Book Review of “When Money Dies”

When Money Dies, The Nightmare of Deficit Spending, Devaluation, and Hyperinflation in Weimar Germany by Adam Fergusson

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• • •‘s Publisher’s Summary says this about the book:
When Money Dies is the classic history of what happens when a nation’s currency depreciates beyond recovery. In 1923, with its currency effectively worthless (the exchange rate in December of that year was one dollar to 4,200,000,000,000 marks), the German republic was all but reduced to a barter economy.

Expensive cigars, artworks, and jewels were routinely exchanged for staples such as bread; a cinema ticket could be bought for a lump of coal; and a bottle of paraffin for a silk shirt. People watched helplessly as their life savings disappeared and their loved ones starved. Germany’s finances descended into chaos, with severe social unrest in its wake.

Money may no longer be physically printed and distributed in the voluminous quantities of 1923. However, quantitative easing, that modern euphemism for surreptitious deficit financing in an electronic era, can no less become an assault on monetary discipline. Whatever the reason for a country’s deficit – necessity or profligacy, unwillingness to tax, or blindness to expenditure – it is beguiling to suppose that if the day of reckoning is postponed economic recovery will come in time to prevent higher unemployment or deeper recession. What if it does not? Germany in 1923 provides a vivid, compelling, sobering moral tale.”’s Critic Reviews say this about the book:
“Engrossing and sobering.” ( Daily Express, London)
“One of the most blood chilling economics books I’ve ever read.” (Allen Mattich, The Wall Street Journal)

Here’s what I think:
BLUF (Bottom Line Up Front) – Skip it, read my review, & wiki-dive instead.

The book has plenty of research, but it is the kind of research that anyone could do with a solid 1-2 hour wiki-dive. And since the audiobook is 7 hours long on 1.3x speed (9:15 hours long on 1x), you can save yourself 5-8 hours. Don’t get me wrong, the information passed along is solid, useful, and paints an excellent picture using data points of what Germany, Austria, Hungary, the UK, and France were like economically from World War I leading up to World War II.

The terms put on Germany with the Treaty of Versailles and the implementation thereafter were devastating, especially by France. Absolutely the old-school mentality of “You lost the war now bend the knee” drove policy. Mainly, Europe deferred to France’s demands of Germany after the war. The trouble is that France’s economy was wobbling too. So it became of interest to France to harvest as much from Germany as possible, which was short-sighted. As investors, we think holistically and see that France and Europe were economically driving Germany and its people into the ground. Germany exacerbated their own economic downfall too with absurd levels of money printing, as the book makes clear. Each year Germany had to pay reparations to France or else lose land between the two countries. Naturally, Germany would rather print absurd amounts of money than lose territory. So printing they did! Heck, individual cities began printing their own currency even!

One place where I feel the book did a better job than a wiki-dive could do was in describing Germany’s delusional perspective on their money (the German Mark). The author goes into example after example of how the state, businesses, and the general population believed their currency was sound and it was every other currency in Europe, the US dollar, and so on that was rising – instead of acknowledging that their currency was falling! The Mark had a somewhat slow slide in the time right after WWI, but continued and continued and continued to slide. Eventually, corruption, tax evasion, and import-export tricks by businesses seeking to hold foreign currency instead (and avoid taxation) became prominent. This was part of a vicious cycle. Other countries wanted no part of the Germany money, which devalued it. But when Germans began acting similarly

A second place the book did well was describing the military officer class that sat atop of German culture before, during, and after World War I. The military officers were never truly held accountable for the lose of the war and retained tremendous influence in Germany, eventually taking over control of different regions as the country’s economy and way of life collapsed.

Lastly, the book does well to describe who had economic advantages and disadvantages as the Germany money collapsed. It is very worth noting that city-life was devastated while country-life was often affected far less. This was because in the city everything relies on everything; a hitch in the system causes a lot of second and third order effects. But in the country self-sufficiency was stabilizing. Who cares if the price of an egg goes from 1 mark to 50 marks if you walk out back and pick one up from one of your chicken coops. Cities are a dynamic and complex network with great upside and great downside.

Furthermore, the salaried jobs typical of officials and other white collar professions got hit hard. Their salaries were fixed and very bureaucratic to adjust. Adjustments were rarely made, and having a city rail pass was about the best compensation since it “adjusted for inflation.” Regardless of the price of a train ticket, if you ride for free you are good. On the other hand folk in the trades were far better off. Because they were constantly moving product/services and the money associated with these transactions they could adjust their prices. The cost of a meal when you sat down would be different than the cost of a meal when the bill came! When trading and bartering, you are better positioned to swap commodity for commodity too. Perhaps you skip the currency and just trade bread for eggs. If you did get stuck with money you knew exactly who to pass that buck to rapidly (and that taker then passed it on rapidly) so you weren’t caught with the “hot potato.” This isn’t to say traders and country-folk weren’t impacted, but rather they could cope better.

Overall, the book is well researched. But with the tidbits I gave you above plus your own solid wiki-dive (perhaps start here) you can save yourself a lot of time. If you are unable to set aside 1-2 hours to read, which happens to me often times, then listening could very well be the best move for you! At the end of the day this is worthwhile information to know, so however you consume it is great!

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