We hope faithful readers realize that our frequent focus, some would say obsession, with the prospect of hyperinflation comes not from an Enquirer mindset determined to create unrest among the populace, but rather takes the form of a warning bell to an American nation often lulled to complacency by political flim-flammery, the narcotic effect of television, and a high standard of living that has proceeded unbroken to any appreciable extent since the end of World War II almost 70 years ago.
What is life in hyperinflation like? To set the stage, let’s go back in time to 1922, when the German government kept 300 paper mills and 2,000 printing presses running day and night, churning out currency into the economy in the desperate attempt to appease the ravenous monster of upward spiraling prices.
Initially, there was no unemployment to speak of. Every person that wanted to work could find a job because almost all the businesses were working at a feverish pace, producing, producing, producing. The issue was that, in real terms, hyperinflation caused the wages of workers to drop precipitously. Though labor unions did their best to negotiate increases, there was no hope of keeping up with the cost of basic goods for survival: food, firewood, toiletries. Groups like domestics, farm workers, and most white collar employees had it worst of all, since they had no unions to bargain for their survival, and many were reduced to hunger and starvation, even while reporting for work every morning.
The problem was not that they weren’t being paid. They were frequent paychecks, sometimes as often as three times a day. The problem, instead, was that they had to immediately rush out and buy what basic necessities they could afford, which was precious little. And when they got to the shops, they were often met with empty shelves. Farmers refused to bring their produce into town and exchange it for increasingly worthless money. Food riots became commonplace. People scavenged the countryside, literally digging crops out of the ground. Businesses began to close. Unemployment soared.
A suddenly destitute middle class began selling anything of value to buy food: furniture, jewelery, works of art, clothing. Needless to say, this engendered a bit of hostility. Hospitals, art societies, charitable, and religious institutions vanished overnight. While the government was able to step in and turn the thing around, hyperinflation had ruined the middle class, which is the primary ingredient to any stable economy. This set the table for Adolph Hitler to step in and propagandize about how he would make sure it would never again.
The rest, as they say, is history.
The American Monetary Association Team
Flickr / Seattle Municipal Archives