inflation, what asset class can be leveraged the most (for most people)?  Answer: real estate, but the real estate market is dead.  So are equities an alternative?  Zimbabwe stock market had 200% + up days. 

I am going long food and guns at this point, but would you leverage silver to take advantage of the debt destruction hyper inflation brings?

Tapeworm's picture

If you want to see when money dies, you should see the collapse of the price of my original hardcopy of his book once it was re-issued.

Ahmeexnal's picture

next time buy flowing hair dollars or 1933 double eagles.

LloydBlankenfiend's picture

There aren't many of us here in Luxembourg and now they allow us foreigners to vote Jean-Claude Juncker wouldn't need to worry, although addmitedly we are but a pimple on Deutschelands asshole!

LawsofPhysics's picture

Yes indeed.  Got food and water security.  Yeah got that too.

X.inf.capt's picture

me too,

plus a hell of alot of skills....

BRING IT!!!!!

topcallingtroll's picture

Bring it huh?

Whats going to get you in depresionary collapse wont be the zombie hordes. Your killer will be brought to you by the fly, or rat, or poorly treated water, and possibly even the lowly skeeter.

peekcrackers's picture

I would rather die on my feet fighting , then live on my knees begging and prying !

earleflorida's picture

be patient my grasshopper - your raison d` etre will come,...  

LawsofPhysics's picture

Infinte growth on a finite world, good luck with that.

X.inf.capt's picture

it had to end

eventually....

im glad im not responsible for this....

the last thing i would want to face is a bunch of torches, pitchforks and ropes, held by very 'unhappy' people...

john39's picture

they have a plan for that... its called throw the expendable strawmen under the bus while you hide.  

X.inf.capt's picture

.

but in this information age, everyone knows who they are...

all of them....

and thats a legacy that will follow their surnames for along time...

i dont envy them and thiers....

css1971's picture

The names you have are the puppets.

X.inf.capt's picture

sorry, i dont have any names,

and im not going to waste my time lookin' for the offenders...

i have alot of people to help, now and later...

thats how we are going to survive, by helpin' not huntin'

Uchtdorf's picture

It is the "plus one" theory. In a fight, you always assume that you are up against an opponent plus one more. so you must watch your own back while delivering justice to the visible one.

In a survival situation, you look how you can help plus one more to create an ally instead of an enemy. Build a community to avoid being the lone wolf who cannot survive without the pack.

Ghordius's picture

The Economics of Inflation
Bresciani-Turroni 1931

The only comprehensive work that was not written with a political agenda.
Gives an understanding how supply chains change with inflation (more vertical integration) and how fixed-cost investments surge.
Includes the effects from and to the other countries, etc.
For example industry workers LOVED inflation, the seriously rich nearly as much, why so many politicians got assassinated, how gov reacted, etc.

disabledvet's picture

wasn't good for government was it! the oddity is that the easiest way to repudiate a debt is too...repudiate the debt! that is precisely what happened on Thursday (sure, it's an "insurance policy"...but all a debt is in strictly "legal terms" is an obliglation to repay at a later date) This is why i simply cannot understand these decisions coming out of the ECB. So what if all of Greece's debt were repudiated? Big deal! Recapitalize the banks--and put everything in the country up for sale. You'd have happy German housewives from now 'till Springtime! (Probably go a long way towards solving the so called "demographic issue" as well. Take that maypole and plant it on some Greek Island baby!) Anywho--"what precisely is the ECB obligating ANYONE to do here?" Nothing as far as i can tell. Well...okey-dokey then!:
http://www.youtube.com/watch?v=zDAmPIq29ro&feature=player_detailpage

Marco's picture

Except sovereign debt isn't backed by a countries assets, if you want their islands you have to take them the old fashioned way ... with guns.

JimBobOMG's picture

Thanks for the PDF!

Old. No. 7's picture

One box of Kraft Macaroni and Cheese (add your own milk & margerine) at Winn-Dixie supermarket is $ 1.79.

Silver Alert's picture

Yes, and it's a smaller box too.

disabledvet's picture

with only one macaroni. phuckers.

Quinvarius's picture

I am pretty sure that stuff was like .35 cents when I was in college.

ziggy59's picture

agree..was a staple!! 3/buck ...on sale 4/buck..at pathmarkin late '70s

DosZap's picture

Old. No. 7

Year before last, it was $0.75,last yr, $1.00......................

66% per yr, in 2yrs.There is NO inflation,except what you need to stay alive with.

fourchan's picture

nice return, go long mac n cheese short dollar

High Plains Drifter's picture

when you are hungry it will go down easy too......

Augustus's picture

The can of coffe once contained a full 16 oz.  Now it is 11.5 oz and has a higher price.

 

As for motorfuel,

The included taxes are now greater than what I once paid at the pump.

 

DutchR's picture

Bought some 'Tesi Bon' Mac&Cheese last week here in Holland (Albert Heijn).

NET WT.7.25oz (206g) €1.69   so that makes $2.39

Griffin's picture

No one should be surprized to see inflation go up after all this money printing, eating our savings and pensions.

What Jean Claude Junker wants is a fiscal union of Europe to begin with, then the end of democracy and full EU control of European states.

When the crash comes, it will crash Europe into a superstate. That is what was always the goal of the Europe project.

The people behind this will take this as far as they have to to succeed, all the way to the edge.

If there are no major surprizes, they will probably pull this off.

dick cheneys ghost's picture

Sorry for the stupid question..........but How does the fact that oil is priced in dollars and the recycling of petro dollars factor into the discussion?

Ghordius's picture

Oil has a political price for the moment.

Ahmeexnal's picture

oil is the true barbarous relic.

when a troy ounce of silver is allowed to reveal its true value, measured not in ficticious amounts of fake debt money but in TERAWATTS HOUR, then we shall bear witness to a true revolution in technology/economics/awareness.

LasVegasDave's picture

Glad to agree with you for once Lizard King

disabledvet's picture

that ain't no relic. it's barbarous that's for sure. it doesn't get any more "forward looking" as they say.