Frederick Taylor is a historian, not an economist. In "The Downfall of Money" he writes a history of Germany from 1914 to 1925 through the lens of the great inflation that befell that country. For example the German Mark falls from 4.2 to the dollar in August 1914 to nearly 7 trillion to the dollar by the end of 1923. He tells the story of how an ordinary wartime inflation which occurred in all of the major combatants turned into a hyperinflation in the postwar era as Germany was weighed down by reparations payments along with a social democratic imperative to fund the welfare state.
He tells the story as to how the inflation impacted various stratas of society with big winners and big losers. The losers were well represented in the German middle-class who patriotically bought war bonds that were to become worthless and for many of them their wages failed to keep up with the inflation. The winners were farmers who held real assets and saw their debts erased by inflation along with the great industrialists who witnessed a stock market boom and the elimination of corporate indebtedness. By the end of the inflation the entire domestic debt of Germany was eliminated. To be sure the external debt was enormous.
Along the way we witness the rise of the Freikorps, the killing of Rosa Luxemburg and Karl Liebknecht and the assassination of Walter Rathenau, a Jewish industrialist who served as foreign minister. There is also a cameo appearance of a demobilized corporal who would one day rule all of Germany.
Harris certainly has a feel for the history of the period. However, I only wish he would have integrated charts and tables in the text in order to get a better understanding of what was going on in the macro-economy. Further he should have spent more time discussing the stabilization program that came in 1924 that broke the inflation and of its consequences. Nevertheless the book is well worth the read.
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