CHAPTER EIGHT
Inflation and Hyperinflation
Bankruptcies of governments have, on the whole, done less harm to mankind than their ability to raise loans.
—R. H. Tawney, Religion and the Rise of Capitalism, 1926
By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.
—John Maynard Keynes, Economic Consequences of Peace
Unemployed men took one or two rucksacks and went from peasant to peasant. They even took the train to favorable locations to get foodstuffs illegally which they sold afterwards in the town at three or fourfold the prices they had paid themselves. First the peasants were happy about the great amount of paper money which rained into their houses for their eggs and butter. . . . However, when they came to town with their full briefcases to buy goods, they discovered to their chagrin that, whereas they had only asked for a fivefold price for their produce, the prices for scythe, hammer and cauldron, which they wanted to buy, had risen by a factor of 50.
—Stefan Zweig, The World of Yesterday, 19441
In the previous chapter, we looked at deflation. Now let’s look at the opposite: inflation and even hyperinflation. Hyperinflation is an extreme case of inflation and a nightmare for anyone living it.
We know that the world is drowning in too much debt, and it is unlikely that households and governments everywhere will be able to pay down that debt. Doing so in some cases is impossible, and ...
