Maybe we should be thinking about Weimar and the inflation that wrecked Europe.
Following the Great War, now known as World War I, the victorious allies forced the abdication of Kaiser Wilhelm II, who would be the last German emperor, and thus ending a 300-year dynasty that had ruled Prussia.
"The depreciation of the mark of 1914-23," wrote the brilliant economist Lionel Robbins in 1937 "Is one of the outstanding episodes in the history of the twentieth century. Not only by reason of its magnitude but also by reason of its effects, it looms large on our horizon. It was the most colossal thing of its kind in history: and, next probably to the Great War itself, it must bear responsibility for many of the political and economic difficulties of our generation."
The idea of the central bank was to end the banking crisis, smooth out the business cycle, and, if you can believe it, finally conquer the problem of inflation.
In the 1910s, with central banks available to make up the difference, new national conflicts could too easily turn to a shooting war.
During the Great War, every major power resorted to the printing press but Germany even more than the others.
The Weimar-Era inflation is Exhibit A. This is not ancient history.
No comments:
Post a Comment