The Downfall of Money

Many theorists believed a hundred years ago, just as they did at the beginning of our twenty-first century, that the world had reached a state of economic perfection, a never before seen condition of beneficial human interdependence that would lead to universal growth and prosperity. And yet the early years of the Weimar Republic in Germany witnessed the most complete and terrifying unraveling of a major country’s financial system to have occurred in modern times.

The story of the Weimar Republic’s financial crisis has a clear resonance in the second decade of the twenty-first century, when the world is anxious once more about what money is, what it means and how we can judge if its value is true. The Downfall of Money: Germany’s Hyperinflation and the Destruction of the Middle Class will tell anew the dramatic story of the hyperinflation that saw the once-solid German mark, worth 4.2 to the dollar in 1914, trading at over four trillion by the autumn of 1923. It is a trajectory of events uncomfortably relevant for today’s uncertain world.

This book tackles a complicated financial story in a surprisingly easy-to-read narrative. The author translates economic mumbo-jumbo into everyday language in twenty-five chronological chapters. The Afterword provides a good explanation of how the economy provided fertile ground for extremists of every flavour to grow, and why Adolf Hitler was eventually elected to office.

The Appendix is excellent in showing the steady devaluation of the German mark from 4 marks to one dollar to 4.2 trillion marks to one dollar. It only took one decade of political and economic shenanigans to make the German currency worthless.

All through the narrative I was reminded of what is occurring today compared to 1914-1923. The mark was taken off the gold standard to finance a war; coins were minted of cheap alloys; government debt was incurred that would take generations to repay (Germany paid its’ final war reparation bill in 2010, a full 96 years after WWI began); societal safety nets were expanded by politicians unable to say “No, we do not have the money”; government bureaucracies expanded each year; the policy of allowing inflation was a ploy by highly trained, professional economists to pay war reparations with devalued money (it did not work).

In the worst of times, the city dwellers (golden horde) formed gangs and raided nearby farms for food. They did not offer to pay or work for the food – they looted. Welfare and unemployment fraud were epidemic. Violators were ignored. Politicians responded by raising the monthly checks to prevent riots and to stay in office.

The subtitle of this book is worth remembering: Germany’s Hyperinflation and the Destruction of the Middle Class. The poor in Germany were the first to die from disease, suicide, and starvation. The ultra-rich, in most cases, had the ability to leave the country, or weather the storm. The middle class small business owners, government employees, artisans, and union workers were gradually driven into the ranks of the poor. They first sold their possessions, their children, and then themselves in order to eat. After the hyperinflation was remedied, they remained poor and traumatized. German citizens had purchased 158 billion marks of bonds during the war with the promise of a nice rate of return. In 1923, the government remedied hyperinflation by introducing a new currency. All of the war bonds were then collectively worth fifteen cents. The government stole all that money by merely changing the rules.

The Downfall of Money does a great job in revealing the real causes of the crisis, what this collapse meant to ordinary people, and tracing its connection to Germany’s subsequent catastrophic political history. By drawing on a wide range of sources and making sense for the general reader of the vast amount of specialist research that has become available in recent decades, it will provide a timely, fresh and surprising look at this chilling period in history.
by
3.83 · Rating details · 127 Ratings · 23 Reviews
A hundred years ago, many theorists believed-just as they did at the beginning of our twenty-first century-that the world had reached a state of economic perfection, a never before seen human interdependence that would lead to universal growth and prosperity. Then, as now, the German mark was one of the most trusted currencies in the world. Yet the early years of the Weima …more
(first published )
ISBN  (ISBN13: 9781620402368)

https://junior-broker.com/life/careers/further-reading/the-downfall-of-money-germanys-hyperinflation-and-the-destruction-of-the-middle-class/

Follow