tag:blogger.com,1999:blog-16646992.post5698181870077182878..comments2023-10-14T23:56:22.016-10:00Comments on Reflecting Light: The behavioral fallout of junk moneyRick Darbyhttp://www.blogger.com/profile/02371910140619422820noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-16646992.post-34271832263502767732012-08-22T04:19:49.769-10:002012-08-22T04:19:49.769-10:00DP111 wrote..
Interest rates are now at virtually...DP111 wrote..<br /><br />Interest rates are now at virtually zero. With inflation at 3% or above, this means people who have saved all their lives, are having their capital effectively pillaged and looted by the banks and governments.<br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-16646992.post-56475988456613602032012-08-21T13:31:04.525-10:002012-08-21T13:31:04.525-10:00In the case of German, there was a one-two punch: ...In the case of German, there was a one-two punch: the Great Inflation was followed about 7 years later by the Great Depression. A good fictional portrait of the psychological impact was offered by Hans Fallada in his novel Little Man, What Now?, which I reviewed here:<br /><br />http://chicagoboyz.net/archives/29873.html<br /><br />I don't think the USA is in danger of Weimar-level inflation...Bernanke may not be brilliant but is not as clueless as was the guy running German monetary policy back in the days...but I think even Carter-level inflation, coupled with protracted structural unemployment, would have very corrosive cultural impacts on the US.David Fosterhttps://www.blogger.com/profile/15464681514800720063noreply@blogger.comtag:blogger.com,1999:blog-16646992.post-74683833087697347322012-08-20T06:00:36.964-10:002012-08-20T06:00:36.964-10:00David,
Although the German Great Inflation was br...David,<br /><br />Although the German Great Inflation was brought under control fairly quickly and the country returned to "normal" on the surface, it's easy to imagine how everyone who lived through it carried psychological scars from then on. Those memories plus the worldwide Depression left many Germans willing to trade political freedom for the promise of national power and full employment.<br /><br />What are millions of Americans who've been out of work for years or are working at jobs far below their capacity feeling today? What might they tolerate in the name of government intervention and national security if they believed it would restore them?Rick Darbyhttps://www.blogger.com/profile/02371910140619422820noreply@blogger.comtag:blogger.com,1999:blog-16646992.post-70159458293425472342012-08-19T12:20:26.165-10:002012-08-19T12:20:26.165-10:00Sebastian Haffner, who grew up in Germany between ...Sebastian Haffner, who grew up in Germany between the wars, described the psychological impact of the great inflation:<br /><br />"But the mark now went on the rampage…the dollar shot to 20,000 marks, rested there for a short time, jumped to 40,000, paused again, and then, with small periodic fluctuations, coursed through the ten thousands and then the hundred thousands…Then suddenly, looking around we discovered that this phenomenon had devastated the fabric of our daily lives.<br /><br />Anyone who had savings in a bank, bonds, or gilts, saw their value disappear overnight. Soon it did not matter whether it ws a penny put away for a rainy day or a vast fortune. everything was obliterated…the cost of living had begun to spiral out of control. ..A pound of potatoes which yesterday had cost fifty thousand marks now cost a hundred thousand. The salary of sixty-five thousand marks brought home the previous Friday was no longer sufficient to buy a packet of cigarettes on Tuesday."<br /><br />The only people who were able to survive financially were those that bought stocks. (And, of course, were shrewd or lucky enough to buy the right stocks and to sell them at the right times.)<br /><br />"Every minor official, every employee, every shift-worker became a shareholder. Day-to-day purchases were paid for by selling shares. On wage days there was a general stampede to the banks, and share prices shot up like rockets…Sometimes some shares collapsed and thousands of people hurtled towards the abyss. In every shop, every factory, every school, share tips were whispered in one’s ear.<br /><br />The old and unworldy had the worst of it. Many were driven to begging, many to suicide. The young and quick-witted did well. Overnight they became free, rich, and independent. It was a situation in which mental inertia and reliance on past experience was punished by starvation and death, but rapid appraisal of new situations and speed of reaction was rewarded with sudden, vast riches. The twenty-one-year-old bank director appeared on the scene, and also the sixth-former who earned his living from the stock-market tips of his slighty older friends. He wore Oscar Wilde ties, organized champagne parties, and supported his embarrassed father."<br /><br />Haffner believes that the great inflation–particularly by the way it destroyed the balance between generations and empowered the inexperienced young–helped pave the way for Naziism.<br /><br />"In August 1923 the dollar-to-mark ratio reached a million, and soon thereafter the number was much higher. Trade was shutting down, and complete social chaos threatened. Various self-appointed saviors appeared: Hausser, in Berlin…Hitler, in Munich, who at the time was just one among many rabble-rousers…Lamberty, in Thuringia, who emphasized folk-dancing, singing, and frolicking."<br /><br />IDavid Fosterhttps://www.blogger.com/profile/15464681514800720063noreply@blogger.com