Inflation Makes People Spend Money
Continuing with Adam Fergusson's When Money Dies, here's another aspect of the march to hyper-inflation that may be happening right now.
For a period before the Weimar hyper-inflation hit, Germany experienced plain old high inflation. And right before it hit, there were even people who thought that the Germans were actually prospering under the inflation of the post-war years - at least some people.
While many people slipped into penury, there were those who benefitted - for a while - from the inflation. That's what happens when the government prints money. Not everyone gets the money that gets printed. Only some people get the money. And when they get it, the money hasn't had time to work its way through the economy and drive up prices - which is the way you actually see and experience inflation. So those who get the money at first get to spend it at the "old" prices - which eventually do go up. Therefore the ones who get the money buy low and prosper.
Indeed, there were those who couldn't see the growing impoverishment of the mass of people, and could only see the growing prosperity of the few. Here's one report captures this. (To best understand these comments, remember the Germans were paying reparations to their World War I enemies and had complained about the burden of those payments.)
The great fraudulent conspiracy in the history of the world is now being enacted in Germany with the full concurrence and active support of its 60 or 70 million people. And this conspiracy is brazenly enacted under the very noses of the Allies. Germany is teeming with wealth. She is humming like a beehive. The comfort and prosperity of her people absolutely astound me. Poverty is practically non-existent. It is all the other way...And yet this is the country that is determined she will not pay her debts...They are a nation of actors...If it wasn't for the fact the the German is guiltless of humour, one might imagine the whole nation was bent on perpetration an elaborately laborious practical joke.
So this person only saw those who prospered - those who were the first recipients of the money that was being printed. The person who wrote this saw full restaurants with people eating and drinking and enjoying themselves. But part of this spending was based on the growing perception that the German money was losing value faster and faster due to the growing inflation. So people spent their money rather than save: "Eat, drink and be merry" is how we might put it.
The author puts it this way:
As money saved diminished like a lump of ice on a summer's day, there was in any case every incentive to eat it, drink it, or be merry on it.
Savings increased after 2008. Some thought the American people would turn away from their debt-ridden, free-spending ways of the past 30 years. But lately, savings have declined. People are spending again. Are they spending because they are more prosperous, or because they've decided to "eat, drink and be merry"?
For a period before the Weimar hyper-inflation hit, Germany experienced plain old high inflation. And right before it hit, there were even people who thought that the Germans were actually prospering under the inflation of the post-war years - at least some people.
While many people slipped into penury, there were those who benefitted - for a while - from the inflation. That's what happens when the government prints money. Not everyone gets the money that gets printed. Only some people get the money. And when they get it, the money hasn't had time to work its way through the economy and drive up prices - which is the way you actually see and experience inflation. So those who get the money at first get to spend it at the "old" prices - which eventually do go up. Therefore the ones who get the money buy low and prosper.
Indeed, there were those who couldn't see the growing impoverishment of the mass of people, and could only see the growing prosperity of the few. Here's one report captures this. (To best understand these comments, remember the Germans were paying reparations to their World War I enemies and had complained about the burden of those payments.)
The great fraudulent conspiracy in the history of the world is now being enacted in Germany with the full concurrence and active support of its 60 or 70 million people. And this conspiracy is brazenly enacted under the very noses of the Allies. Germany is teeming with wealth. She is humming like a beehive. The comfort and prosperity of her people absolutely astound me. Poverty is practically non-existent. It is all the other way...And yet this is the country that is determined she will not pay her debts...They are a nation of actors...If it wasn't for the fact the the German is guiltless of humour, one might imagine the whole nation was bent on perpetration an elaborately laborious practical joke.
So this person only saw those who prospered - those who were the first recipients of the money that was being printed. The person who wrote this saw full restaurants with people eating and drinking and enjoying themselves. But part of this spending was based on the growing perception that the German money was losing value faster and faster due to the growing inflation. So people spent their money rather than save: "Eat, drink and be merry" is how we might put it.
The author puts it this way:
As money saved diminished like a lump of ice on a summer's day, there was in any case every incentive to eat it, drink it, or be merry on it.
Savings increased after 2008. Some thought the American people would turn away from their debt-ridden, free-spending ways of the past 30 years. But lately, savings have declined. People are spending again. Are they spending because they are more prosperous, or because they've decided to "eat, drink and be merry"?
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