Video: Adam Fergusson: Inflationism is Playing with Fire

GoldMoney.com's Director James Turk, interviews Adam Fergusson, author of the bestselling book When Money Dies at the recent Casey Research/Sprott Summit.




Gold Money summarizes the interview...

Fergusson discusses how the hyperinflation affected different groups in German society in different ways – with debtors benefitting and huge numbers of middle-class savers wiped out. Riots, corruption and political extremism were just some of the malignancies encouraged by the hyperinflation. He points out that those who held hard currencies as well as people who held tangible assets like gold and silver were in-large part protected from the worst economic consequences of the hyperinflation. In his words: “gold remained at all times in Germany the measure of what was important to them.”

James and Adam discuss whether or not today there is any way for governments in the developed world to repay their huge debts. Both men conclude that inflation is the only politically viable method of repudiating these unmanageable obligations. Fergusson highlights the importance of velocity and the demand for money in determining whether or not inflation turns into hyperinflation – though points out that this tipping point can take a surprisingly long-time to arrive; in Germany, people kept confidence with the rapidly devaluing mark throughout the First World War, despite clear signs that the country was heading for a currency crisis.

Fergusson thinks that we are heading for high inflation in many countries, but is doubtful that Weimar Germany’s nightmare currency collapse can be replicated in a sophisticated modern economy. He concludes with a quote from Jean-Claude Juncker, prime minister of Luxembourg, who recently commented with respect of the sovereign debt crisis: “we all know what has to be done; what we don’t know is how to get re-elected once we done it.”

While Mr. Ferguson doesn't want to predict the imminence of hyperinflation in the West, he questions if policymakers would have "the kind of courage that politicians cannot have" in preventing a full blown hyperinflation from happening (34:20) once the tipping point arrives. He further sneered at economists for repeatedly predicting the wrong things (33:12).

You can read When Money Dies: The Nightmare of the Weimar Collapse in pdf form by pressing this link