The Penniless Billionaires

What a great book. A short trip down Memory Lane's more memorable Hyperinflations. There clearly is no "perfect" currency for all times and places. Currency FeedBack Loop in a nutshell: 1. Leaders issue a Currency to make it easier to trade goods and services. Usually it starts out linked to a commondity of some kind (if the commodity isn't used directly, like gold for example). 3. The Leaders find they are going to run out of currency (many possible reasons). So they either a) Debase it (e.g. add other metals to gold coins), or b)they declare FIAT = the currency will float in value against commodities - but can no longer be redeemed for any commodity. In other words, now the currency is nothing more than promissory note whose value rests Solely on CONfidence of the public in the Lender (their government or some non-government entitiy the government "Trusts").. . 4. The Leaders constantly give into the demands of the populace and in the end, the Leaders can't pay for all of their promises. 5. They Hyperinflate ... they make too many Promissory Notes and the public Loses CONfindence in the currency. Thereafter the notes are called "Promise-Sorry Notes." 5. The public and leaders go back to SOMETHING TANGIBLE for their currency (gold seems to usually be the default currency of Refugees of past civilizations). 7. Repeat the above cycle. Fiat seems to be favored in economic growth periods when Civilizations "get impatient" so to speak. That's when there seems to be enough Resources to fritter and waste away on empty Promisary Notes.

Mr. Shapiro does an excellent job of describing just how, and MOST importantly, WHY it happens. It isn't some uncontollable twist of nature that no one can do anything about. In every inflation, especially every hyper-inflation, there are people who profit enormously from it. When the people who profit from it can also control it, the entire world gets turned upside down. As the author also shows, hyper-inflation wreaks havoc upon the society at large; if Germany had not experienced the post WWI hyperinflation, people would not have been so confused, and lost that the ravings of a lunatic would have captured their minds. There IS a price to pay for inflation far beyond any monetary and fiscal effect. This should be required reading for everyone who runs for public office. Those that don't "get it" about should be barred from ever holding any public trust whatsoever. (or shot, but let's be nice, OK?)

This book is a real eye-opener, especially about the German hyper-inflation of the early 1920s and the monster Stinnes. If we have any thoughts of timesizing the workweek to achieve full employment instead of downsizing the workforce while trying to create enough 40-hr/wk jobs (but never succeeding), we've got to learn the lessons of this book. Central bankers, left without accountability (like Greenspan today), can negate any progress toward fuller employment and closing the income gap by engineering any inflation rate they want. PS - the author's name is Shapiro, not Shapire