HN Books @HNBooksMonth

Highly recommend the book “When Money Dies” about hyperinflation in the Weimar Republic. It digs into how the inflation grew and its effects on real people. Those who illegally transferred their savings to foreign currency early did the best, but many long term savers had their entire life savings wiped out.

Early in the process people were exuberant since the markets were rising and their paper net worth was increasing, so they were selling valuable assets like pianos for money that would quickly become worthless. Eventually the farmers became extremely powerful since they had the one thing everyone needed.

Also worth mentioning that Bitcoin’s volatility makes it a poor inflation hedge, but this is for different reasons than the author of the article suggests. It’s more because the Bitcoin ecosystem is highly manipulated and it’s still unclear what a fair price for Bitcoin looks like.

https://www.amazon.com/dp/1586489941/ref=cm_sw_r_cp_awdb_imm...

⬐ throw0101a

When Money Dies is on my to-read list, but haven't gotten to it yet. However, there's some interesting stuff available that may be of interest in this matter:

> Weimar is often mentioned as if it were the only case of post WWI currency collapse. In fact, as the CATO working paper by Hanke and Krus (2012) points out, it was one of 6 cases: Germany, Austria, City of Danzig, Russia/USSR, Hongary Poland.

> Now think about that – did 6 different governments, all within a 4 year time period, and all bordering each other and/or in the same post WWI region and intellectual/political climate (with the seeds of the some of the farthest right and farthest left regimes in all of history within them that would lead to WWII just ~18 years later)—

> Did all of a sudden this little world region and precise time period and intellectual milieu decide to just start spending like crazy? At the same time? While the rest of the world did not?

* https://clintballinger.wordpress.com/2021/01/12/the-myth-of-...

> The Weimar Republic is the most notable hyperinflation. But it was not the only case of hyperinflation that occurred in Europe at the time. In fact, several European nations were ravaged by the war, war reparations and regime changes that ensued. In the case of Weimar the country was already in a fragile state after Germany lost WWI. To add insult to this injury the allied nations demanded punitive war reparations resulting in foreign denominated debt.

* https://www.pragcap.com/hyperinflation-its-more-than-just-a-...

> In this paper I will argue why the common misconception that “inflation is always and everywhere a monetary phenomenon” cannot be used to explain most historical hyperinflations. I will argue that “money printing” is often the response to exogenous and unusual events and not the direct cause of the hyperinflation.

* https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1799102

In Germany, the argument goes, it the problem wasn't necessarily that printing money was the cause of inflation, but rather the printing of money was the effect of something else.

⬐ nostrademons

> it’s still unclear what a fair price for Bitcoin looks like

Note that if Bitcoin replaces the U.S. dollar as the global reserve currency (or even as a functioning currency), the fair price for Bitcoin is infinite. Dollars will be worthless; we'll be pricing everything in Bitcoin. We can get rough estimates of what price levels will be by dividing total $USD supply by total BTC supply: there are $20T USD within the M2 money supply, there will be a max of $21M BTC ever minted, so you'd expect 1 BTC = roughly $1M USD. A satoshi will be worth roughly 1 cent, so a Big Mac would be around 400 satoshi, a nice restaurant meal out would be maybe 5K satoshi, etc.

Bitcoin's volatility is because it's not at all clear that the USD will be replaced as a currency, and even if it is, it's not clear that BTC will be the replacement. You can actually compute the probability that the market ascribes to complete monetary collapse from the ratio between BTC's actual market price to its predicted equilibrium price based on money supply, much like you can compute inflation expectations from the spread between TIPS and T-bills. Right now BTC is trading at about $30K, fair market value on a money-supply-parity basis is about $1M, so the market is assuming about 3% chance that the dollar will be replaced by Bitcoin.

Might I suggest: "When Money Dies" ? The classic history of what happens when a nation’s currency depreciates beyond recovery. http://www.amazon.com/When-Money-Dies-Devaluation-Hyperinfla...