The word `inflation’ describes a situation in which prices are rising and the value of money is falling.
It is commonly said that inflation is caused by too much money chasing too few goods. Inflation occurs, in other words, when the supply of goods fails to keep up with demand. Inflation is not easy to stop once it has got started. An inflationary spiral tends to set in. Rising prices produce a demand for higher wages: higher wages mean that goods cost more to produce: prices have to go up again to pay for the wage increases.
[Comments seen below in blue text are my attempt to transpose the scenario of Germany’s inflation in the early 1920s, with events currently unfolding within the US and around the world. Mr. Larry]
Germany began to suffer serious inflation during the war. The German government did not pay for the war by taxing people more heavily. Instead it paid its bills by printing banknotes. Soon there was too much money chasing too few goods. An inflationary spiral had started.
[The US government did not pay for the wars in the Middle east, for the bank bailouts, or its many social programs by taxing people more heavily. Instead it paid its bills by printing banknotes. Soon there was too much money chasing too few goods. By early 2012 an inflationary spiral had started.]
Things got worse at the end of the war. A huge amount in reparations was demanded from Germany. The sum to be paid was fixed at £6,600,000 in 1921. Many foreigners thought that Germany would be unable to pay. They began to lose confidence in Germany’s currency. Foreign banks and businesses expected increasingly large amounts of German money in exchange for their own currency. It became very expensive for Germany to buy food and raw materials from other countries. This led to a further increase in prices in Germany.
[Things got worse after the end of the Iraqi War in 2011. Within months there developed a drought related shortage of beef at the grocery market, which caused all meat and protein food prices to rapidly escalate; meanwhile, huge amounts of foreign investment in US Treasury Bonds and other instruments and obligations were coming due. The sums owed to China alone were a couple trillion dollars. Many foreigners thought that the US would be unable to pay. They began to lose confidence in the US dollar. Foreign banks and businesses expected increasingly large amounts of interest for loans and cash in exchange for their own currency. When our trade partners scaled back their purchases of US government debt, the US Treasury borrowed from the Federal Reserve. It became very expensive for US to buy food and finished products from other countries. This led to a further increase in prices at foreign retail outlets across the USA.]
Late in 1922 Germany failed to pay an installment of reparations on time. France replied in January 1923: French troops occupied Germany’s main industrial region, the Ruhr. The French were determined to make Germany pay every penny she owed. They wanted to keep Germany weak. A weak Germany meant that France was safe from the threat of attack.
[( A peek into the future) Meanwhile, the US Government continued spending digital money on ‘Quantitative Easing’ programs, there were threatened ‘government closedowns’, and further reductions in the nation’s credit rating. Several foreign countries replied to events and a few US businesses operating within their borders were nationalized. Suddenly nations around the world which had been either generally hostile or cool to US policy, began talking about nationalizing US private interests in payment for US government debt.]
The German government ordered a policy of passive resistance in the Ruhr. Workers were told to do nothing which helped the invaders in any way. What this meant in practice was a general strike. The cost of the government’s policy was frightening. All the workers on strike had to be given financial support. The government paid its way by printing more and more banknotes. Germany was soon awash with paper money. The result was hyperinflation.
This table shows what happened to the price of bread in Berlin (prices in marks):
[It took 5 years overall, 3 years to ramp up and 2 years of hyperinflation.
We’ve just begun to see inflation tick up during 2011. (2012, 13, 14, then rampant 2015-16)
I’m making a friendly wager, that by the end of 2016, the US is no longer the place we know today (in mid December 2011) and is on a far different track going into the future than what we currently expect. Note, in this post we’re only discussing inflation, the realities of ‘peak oil’ are discussed in several other posts in the 4dtraveler blog.
I wouldn’t doubt for a moment that with the ‘peak oil’ back side price ‘spikes’ in ‘gasoline’ and oil (like German reparation payments to France) get the blame for the coming inflation. But as you’ll see below, “deficits lead to inflation and uncontrolled deficits lead to uncontrolled inflation, and if history teaches anything, it is that government cannot be trusted to manage money.”—lp]
This is what happened to the price (in marks) of some German retail goods:
|Item||1913||Summer 1923||November 1923|
|1 kg butter||2.70||26,000||6,000,000,000,000|
|1 kg beef||1.75||18,800||5,600,000,000,000|
2. The Nightmare German Inflation
December 6, 2008 , Market Skeptic, by Eric deCarbonnel
Pasted from http://www.marketskeptics.com/2008/12/nightmare-german-inflation.html
As this report points out, the correlation between deficits and inflation is sacrosanct — deficits lead to inflation and uncontrolled deficits lead to uncontrolled inflation. Whether or not there will be a Nightmare American Inflation remains to be seen. Let it be said though that the trend is not favorable.
