Money's key role in changing our world comes most to the fore when its value evaporates...
EVER FEEL LIKE, whatever you do, inflation is about to sweep you and your money under the carpet of history?
Well, stop fretting Dr.Bernanke! Because "price revolutions" have happened before and they'll surely happen again.
To spot yourself as a speck in monetary history today, all you've got to decide is whether the price revolution of the 20th century ever actually reached its end or not. Because we might still have a whole heap of trouble to come.
After studying and detailing the price inflations of the 13th, 16th and 18th centuries, David Hackett Fischer – better known for Paul Revere's Ride and a key inspiration, along with Robert Barro, for the pop-economists behind Freakonomics and The Tipping Point – shows in The Great Wave how "the great inflation of the 20th century differed from every price revolution that had preceded it. Its velocity, mass and momentum were greater than those that came before."
The hyper-inflations of Weimar Germany and late '40s Hungary had been and gone by this point, however. What lies ahead in this erudite but compelling history is the rapid inflation that actually preceded the oil shocks of 1973 and 1980. This sharp worldwide rise in the cost of living then lurched into "stagflation" – a new term for a repeated pattern – when the world's leading economy, then the United States, slowed as unemployment soared but inflation and the trade deficit soared.
Of course, the 1970s inflation was also the world's first price revolution when money had nothing but credit, mere confidence, to support it. Lacking any commodity backing from Gold or silver, "this time, leaders of the administration tried to restrain [prices] by a policy of moral suasian called 'jawboning' in the jargon of the day," notes Hackett Fischer.
"The only discernible effect of jawboning was an inflation of rhetoric that kept pace with rising prices. The cost of living kept climbing."
Too spooky, no? But The Great Wave offers much more than simply four warnings from history, however.
The depth of detail and anecdote, plus huge volumes of original research (stitched together both from original and secondary sources), makes for a unique history of Western civilization. Letting money and the cost of living argue it out center stage, David Hackett Fischer shows how the rot of inflation forces the collapse of regimes and entire societies, allowing new dynasties, customs and order to take hold.
How come the Black Death proved so virulent in the mid-14th century compared with other outbreaks? What's the connection between violent crime, birth rates, substance abuse and consumer prices? Why is it that, just before the great waves of inflation in history crested and broke, "the rich grew richer, the people of middling sort lost ground, the poor suffered terribly [and] inequalities of wealth and income increased"...?
If you believe (or even merely suspect) that history really does matter, then you really should buy this book now. Because money's key role in changing the world comes most to the fore when its value evaporates.