Money-printing: a warning from history

"Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become "profiteers," who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.

"Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose."

-       John Maynard Keynes, ‘The Economic Consequences of the Peace’, 1919.

 

Last week, on a sultry summer’s evening in London, I had the pleasure of attending the re-launch party of Adam Fergusson’s ‘When Money Dies: the nightmare of the Weimar hyper-inflation’. This über-cautionary tale was originally published in 1975 by William Kimber & Co. Having fallen out of print, second-hand editions were changing hands, amongst those who could locate copies, for several hundred pounds each. It has now, happily, been republished by Old Street Publishing Ltd., for the very affordable price of £12.99. Suffice to say that every reader of this commentary is gently encouraged to purchase a copy.

That said, reading, and digesting, ‘When Money Dies’ is not particularly easy. In financial terms it is the equivalent of a snuff movie. For the sensitive of spirit, the experience is truly heart-rending. For this is not a fictional phantasmagoria; the extraordinary sequence of events within it genuinely happened, to real people.


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Comments

[Quantitative Easing]

A lot of the smart money crowd seem to think that another round of quantitative easing is just around the corner - perhaps the Fed will announce something on August 12.

It really does appear that we're headed towards a period like his book described.

[Ovacue Fertility Monitor]

Hmm interesting post..I love reading it! Thanks for sharing this post! and for the link..