If history teaches anything, it is that government cannot be trusted to manage money.
When currency is not redeemable in gold, its value depends entirely on the judgment and the conscience of the politicians. (That is the situation in this country today.)
Especially in an economic crisis or a war, the pressure to inflate becomes overwhelming, any alternative may seem politically disastrous. Whether it be the Roman emperors repeatedly debasing their coinage, the French revolutionary government printing a flood of assignats, John Law flooding France with debased money, or the Continental Congress issuing money until it was literally “not worth a Continental,” the story is similar. A government in financial straits finds its easiest recourse is to issue more and more money until the money loses its value. The entire process is accompanied by a barrage of explanations, propaganda and new regulations which hide the true situation from the eyes of most people until they have lost all their savings. In World War I, Germany — like other governments — borrowed heavily to pay its war costs. This led to inflation, but not much more than in the U.S. during the same period. After the war there was a period of stability, but then the inflation resumed. By 1923, the wildest inflation in history was raging. Often prices doubled in a few hours. A wild stampede developed to buy goods and get rid of money. By late 1923 it took 200 billion marks to buy a loaf of bread.
Millions of the hard-working, thrifty German people found that their life’s savings would not buy a postage stamp. They were penniless.
By late 1923, 300 paper mills were working top speed and 150 printing companies had 2000 presses going day and night turning out currency.
Under the forced draft of inflation, business was now operating at feverish speed and unemployment had disappeared. However, the real wages of workers dropped badly. Unions obtained frequent increases, but these could not keep pace. Workers –domestics, farm workers and various white-collar groups– fared especially badly. They had no unions to fight for pay boosts for them, and often they were reduced to hunger. Many people showed visible signs of malnutrition. Skilled workers, writers, artisans and professionals found their wages lagging until they reached the unskilled worker level, which often meant the bare minimum needed to support life.
Businessmen began to abandon their legitimate occupations to speculate in stocks and in goods. Thousands of small businessmen tried to eke out a living by speculating in fabrics, shoes, meat, soap, clothing–in any produce they could obtain. Each fall in the mark brought a rush to the shops. People bought dozens of hats or sweaters.
By mid-1923 workers were being paid as often as three times a day. Their wives would meet them, take the money and rush to the shops to exchange it for goods. However, by this time, more and more often, shops were empty. Storekeepers could not obtain goods or could not do business fast enough to protect their cash receipts. Farmers refused to bring produce into the city in return for worthless paper. Food riots broke out. Parties of workers marched into the countryside to dig up vegetables and to loot the farms. Businesses started to close down and unemployment suddenly soared. The economy was collapsing.
Meanwhile, middle-class people who depended on any sort of fixed income found themselves destitute. They sold furniture, clothing, jewelry and works of art to buy food. Little shops became crowded with such merchandise. Hospitals, literary and art societies, charitable and religious institutions closed down as their funds disappeared.
What caused the inflation?
Our thesis is simple: The inflation was caused by the government issuing a flood of new money, causing prices to rise. Then, as the inflation gained momentum, events seemed to demand the printing of larger and larger issues of currency. [exactly where we are today] To half the process would have taken political courage, and this was lacking. As usual, the true facts were hidden behind a barrage of excuses, explanations and propaganda laying blame on everyone except the true culprit.
Above all, it became an article of faith among the political leaders and most ordinary citizens that the inflation was really due to the burden of reparation payments imposed by the peace treaty. This meant, so the argument ran, that Germany would be stripped of its gold, foreign exchange and wealth; it would be bankrupt. Hence, the mark fell in value in terms of gold or dollars. This drop in the foreign exchange value of the mark was said to be the true reason for the inflation.
The mechanism of inflation was simple. The government issued paper promises to pay, and the Reichsbank issued money on the security of these promises. When a government spends more than its income, it must borrow. If it merely borrows money from its citizens by selling them bonds, there need be no inflation. Instead of that money being spent or invested by the citizen, it is borrowed and spent by the government, but the total amount of money is not increased.
