Review of the First Edition (rare hardcover) of When Money Dies, written by me on May 25, 2006, & not reedited:
I first read this book some 25 years ago. I was so impressed I immediately bought a dozen copies & gave them to pals. (In 1980 they were 3-4 pounds sterling each--it's ironic & interesting that the price of this out-of-print book now fetches multiple zeros).
Here are some parallels with our time:
The Germany of the '20s finds it cannot meet the costs of war reparations. The US of the 2000s starts a war intending to pay reparations before it begins, and then finds itself unable to meet the mounting costs of war reparations it originally thought would leap out of the ground and just pay themselves. (Meanwhile, the US's wounded soldiers [& the families of its dead soldiers] are going to require entire lifetimes of domestic reparations).
The Germany of the '20s attempted to buy/finance prosperity with ballooning deficits. The US of the 2000s wants to buy/finance prosperity with ballooning deficits. Neither nation-State can be told it is wrong--and neither admits (or even recognizes) inflation is a hidden and pernicious tax.
Germany before the '20s had every confidence in the mark. The US in the 2000s believes the only currency in the world is the dollar, & the only thing money can be made of is paper and ink (never gold or silver). But as one mixes ink with paper, hoping the mixture will have exchange value, one finds that one has given value to neither material.
As Germany becomes more unhinged in the '20s, it moves towards a strong man as a moth to a flame. As the US grows more unhinged, it loses faith in its 'strong man' (even if he does not lose faith in himself). If the US should subsequently shun whoever wants to be the next 'strong man', there may yet be be hope. Since it is possible for the next wannabe 'strong man' to be laughed off the stage, it is yet possible the US will not succumb. The jury is still out.
At times the mark strenghthens (goes against the ultimate trend, for short periods): the Germans of the '20s (and other investors) think the crisis is over and it is time to buy. At times the dollar strengthens (goes against the ultmate trend [?], for short periods): the world of the 2000s thinks the crisis may end--isn't it now time to buy cheap US assets?
The Germans of the '20s can add more zeros to their paper--but paper production does not keep up with the 'demand' for money. The US of the 2000s has but to generate a computer entry and like magic, the 'demand' for money is met. The paper of Germany leaves a trail [Fergusson proves this]--computer entries can be a hidden and dirty little State Secret [until prices rise as the money actually depreciates, the state can suppress much of the evidence].
At many levels, this book about a frightening past speaks to a menacing present. Because of its price, many will not get to read that message. Between the Germany of the '20s and the US of the 2000s, there are differences too, but not differences that necessarily help. The potential for money supply to soar (the Fed's ability to create credit by computer without even having to buy ink, paper, and printers) has never been so boundless. We of the 2000s prefer to believe we are more intellegent than the Germans of the 20s. We live with the hope that our enlightened leaders [!] comprehend inflation & understand that deficit spending shall ruin us. Enlighted people that they are, from government top to government bottom, we know and rely upon our leaders' fiscal responsibility. Just look at how enlightenment runs through the Nation--budgetary constraints are placed upon our brilliant leader, by those guardians of the Public Purse & Trust, a US legislature that checks and balances all his raw power. In truthiness [that is, if one buys their spin], they all do their utmost to preserve & protect the currency, while shouldering their duties to preserve and protect our Constitution. Tonight, can I sleep contentedly, knowing both these National Treasures are safe and sound?
Read this book: it is still found in libraries. You will be witness to ink on paper that actually has and holds its value.
May 25, 2006
Addenda No.1 of 2:
I'll use this post to import a comment I wrote in a later review of this book by "Yoda" (p.5, of these reviews). Yoda was critical of the fact that Fergusson did not offer any charts of changing values of the mark, to back his assertions that increased money supply was causing inflation--Yoda commented:
'''Fergusson does not claim explicitely anywhere in the book that he was going to "prove" that increases in the money supply cause inflation. However, he states or hints on just about every other page that there are excessive or great increases in the money supply. This is in a book on hyperinflation. Ferguson's implication, in this regard, is pretty clear.
'''With respect to "chronicling the history of what happened" the book is quite a joke. There is, literaly, not one mention of what inflation even was, despite the fact that the book, in your words is supposed to "chronicle" just this. What was the CPI? 100% per year? 1000%? 10,000%? What was the increase in industrial prices? There is barely a mention of it at any fixed time, nevermind how it developed over the time period the book discusses. Even a single table would have sufficed in this regard. In a book "chronicle" on the topic, this is a fatal mistake. In addition, there is no information or hard data on other negative ancillary aspects of inflation. For example, Ferguson mentions that inflation had serious negative impacts on employment and industrial production. Yet, again, there is not a mention of what either were during any fixed time period that the book covers, never mind how these changed over time. How can a "chronicle" of inflation and its impacts over this time period not even mention these numbers?'''
