“By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens…The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose.” John Maynard Keynes
As we continue to see the inflation being caused by an out-of-control, money-printing federal government, I’m fascinated by other historical examples of what inflation has led too. It rarely ends well.
Rudy Havenstein was a German lawyer and President of the Reichsbank (the German central bank) during the hyperinflation of 1921-1923. Someone on Twitter has adopted his name and has become a widely followed account on fintwit. He recently wrote a three part series on his substack reviewing a book called “Before the Deluge” by Otto Friedrich.
I found the series a fascinating perspective on what happened in Europe, and Germany in particular, during the years following World War I, during the great German hyperinflation, and in the years leading up to World War II. This era is typically presented to us in very simple, broad terms, with simplistic causes leading to simplistic outcomes and simplistic lessons learned. The more nuanced reality is far more interesting, much more human, and somewhat terrifying.
I could do a lot of commentary with my own thoughts on what happened, but Rudy does a great job of carving out pieces of the book to paint his own picture of the reality as it unfolded. While I’m not in any way suggesting the same thing will happen as a result of our own insane money printing, it’s difficult not to see the parallels with our own society and ponder what may happen in the future as a result.
I am completely convinced that inflation, debt, and political turmoil will be THE primary stories that will grip our entire population over the next decade, or until there is some major reset event. We live in historical times. We would be wise to study and learn from history.
Here are the three parts:
Before the Deluge, Part 1 – by Rudy Havenstein
It's A Learning Problem 