When the government needs more money than its people are able or willing to lend it, it monetizes the debt. That is what happens in this country when the government runs a big deficit. The Federal Reserve (our central bank) “buys” as many US Treasury bonds and other debt instruments as necessary to stabilize the market. It prints money on the security of these bonds. Despite the facade of the government supposedly “borrowing,” the net result is the creation of printing press money. (Actually these days the money is created in the form of new bank deposits–checkbook money–but the net result is exactly the same as if bills were printed.)
This is what happened in Germany. The government issued notes which were promptly discounted by the Reichsbank, i.e., the bank issued money on the “security” of these worthless notes. To compound the evil, the bank failed to raise its interest rate sufficiently. Businessmen found it very profitable to borrow money from the bank and buy up goods, shares and companies. Their debt was wiped out within weeks by the rapid inflation, and the businessman remained holding the valuable assets he had bought. The net result was a huge “private inflation” caused by the rapid expansion of credit. Even foreign exchange was bought with borrowed money, so that the Reichsbank actually financed speculation against its own currency. Yet the bank refused to raise interest rates, arguing that this would only add to the cost of business and thus would increase inflation!
The tax system virtually broke down. Businessmen found that by merely delaying tax payments, the depreciation in the mark would virtually eliminate their true value. But the government, lacking adequate income, felt forced to resort more and more to creating money. By October 1923, 1% of government income came from taxes and 99% from the creation of new money.
Despite the proliferating billions of trillions of marks, the average citizen found it harder and harder to get enough money for necessities. Banks, short of money, could not honor checks. Businessmen were strapped for money to buy materials and meet payrolls. [just like what is happening today due to credit crisis!] The government faced the same problem. It appeared that there was not too much money around, but rather– much too little.
The clamor for more money grew on all sides. [just like today’s bailouts!] It seemed that any halt to the printing presses would bring business to a standstill and throw millions of workers out on the street. [just like fears of the Big Three bankruptcy!] The government itself would be unable to carry on.
The government was riding a tiger, that it dared not dismount. On October 25, 1923, the Reichsbank noted that it had that day printed 120,000 trillion marks. Unfortunately, the day’s demand had been for one million trillion. However, it announced that it was expanding production and the daily issue would soon be 500,000 trillion! [Before one of the greatest period of hyperinflation in history, the money supply was contracting (deflation). So all the deflationists that think treasuries are safe are in for a nasty surprise.]
Once people lose confidence in a currency, they try to get rid of it.
As Lord Keynes pointed out, this makes circulation speed up enormously, and hence prices rise faster than the government can print new money. Marshall, studying this process, concluded that, “The total value of an ‘ inconvertible paper currency cannot be increased by increasing its quantity; any increase in quantity which seems likely to be repeated will lower the value of each unit more than in proportion to the increase.”
Customarily, however, governments blame everyone and everything except themselves for inflation. When inflation lags behind issue of money, as it did in the war, they say that this shows that the issue of money is not dangerously high. Later, when confidence vanishes, and prices soar ahead of currency issues, that again is taken to prove that the government is not to blame–it is only reluctantly issuing money that is desperately needed in view of rising prices.
How Investments Fared
Its important to understand how hard it was to obtain real income during the inflation. Professionals, skilled workers and others used to enjoying good income found their real salaries disastrously cut. Those who depended on savings, pensions or investment income for a living faced a terrible situation.
- Interest from bonds or savings deposits soon depreciated to where they had no real value.
- Owners of rental property fared no better; the government froze rents, which soon meant that tenants were occupying premises virtually rent-free.
- Cash: Money held in cash lost value rapidly and soon became completely worthless. Of all investment forms, this was the most disastrous.
- Bank Deposits: In theory, bank deposits became as worthless as cash. However, after the stabilization the government decreed partial reimbursement, and sums in the range of 15-30% of the original deposit value were repaid. Naturally, however, the great majority of depositors withdrew their funds at some time during the inflation, after much of the value had been lost, and exchanged them for goods. Few Germans held money in deposits through the entire period
- Bonds, Mortgages: As usual in an inflation, bonds and mortgages fell in value even faster than cash. [In other words, US treasuries are the worst possible investment you can make right now] After the stabilization, some restitution was provided by law. Holders of government bonds were reimbursed to the extent of 2.5% of the original bond values.
- Real Estate: Farmers and holders of urban property seemed to benefit if their property was mortgaged; the inflation soon wiped out the mortgage debt. However, they received no income, as noted above, since rents were frozen. After the stabilization, heavy new taxes and the urgent need for cash forced most holders to remortgage their property, often more heavily than originally, so that their gains were illusory. Still, those who held real estate throughout managed to save the capital thus invested. However, those who sold during the inflation (often through desperate need for cash) fared poorly.
