When Money Dies by Adam Fergusson
“This is, I believe, a moral tale. It goes far to prove the revolutionary axiom that if you wish to destroy a nation you must first corrupt its currency. Thus much sound money be the first bastion of a society’s defence.”
When Money Dies chronicles the the acute hyper-inflationary period that wracked Germany (an also Austria and Hungary) between 1921 and 1924. It is cautionary history about the predictable, deleterious effects of currency collapse on all facets of human behavior, from the individual up to the society as a whole.
Core to the book is a critical examination of the dark absurdity that unfolds when a currency charts a parabolic path towards 0 on unit value — “At the end of 1923, it would have been possible to exchange a shilling or franc or lira for up to 1,000,000,000,000 marks […] The marks was dead, on million-millionth of its former self.”
One of the book’s key points is that the range of numbers involved during hyper-inflation so defy human comprehension that they are meaningful only in the scope and scale of their meaninglessness. While at the same time, people grossly misunderstand what is happening to their money. Rather, as Fergusson aptly points out, most “assume not so much that their money was falling in value as that the goods which it brought were becoming more expensive.”
And this can have nasty, even catastrophic outcomes as people lash out to assign blame, often violently, everywhere except where it is truly due - that being, at the feet of the nation’s central bankers and captured politicians, who, seeking to avoid austerity or “revolution,” unleash something far, far worse. A run-away money printing that inevitably still defaults into economic austerity and revolutionary political headwinds — but making them orders of magnitude more extreme than they might have been otherwise.
Here’s how is goes:
When people finally realize that their currency has completely lost its store of value, it ceases even to be a medium of exchange and then, all hell breaks loose…
The exceptionally shrewd may sense what’s broken, well before it is evident, and benefit by way of defensive capital flight, financial arbitrage, and / or outright profiteering.
The monied members of the professional and rentier class pursues the “smart decision” of chasing after asset speculation (like stocks and real estate) - completely misunderstanding that even with these assets they will ultimately loose in real terms. In essence, confusing the slowest sinking vessel for one of pristine seaworthiness.
The asset-less salaried middle class, with static pay, find themselves among the earliest to be completely overtake by inflation, wiping them out in short order, and swelling the ranks of the political extremes with the well-educated but now dejected, a easy hallmark of particularly dangerous and effective radicals.
The hourly wage workers, at first gloat, oversure as they confuse nominal wage increases for real purchasing power gains only to lapse into destitution when the factories inevitably shutter.
The agrarians, content to rest on a fat harvest, withhold output or profiteer against urbanites until something breaks and the urbanites come to the countryside themselves to kill and eat.
And the captive rich, those who do not or cannot leave, finding themselves over-flush with declining paper, must rush to spend it — feeding the industries of gluttony, hedonism, speculation and vice — that is until one revolution or another sweeps in and puts all their backs against the wall.
In many ways the book is very simple and could stand to be much shorter. In documenting the history, the book’s same points are made over and over and over and over again - but perhaps that’s also the point… Inflation sucks, hyper-inflation kills, and the incentives of politicians, especially in democratic systems, will all but assure that they can only make the situation worse and worse, and finally, worse still. The road to Hell is paved with literal bricks of debased currencies.
As a bitcoiner and a reader who sees more than a few parallels between today’s global money system and the economic conditions at play in 1920s Germany, it is easy to come away with a dreary and pessimistic outlook for our present timeline, yet I see something different — in fact, I see profound reason for hope.
History does not repeat, but it often rhymes — but with today’s dramatic advances in technology, the rhyme stands to be very different this time. The problem in 1920s Germany was that the overwhelming majority of people holding marks did not have any viable way to get off the ride as it spun faster and faster and ever-more precariously out of control. Today, this is simply not the case. We have bitcoin - an unstoppable, permissionless, debasement-proof currency that is accessible to everyone, globally.
For the first time in history, everyday people will have an unblockable exit to use when the present spread of government currencies inevitably falter and collapse. This, I believe, will provide significant cushioning against some of the most extreme excesses seen in 1920 Europe (or worse, 1930-40s Europe) and other more recent currency debasement crises.
And while surely there will be those who, out of fear, envy, and political manipulation turn to blame the crisis on the solution — as though it was the lifeboats that sunk the Titanic or the parachutes that downed the plane — the fact that the escape route is accessible to all should dampen this (potentially very dangerous) reactionary movement. Simply put, this time, the calamity needn’t be shouldered by everyone, or if we’re honest about it, by much of anyone at all…and this is reason for great hope.
Turning now to final thoughts about the book. It is an extremely detailed and elucidating chronicle of the long tail of human miseries let loose upon society when a currency collapses — but it is also frustrating to read and poorly written in many ways.
Like some Byzantine space opera, the book should begin with a cast list of key players, but instead the never ending merry-go-round of financial and political actors are introduced as though the reader already knows who they are. But then again, I think the author would argue that “who they are” does not much matter.
Another strange quirk that I could not ignore is that while the author takes pains to demonize anti-semitism — and scapegoating in general — as regressive and dangerous, he also seems to go out of his way to repeatedly underscore the Jewishness of the few of the book’s political / financial villains that do happen to be Jewish themselves.
In all, When Money Dies is several hundred pages book that probably should have just been an essay. It is full of interesting, illuminating, and lucid historical tidbits and pointed financial and ideological analysis of era, but it plods and meanders and, maddeningly, jumps around with dates in a way that makes a mockery of linear time. As such, It is not hard for the reader to come away more than a bit stupefied at what they just read — but perhaps this an unavoidable side effect of an earnest treatment of the topic — art imitating life, and a little unrequested taste of the times for the reader.
Rating: 2/5 💸