Remember the three day week, miners strikes and the glories of fixing British Leyland cars, where every motor was a Friday afternoon job? No, you probably don’t because you weren’t born then 😉 To be honest I was a kid then so I didn’t really understand the horror.
This was after the 1973 oil shock, and there was this thing called inflation stalking through the land. A chap called Adam Fergusson looked back in time, to 1930’s Germany, to garner information about inflation, and this book encapsulated what he found.
Though the stage had been set for the inflation by the conditions set at Versailles, the story has curious resonances with now. In the initial stages, the inflation took the form of a slow-motion economic train wreck, which is similar to now in terms of the middle classes slowly being destroyed by their purchasing power dropping. Some people who either have non-financial capital, particularly businesses connected abroad, do quite well, and foreigners do particularly well as their hard currency is highly sought after.
Now of course the German experience was far worse that anything we have experienced in recent times, and has had a deep effect on the German psyche, with a low tolerance of debt and a low tolerance of Club Med profligacy at the moment. This book is a powerful cautionary tale of what may lie ahead if we don’t get a grip on inflation.
It’s a pity that the writing is rather turgid – it is a tough read, with the overview swamped in a welter of detail at times. I had to extend it three times at the library to be able to get through it, one to be taken on in small bites at a time.
The essential message is the same as the exhibition in Cambrdge. Once inflation has destroyed half the purchasing power of your wealth, you are stuffed, you can’t do anything to head it off. This is because the decline becomes exponential, each future halving occurring in smaller and smaller intervals. It is well worth reading despite being hard going.