- Foreign Exchange: Those who held funds in dollars, pounds or other stable currencies, or in gold, saved their capital. The government set up rigid exchange controls as the inflation proceeded. As usual under such conditions, a black market flourished. The ones who fared best were the small minority who had the foresight to exchange marks into foreign money or gold very early, before new laws made this difficult and before the mark lost too much value.
- Personal Property: Capital was preserved by those who early changed it into objects of lasting value–rare coins, stamps, jewelry, works of art, antiques–or into merchandise such as clothing, fabrics, etc. Of course, most people did not understand the advantage of accumulating such property until the inflation was well along. By that time the prices of all goods had risen so much that they seemed outrageously bad bargains. In the event, however, cash proved an even worse bargain
- Common Stocks: In an inflation, common stocks are generally considered a desirable hedge to protect against or even to profit from the rise in prices. In practice, it is not so simple. In the USA, stock prices have been known to fall violently just when inflation was most evident (1946, 1957, 1966, 1969). Market fluctuations–the rise of exciting new speculative stocks, waves of fear or greed–all make it much too easy to buy or to sell at the wrong time or to go into the wrong stocks.
Getting down to specifics, we can say that those Germans who bought a well-diversified list of stocks in solid, well-established companies quite early in the inflation and who held on throughout the period and also through the stabilization crisis saved much or all of their capital. [Those stocks may have been equivalent to our Johnson & Johnson, General Mills, etc. lp) However, there were many pitfalls along the wayside for the greedy, the fearful and the over-clever. Those who did best were investors with a certain unemotional, stolid character, a basic confidence that strong, well-managed companies would come through, and an immunity to excitement, anxiety and speculative temptations.
Many very sharp but brief advances and declines in the market led to widespread speculation, and well-intentioned investors often wound up as traders. Naturally most of them did as badly as amateur speculators generally do. Many decided that speculation was the only sensible approach; when the entire economy and financial structure was visibly crumbling, who could wait patiently with confidence in the long-range value of anything?
3. There are many descriptions of what it was like to live through the German hyperinflation, many similar elements that would undoubtedly replay in the US, or anywhere, during a collapsing economy:
Pasted from <http://www.johndclare.net/Weimar_hyperinflation.htm>
• Bartering became more and more widespread . . . A haircut cost a couple of eggs . . . A student I knew . . . had sold his gallery ticket . . . at the State Opera for one dollar to an American; he could live on that money quite well for a whole week. The most dramatic changes in Berlin’s outward appearance were the masses of beggars in the streets… The hard core of the street markets were the petty black-marketers … In the summer of that inflation year nay grandmother found herself unable to cope. So she asked one of her sons to sell her house. He did so for I don’t know how many thousands of millions of marks, The old woman decided to keep the money under her mattress and buy food with it as the need arose – with the result that nothing was left except a pile of worthless paper when she died a few months later.
• As soon as the factory gates opened and the workers streamed out, pay packets (often in old cigar boxes) in their hands, a kind of relay race began: the wives grabbed the money, rushed to the nearest shops, and bought food before prices went up again. Salaries always lagged behind, the employees on monthly pay were worse off than workers on weekly. People living on fixed incomes sank into deeper and deeper poverty.
• A familiar sight in the streets were handcarts and laundry baskets full of paper money, being pushed or carried to or from the banks. It sometimes happened that thieves stole the baskets but tipped out the money and left it on the spot. There was dry joke that spread through Germany: papering one’s WC with banknotes. Some people made kites for their kids out them. — Egon Larsen, a German journalist, remembering in 1976
• At eleven in the morning a siren sounded. Everybody gathered in the factory yard where a five-ton lorry was drawn up, loaded with paper money. The chief cashier and his assistants climbed up on top. They read out names and just threw out bundles of notes. As soon as you caught one you made a dash for the nearest shop and bought anything that was going….
You very often bought things you did not need. But with those things you could start to barter. You went round and exchanged a pair of shoes for a shirt, or a pair of socks for a sack of potatoes; some cutlery or crockery, for instance, for tea or coffee or butter. And this process was repeated until you eventually ended up with the thing you actually wanted. — Willy Derkow, who was a student at the time, remembering in 1975.
