Adam Fergusson - When Money Dies: A Comparison Between 1920’s Weimar Germany and Today
Quoted by central bankers, economists, and even recommended by Warren Buffett, the classic book, “When Money Dies”, is a brilliant and cautionary account of what happens to society when people lose trust in money as occurred during the 1920's in Weimar Germany. Here we present a partial transcript of our interview with the book’s esteemed author, Adam Fergusson, airing for subscribers Thursday, May 30th.
Jim Puplava: Joining me on the program as my special guest is Adam Fergusson, author of the classic book, “When Money Dies: The Nightmare of Deficit Spending, Devaluation, and Hyperinflation in Weimar Germany”. Mr. Fergusson, you have worked as a journalist and even served in Parliament—what provoked you to write When Money Dies, which was originally published in 1975? Was it the inflationary experience we were undergoing at the time?
Adam Fergusson: Yes, it certainly was. At that time, certainly in Britain, inflation had risen to above 20%. And what fascinated me then was not only my own worries of what was happening to my savings but how people behaved when they found that their money was losing its value so fast and what they then did. They worried about whether they should get rid of their money. They lost their trust in money. And what happens when people lose this trust is extremely interesting. It has interested economists ever since Adam Smith. How people behave when the measure of all value starts to disappear. That was what was happening in 1975 in Britain and indeed across the rest of the world because we had the first oil shock then and so I went back to Weimar Germany—Germany of the early 1920’s—to find out how people behaved then.
Jim: One aspect about inflation that is not clearly understood is that it isn’t so much that the value of the goods you’re buying that are going up, costing you more, or becoming more expensive, it’s the fact that the money you own is depreciating in value. And that’s something I think is very important because if you go to the store and you see the price of groceries has gone up, the price of gas keeps rising, and you say, “Boy, what’s causing all this?” Most people don’t really understand that the real cause behind it is the value of money in your wallet is falling.
Adam: This is a very very important point and I quite agree with you. When people strike, they do so for higher wages, but what they should be striking for is stability of their currency, then they wouldn’t need to strike for higher wages to pay these higher prices. And all the time the constant devaluation, the constant wearing away of the value of your currency is going on, in many cases, absolutely deliberately and consciously by the governments and banks who are running the economy. I don’t want to say these are wicked people because in the modern world and in a modern economy inflation is inevitable. We are not going to get away from it. But people should be much more conscious of what it is that’s happening. All the time, while the inflationary process goes on, the people who are affected are, of course, the savers, the pensioners—the people least able to take steps to safeguard their position.
Jim: How would you contrast where we are today with the hyperinflation that took place in Germany, for example, in the 1920s? You mentioned earlier that you don’t believe we’ll get anywhere close to the hyperinflation that took place in Germany. Why do you believe that to be the case and what do you think is the probable outcome when you have global central banks around the world engaged in quantitative easing?
The remainder of this audio interview will be available for subscribers Thursday, May 30th on the Newshour page. To gain full access to all our premium interviews and broadcasts, please CLICK HERE to subscribe.
In the rest of this interview, Adam explains further the various ways inflation corrupts and demoralizes society, as it did in Germany, along with a number of other topics, including:
- How much currencies have fallen since 1971, when Nixon broke the gold window
- How and why the stock market soared in Weimar during hyperinflation
- How governments deliberately use inflation and how things go wrong
- How hyperinflation and losing trust in a currency work together
- How he'd rewrite his book today given the new circumstances taking place
For a list of previous interviews and guests, CLICK HERE to see our archive.
About FS Staff
FS Staff Archive
|07/15/2015||Financial Sense is hiring!||splash_page|
|07/13/2015||Robin Griffiths: China Stock Market Crash Brings Opportunity, Not Crisis||story|
|07/10/2015||How a Public Pension Crisis Is Driving an Epic Credit Boom||story|
|07/02/2015||Rosenberg on Greece, US Economy, and Stocks||story|
|06/24/2015||Gary Shilling: US Dollar Headed Higher; Bull Market in Bonds Not Over Yet||story|
|06/19/2015||Tom McClellan Predicts Major Market Peak This August, Bear Market Into 2016||story|
|06/18/2015||Armstrong: US Stocks May Double Over the Next Year and a Half||story|
|06/15/2015||Dan Wantrobski: Institutional Investors Praying for a Correction||story|
|06/13/2015||Russell Napier: Turkey May Be the Next Bear Stearns; Cash Becoming "Too Hard" for Policymakers||story|
|06/08/2015||Ralph Acampora on Why This Market Is Like the 60s||story|