This book explores the characteristics of inflations, comparing historical cases from Roman times up to the modern day. High and moderate inflations caused by the inflationary bias of political systems and economic relationships - and the importance of different monetary regimes in containing them - are analysed. Peter Bernholz demonstrates that certain macroeconomic traits have been stable characteristics of inflations over the centuries, and illustrates their causes: the development of real stock of money, real exchange rate, real budget deficit and of currency substitution. He goes on to explain that metallic monetary regimes allow substantial inflations by debasement - 4th century Roman Empire experiencing the highest of them - but are dwarfed by the experience of hyperinflations. These occurred only under discretionary paper money regimes. To demonstrate this and their characteristics, all twenty-nine hyperinflations are studied. In contrast to the existing literature, the book also examines political conditions that allow a return to stable monetary regimes, given the inflationary tendencies of political systems. Finally, economic measures and institutional reforms to end high and moderate inflations are discussed.
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"'Peter Bernholz's book brings together his comprehensive studies of inflation from the fourth century to the present, showing their common elements and their differences. This is an impressive work that bankers, central bankers, economists and laymen can read with pleasure and profit. I recommend it highly.' - Allan H. Meltzer, Carnegie Mellon University and American Enterprise Institute, US 'This book is about explaining inflation. It is written by one of the world's leading political economists. His comparison of 29 hyperinflations demonstrates the crucial role of political institutions and monetary regimes. The author's grasp of economic and political history is truly exceptional. The book fills a gap. It is the fruit of a lifelong occupation with the problem of inflation.' - Roland Vaubel, University of Mannheim, Germany"
About the Author
Peter Bernholz, Professor Emeritus of Economics, Center for Economics and Business (WWZ), University of Basle, Switzerland
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27 of 27 people found the following review helpful
Format:Paperback|Amazon Verified Purchase
The author breaks the book into historical examples. From these examples he draws conclusions which are written out at the end of each subchapter. He looks back at these conclusions and sees if they hold up under other circumstances in future chapters.
Historical data include a prce index of rice in Ming China, Inflation in revolutionary America, and Florian exchange rates in medieval Italy.
He is apolitical, and from Switzerland. So, to an American, it does not matter what political party you are.
If you are interested in how politics and monetary policy interact with each other to cause inflation and boom/busts, this book is for you. It has definite lessons that we shed light on today's economy. Particularly, the "caps" and "hats" political parties in Sweden, and their inflation plight.
This is a book I will 100% read multiple times. I can only say that about 3 other books. I reccomend this book with no reservations.
Historical data include a prce index of rice in Ming China, Inflation in revolutionary America, and Florian exchange rates in medieval Italy.
He is apolitical, and from Switzerland. So, to an American, it does not matter what political party you are.
If you are interested in how politics and monetary policy interact with each other to cause inflation and boom/busts, this book is for you. It has definite lessons that we shed light on today's economy. Particularly, the "caps" and "hats" political parties in Sweden, and their inflation plight.
This is a book I will 100% read multiple times. I can only say that about 3 other books. I reccomend this book with no reservations.
15 of 15 people found the following review helpful
By David Merkel
Format:Paperback
I did not ask for this book, but I am glad the publisher sent it to me for free. There is a lot of concern over inflation in the present era, but not a lot of structured thought about what drives inflation.
This book takes the long term perspective, and looks at the wide array of monetary arrangements, and analyzes which arrangements produced more or less price inflation. The author shows that there is generally an inflationary bias in all currencies. Currencies that are backed by precious metals tend to experience less inflation, but many governments using such currencies debase the metals or clip the coins. That said, it does restrain inflation, because inflating a metallic-based currency takes a lot of work.
To have significant inflation, one must have unbacked paper money. The same is true of defaults in bonds. In order to have a crisis, much debt must be issued relative to the assets and earning power of the companies. The debt is not backed by sufficient repayment capacity, and thus there are some defaults.
A fiat currency in and of itself, is not sufficient to create hyperinflation. Hyperinflation only happens when the government finances itself by printing money with abandon.
The book further distinguishes itself by explaining situations where foreign currencies come in to act as shadow currencies inside nations. Further, the book describes how inflationary situations end. One constant is that people quickly analyze where purchasing is declining, and seek stability through metals or relatively stable fiat currencies.
One strength of the book is that at the end of each chapter, the author summarizes all of the main points. I recommend this book.... Read more ›
This book takes the long term perspective, and looks at the wide array of monetary arrangements, and analyzes which arrangements produced more or less price inflation. The author shows that there is generally an inflationary bias in all currencies. Currencies that are backed by precious metals tend to experience less inflation, but many governments using such currencies debase the metals or clip the coins. That said, it does restrain inflation, because inflating a metallic-based currency takes a lot of work.
To have significant inflation, one must have unbacked paper money. The same is true of defaults in bonds. In order to have a crisis, much debt must be issued relative to the assets and earning power of the companies. The debt is not backed by sufficient repayment capacity, and thus there are some defaults.
A fiat currency in and of itself, is not sufficient to create hyperinflation. Hyperinflation only happens when the government finances itself by printing money with abandon.
The book further distinguishes itself by explaining situations where foreign currencies come in to act as shadow currencies inside nations. Further, the book describes how inflationary situations end. One constant is that people quickly analyze where purchasing is declining, and seek stability through metals or relatively stable fiat currencies.
One strength of the book is that at the end of each chapter, the author summarizes all of the main points. I recommend this book.... Read more ›
1 of 1 people found the following review helpful
By Jaime Jesus
Format:Paperback|Amazon Verified Purchase
This is a very good read for most since it demonstrates the history of fiat money and politics and it always ends sadly... The fact is we need to consider what his work informs is that we cannot expect "others" to make the "right" decisions when their are divergent interests seeking privileged position based upon govt edict.... we essentially do ourselves in as the "system" both politically and Sociologically, are not prepared to move to the next step. A level which was told to us many years ago. WE were told! Sometimes going back to what worked is better than doing what led to bringing you down.
Good book as this subject is rarely taught or discussed.
Good book as this subject is rarely taught or discussed.
By N. ROBERTS
Format:Paperback|Amazon Verified Purchase
A technical book written for economists. The financial history reader will get something out of the book, though. Clinically written.
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