• I vividly remember pay days at that time. I used to have to accompany the manager to the bank in an open six-seater Benz which we filled to the brim with bundles and bundles of million and milliard mark notes. We then drove back through the narrow streets quite unmolested. And when they got their wages, the workmen did not even bother to count the number of notes in each bundle. — A worker in a transport firm in Berlin
Some of the experiences are almost amusing:
• One fine day I dropped into a cafe to have a coffee. As I went in 1 noticed the price was 5000 marks – just about what I had in my pocket. I sat down, read my paper, drank my coffee, and spent altogether about one hour in the cafe, and then asked for the bill. The waiter duly presented me with a bill for 8000 marks. ‘Why 8000 marks?’ I asked. The mark had dropped in the meantime, I was told. So I gave the waiter all the money I had, and he was generous enough to leave it at that. — The memories of a German writer
• We were out playing football and one of my friends said: ‘I’m going to the shop to buy a couple of bread rolls.’ he had a 500,000 mark note… But he only came back with one, because a roll now cost 400,000 marks. — The memories of a Karl Nagerl, who was a school boy in 1923
• Two women were carrying a laundry basket filled to the brim with banknotes. Seeing a crowd standing round a shop window, they put down the basket, for a moment to see if there was anything they could buy. When they turned round a few moments later, they found the money there untouched. But the basket was gone. — The memories of a German writer
• It was in many ways a cheerful time for the young. When I grew up we were taught to save money and not throw it away. But in the worst days of the inflation this principle was turned upside down. We knew that to hold on to money was the worst thing we could do. So this allowed us, with a good conscience, to spend whatever we had available. — A currency dealer
But for many people – especially those on a fixed income, hyperinflation was a disaster:
• As soon as I received my salary I rushed out to buy what I needed. My daily salary was just enough to buy one loaf of bread and a small piece of cheese …. A friend of mine, a vicar, came to Berlin to buy some shoes with his month’s wages for his baby. By the time he arrived, he only had enough to buy a cup of coffee.– A German woman writing about the effects of hyperinflation.
• My father had sold his business during the war, together with all the real-estate property he owned, and retired from business. He was, by middle-class standards, a rich man, and intended to live on the income from his investments. These were mainly life-insurance policies, fixed value securities and a mortgage on a large agricultural estate, whose yield of 15,000 marks per annum would have provided a very good income. All this depreciated, of course, to zero – my father only managed to keep his head above water by resuming work. “– A writer remembering the effects of the inflation on his father
• Countless children, even the youngest, never get a drop of milk and come to school without a warm breakfast … The children frequently come to school without a shirt or warm clothing or they are prevented from attending school by a lack of proper clothing. Deprivation gradually stifles any sense of cleanliness and morality and leaves room only for thoughts of the struggle against the hunger and cold. — Report by the Mayor of Berlin, 1923
• A friend of mine was in charge of the office that had to deal with the giving out of … pensions …in the district around Frankfurt…. One case which came her way was the widow of a policeman who had died early, leaving four children. She had been awarded three months of her husband’s salary (as a pension). My friend worked out the sum with great care …and sent the papers on as required to Wiesbaden. There they were checked, rubber stamped and sent back to Frankfurt. By the time all this was done, and the money finally paid to the widow, the amount she received would only have paid for three boxes of matches. —A German woman who ran a Christian relief centre for the poor
• Billion mark notes were quickly handed on as though they burned one’s fingers, for tomorrow one would no longer pay in notes but in bundles of notes… One afternoon I rang Aunt Louise’s bell. The door was opened merely a crack. From the dark came an odd broken voice: ‘I’ve used 60 billion marks’ worth of gas. My milk bill is 1 million. But all I have left is 2000 marks. l don’t understand any more’. — E Dobert, Convert to Freedom (1941)
But, importantly, not everybody suffered:
• The impact of hyperinflation within Germany was uneven. Some profited from it. Adroit speculators like the tycoon Hugo Stinnes made fortunes, and industrialists and landowners who owed money were able to pay off their debts in devalued currency. Others were able to escape the worst – those, for example, whose wealth took the form of property or those with goods or skills which could be readily bartered. Initially the working class suffered comparatively little because trade unions ensured that wages kept pace with rising prices, but as 1923 wore on their position deteriorated. The principal losers in 1923, though, were those with cash savings, many but not all of whom were in the middle class (the Mittelstand). Middle-class savers experienced the trauma of seeing the value of their savings completely wiped out. — Alan White, The Weimar Republic (1997)
One writer remembers a specific example of the rich getting richer