I replied (and Yoda later kindly acknowledged my reply filled in at least some of these blanks left by Fergusson) on Jul 8, 2011 2:38:55 AM PDT...
Jamal J. Hattab says:
"""The value of the mark against foreign currencies such as (1) the pound sterling (7.9864+ grams of 22 carat [0.91667/1 gold] gold or 0.2354 of an ounce of gold); (2) the dollar ($20 = 0.9677 ounces of fine gold, so that a dollar is 0.048385 ounces of gold, or about $4.865 dollars would equal one pound sterling, which at the time would be one British gold sovereign); or (2) the French, Swiss or Belgian francs, which are 20 to 0.1867 oz of gold (you can calculate that ratio of francs to dollars or sterling yourself) indexes its external fall in value. Therefore, Fergusson catalogs the fall of the mark by noting its fall against these various amounts of gold, that just so happened to be foreign currency at the time. Today as we watch the euro, dollar, swiss franc, et al plunge in value, one can still see how they chart against gold (see any chart of year gold values against the various paper monies that are tumbling downwards in value over the last ten or twelve years). Perhaps a conversion table of the various gold currencies (or a recalculation of marks per gram of gold or some other accounting, rather than referring to the various franc, dollar or sterling rates) might have helped the reader, but the account of the mark's fall is its fall against these other, at the time, sound currencies--i.e., gold money--worked for me. Those falling rates are the book's empirical evidence, evidence that I think you missed, perhaps because you did not recognize that these other currenceis at the time were actual amounts of real gold. While cataloging the mark's fall, against external gold coin, Fergusson simultaneously provides the reader with domestic price data (not officially calculated by the govenment), which, because it includes many commodities and servicies, and moves at different rates to the external value of the mark (which is why goods in marks are so cheap for foreigners at times), is considerably more difficult to pin down than the faster-moving (and better published, in business and other journals) external rates of mark depreciation against gold equivalents. At the same time, the book also catalogs even more esoteric falls in other values--declines in civility; stability; freedom from crime; rises in anarchy; items that one almost took for granted at the end of the twentieth century, but, as I write in the early 21st, for how much longer? The value of gold today, against paper money, when not manipulated, is often a harbinger of things to come. Because of gold's manipulation by various central banks and governments, the message it might telegraph to the observent gets obfuscated and is undermined. But today, I watch gold nonetheless, as an indicator of what might lie ahead. Have you bought any yet?"""
Addenda No.2 of 2 (written May 2011):
Recently, while chatting with someone about the economy at a small gathering, a women who was within earshot opined, "You know, economists don't do any good in the world."
I concurred, adding, "But if one is to accomplish real EVIL in the world, one needs to understand economics."
As the EU decides what to do about Ireland, Greece, Spain, Portugal, Italy, et al (The so-called PIGS [or PIIGS to be accurate]: if Greece left, what would the acronym then be?), and Quantitative Easing continues across the pond, we are coached: "Inflation is not a problem." I suppose if one benefits from it (as a Central Banker, printing money to help out his pal banks) inflation is NOT a problem (for the issuer of fiat money), but for many of the rest of us, this seems to be Bernanke's grand delusion.
But for those of us not in the bank-clubs, it soon will be problematic. While one can debate specific issues, the META-issue is wheter fiat money should exist in the first place: other discussion simply revolves around minutia, argued for, & over, by statists who form imagined justifications [bad arguments, rooted in 'the sky is falling' worst case scenarios, i.e. smoke screens. Or as philosphers call such 'arguments', 'rationalizations'] to maintain abusive powers to control money and enslave the rest of us through their hidden taxes and redistributions of wealth [to their all-knowing 'good' selves].
In passing, I note that Rationalization appears most often in the vicinity of Conflicts of Interest.
[...] One might better argue for possible answers: unadulterated gold money; constitutionally mandated balanced budgets--in sum, defacto and dejure taxation, but only if accompanied WITH informed representation. Accept neither hidden taxes, nor sub rosa powers, and their corollory, the special interest groups that render conflict of interest and corruption commonplace.