The Downfall Of Money

1920s Germany. They’ve just lost WW1 and as the rest of the world gear up for the roaring 20s, German society experiences hyperinflation, at the dawn of what is known as the Weimar Era.

This book, by Frederick Taylor, is mainly a cautionary tale as to how a civilized advanced society can run off the rails into extremism when everyone’s economic purchasing power collapses.

What made this book so interesting was how packed it was with eyewitness accounts, news reports of the day, stats and various human stories. We are talking about just a few years. WW1 is largely dealt with in the first chapter or two, and the rest of the book, running at around 300+ pages, is about the several years after that, ending at the mid 1920s.

It doesn’t get to Hitler’s ascent to power, though he is briefly mentioned in the book as a young rabble-rouser on the scene. It actually opts for another climax: The revaluing of the mark, which meant phasing out the old banknotes for some new ones with less zeros. Savers were ripped off. Wealthy and middle-class families were driven to destitution. Respectable daughters to prostitution. In the midst of that there is also political assassinations, street violence, scarred veterans, a “revolution”, ongoing spats with their recent WW1 opponents, and the awkward readjustment from a confident royal-militarist society to a humiliated, confused and angry society which has lost its sense of self-certainty, embittered by war and a perceived unjust peace, trying hopelessly to establish a more modern civic order. And then we all know what happens next.

There’s an additional point of interest for the art-history fans, as one of the later chapters includes journal exceprts from the diary of the painter George Grosz, in which he relates being escorted to the apartment of a restauranteur friend and seeing huge hidden stockpiles of goods like meat and cheese, which were no longer available or affordable in the regular shops.

Economics has always been known as the dismal science, which I infer to mean boring. But it only seems boring until it isn’t, and then its insanely important and a lot of people seem to curse themselves for not understand the gold standard, the fancy words like inflation/deflation/ interest/bonds/debt/foreign-holdings, and all the funny graphs.

One of my longstanding political opinions are that a lot of social issues, grievances and tensions are tolerable/ignorable to most people when the economy is good, and there is hope for prosperity. But when the economy tanks, those social divisions get amplified to the point of catastrophe, It’s the point at which people lose not only their wealth but also their ability to procure wealth, however you define that word. In other words, they lose hope that behaving within the existing civic order is in their best interests.

This is a good book to read about to understand the human side of a currency crashing into worthlessness and the consequences of that.

Though not featured in the book, the painting “Eclipse Of The Sun”, painted in 1926 by George Grosz, is seen to encapsulate the tumultuous Weimar era and was painted just after the currency was revalued.

George Grosz was a German painter who experienced the 1920s hyperinflation firsthand. Extracts of his diary appear in the book. He chose to migrate to the US in 1933, shortly before Hitler came to power. He returned to Berlin in 1959, a few months before his death. (Source of above two images linked)