• A German landowner bought, on credit, a whole herd of valuable cattle. After a certain time he sold one cow from the herd. Because of the depreciation of the mark, the price he got for it was enough to pay off the whole cost of the herd. — The memories of a German writer
Certain things about the inflation roused people to anger, and this anger led to outbreaks of violence:
• At Cologne yesterday outbreaks of looting were a frequent occurrence in spite of the activity of all the available police. Many shops remain unopened and others are barricaded … Many lorries were held up on their way to market and were looted of potatoes, meat and bread as well as of tobacco and boots. — Evening Standard (a British newspaper) for 13 October 1923
For many, the memories of 1923 were to be one of the reasons they supported Adolf Hitler in the 1930s:
• This financial disaster had profound effects on German society: the working classes were badly hit; wages failed to keep pace with inflation and trade union funds were wiped out. The middle classes and small capitalists lost their savings and many began to look towards the Nazis for improvement. On the other hand landowners and industrialists came out of the crisis well, because they still owned their material wealth – rich farming land, mines and factories. This strengthened the control of big business over the German economy. Some historians have even suggested that the inflation was deliberately engineered by wealthy industrialists with this aim in mind. However, this accusation is impossible to prove one way or the other, though the currency and the economy recovered remarkably quickly.– Norman Lowe, Mastering Modern World History (1982)
• We were deceived, too. We used to say, “All of Germany is suffering from inflation.” It was not true. There is no game in the whole world in which everyone loses. Someone has to be the winner. The winners in our inflation were big business men in the cities and the “Green Front”, -from peasants to the Junkers, in the country. The great losers were the working class and above all the middle class, who had most to lose.
How did big business win? Well, from the very beginning they figured their prices in gold value, selling their goods at gold value prices and paying their workers in inflated marks.
…You could go to the baker in the morning and buy two rolls for 20 marks; but go there in the afternoon, and the same rolls were 25 marks. The baker didn’t know how it happened that the rolls were more expensive in the afternoon. His customers didn’t know how it happened. It had somehow to do with the dollar, somehow to do with the stock exchange – and somehow, maybe to do with the Jews. — Erna von Pustau remembering life in Hamburg at the time
• When I was a student in Freiburg only some 30 miles from the Swiss border there was a regular influx of visitors from nearby Basle. They were quite ordinary people who came for a day’s shopping and enjoyment. They filled the best cafes and restaurants, bought luxury goods. Most of us had very little money and could never afford to see the inside of all those glamorous places into which the foreigners crowded. Of course we were envious . . . Contempt for such visitors combined with envy to produce in most of us a great deal of anti-foreigner and nationalist feeling. — Memories of William Guttman
• On Friday afternoons in 1923, long lines of manual and white-collar workers waited outside the pay-widows of the big German factories, department stores, banks, offices … staring impatiently at the electric wall clock, slowly advancing until at last they reached the window and received a bag full of paper notes. According to the figures inscribed on them, the paper notes amounted to seven hundred thousand, or five hundred million, or three hundred and eighty billion, or eighteen trillion marks – the figures rose from month to month, then from week to week, finally from day to day. With their bags the people moved quickly to the door, all in haste, the younger ones running. They dashed to the nearest food store, where a line had already formed. Again they moved slowly, oh, how slowly, forward. When you reached the store, a pound of sugar might have been obtainable for two millions; but, by the time you came to the counter, all you could get for two millions was half a pound, and the saleswoman said the dollar had just gone up again. With the millions or billions you bought sardines, sausages, sugar, perhaps even a little butter, but as a rule the cheaper margarine – always things that would keep for a week, until next pay-day, until the next stage in the fall of the mark….
The printing presses of the government could no longer keep pace…. You could see mail-carriers on the streets with sacks on their backs or pushing baby carriages before them, loaded with paper money that would be devalued the next day. Life was madness, nightmare, desperation, chaos…
Communities printed their own money, based on goods, on a certain amount of potatoes, of rye, for instance. Shoe factories paid their workers in bonds for shoes which they could exchange at the bakery for bread or the meat market for meat.… suddenly, the mark lost its value. The war loan was worth nothing. Savings of a lifetime were worth nothing…Money had lost its value – what, then, could have value? Of course, many were accustomed to having no money; but that even with money you had nothing…. First the Kaiser gone, then the silver coins with his likeness had gone and unknown faces, sometimes distorted to frightful grimaces by eccentric artists, stared at you from worthless paper notes. — Konrad Heiden.
“History doesn’t repeat itself, but it does rhyme.”
— Mark Twain