When Money Dies: Adam Fergusson

When Money Dies

Last week I finished reading the book “When Money Dies” originally published in 1975 by Adam Fergusson (reissued 2010).

I sought out this book primarily due to my concerns about Quantitative Easing, but as I read this book I found myself frequently wondering and worrying about Greece.

Fergusson relates the axiom that “if you wish to destroy a nation you must first corrupt its currency. Thus must sound money be the first bastion of a society’s defense.”

Fergusson’s book is a fascinating economic (and political) history of Germany from the end of WW1 in 1918 through 1924. The book frequently goes into granular detail, and at times has a near daily accounting of the tribulations of the German state and its people.

I was especially fascinated by the wildly varied responses and impacts of various economic segments of German society. At various times, despite near continuous devaluation of the Mark, much of German industry remained operational and in fact continued to expand. Not unlike today’s Quantitative Easing, continuous printing of ever greater values of Marks stimulated the economy, allowing Germany to maintain both high levels of employment and  economic / industrial expansionary investment. Also much like today’s experience with QE, the challenge for Germany was how to stop printing money without causing a total collapse of the Germany economy (which eventually was Weimar Germany’s fate).

I doubt that most people today are aware that Austria also suffered hyperinflation during this same period, and in fact Austrian currently devaluation preceded Germany’s. At the risk of oversimplification, it is interesting to note the stark similarities between Austria and present day Greece. 1918 Austria (population 6.5 million) had more state employees than Germany (population 50 million), tax collection was entirely ineffective, and all state enterprises ran at a huge loss. Austria, despite its effective bankruptcy, was “even supplying cigars to the population at far below the cost of production.”

One very interesting labor market outcome during this period was that “labour, wholly or partially educated labour, has already begun to rule in Germany, and there is no demand for brains: that is to say, brains have no longer a marketable value.”

The devaluation of the Mark was absolutely staggering, and at times the author struggles to document the unrelenting pace of devaluation. Periodically the book becomes rather repetitive, which accurately mirrors the historical events being described. The author  struggles with tragic adjectives; after a few chapters it simply becomes impossible to find creative new ways to describe the ever greater depths of unfolding economic tragedy. The reader gets a taste for the experience of the Germans during this period; each time it seems that things can get no worse, and that a bottom must certainly be reached, Germany prints a new larger denomination of Mark and the deflationary spiral plumbs new depths.

The events summarized by Fergusson happened less than 90 years ago, and were experienced and suffered by a well developed Western economy. However, a century is a long time. Could these events be repeated in this modern era? Certainly (hopefully)our learned Government and Global leaders are far more enlightened and sophisticated than 1920’s Germany. Or are they arrogantly (misguidedly) confident in their collective ability to ride the fiat currency tiger without getting eaten?

It is interesting to note that hyperinflation in the 21st century is not simply an obsolete historical tale. Zimbabwe was in the news as recently as mid-June 2015, when its central bank announced that the old Zimbabwe dollars can still be exchanged for US dollars, at a rate of 100 trillion Zimbabwean dollars per $40 USD. 100 trillion Zimbabwean dollar notes are actually more valuable on Ebay, where collectors have recently paid up to $159 USD.

If (or perhaps more likely expressed as when) Greece exits the Euro and resumes printing Drachmas, I am very concerned about the valuation of this newest fiat currency. Will Greece be able to successfully deflate away its serious debt and liability issues, or will the Drachma, along with Greece’s long suffering citizens, experience the German Mark’s hyper inflationary fate?

Frank T.

Physics for Future Presidents: Richard Muller 2008

Physics for Future Presidents

Physics for Future Presidents is a very interesting and entertaining book published in 2008 by Richard Muller. Muller wrote the book in the form of an educational primer addressed directly to a future president.

Muller opens with a quote often attributed to Mark Twain: “The trouble with most folks isn’t their ignorance. It’s knowin’ so many things that ain’t so.” Interestingly, to illustrate the aphorism itself, Muller points out that this famous quote is even from Twain. the quote is correctly attributed to Josh Billings, a humorist from the nineteenth century.

Muller covers a broad range of important physics concepts and principles which are valuable for rendering technically valid presidential decisions. He covers nuclear energy, nuclear weapons, fossil fuels, renewable fuels and solar energy, nuclear radiation and biological weapons, nuclear waste, space and satellites, human and robotic space exploration, global warming.

Muller also spends considerable time reviewing the scientific methodology for establishing and validating scientific facts and principals and differentiating these from opinions and  various forms of conjecture. He provides tools and insights to help the future president to identify various forms of propaganda such as distortions, exaggerations, cherry picked data, news bias, and misuse of statistics.

Muller carefully explains and debunks many myths and misconceptions, including concerns over radiation and the actual prevalence of various forms and concentrations of radiation to which humans are constantly exposed.

He closes the book with a summary of exciting new technologies including biofuels, clean coal, concentrated solar energy, safe nuclear technology, and various forms of renewable energy.

I thoroughly enjoyed this book, and am pleased to recommend it to anyone who has a general interest in science and scientific principles and methodology. You don’t need to be either a physicist or a presidential aspirant to enjoy and appreciate this book. This book will provide you with additional tools for your leadership and decision-making toolbox.

Frank T.

The Moral Case for Fossil Fuels: Alex Epstein

Moral Case Fossil Fuels

I just completed a very interesting and provocative book, “The Moral Case for Fossil Fuels”, copyright 2014 by Alex Epstein.

Today’s society, especially western cultures, have paradoxically grown more tolerant of some types of diversity, and completely intolerant of other forms of diversity. We embrace a wide range of sexual preferences, same sex marriages, alternate lifestyles. However, if someone chooses to explore the possibility that the scientific theories and opinions which postulate man-caused global warming and climate change may be subject to alternate interpretations, they are promptly ostracized, labeled “science denier” or worse.

I believe in taking reasonable and responsible steps to minimize human impact on the environment. I also believe that it is both socially and economically wise to extract maximum value and utilization from every unit of energy which we consume. I proudly drive a Prius. I’m sure others can lay claim to more “green credentials”, but my family and I do seek to be responsible consumers of energy.

However, I also seek to understand the broad perspective of energy generation and utilization, and both the risks and benefits of our various energy options.

If you have an open mind, and want to significantly expand your knowledge and appreciation for the role fossil fuels have played in the development and sustainability of our society, I highly recommend reading this book.

Alex is not a science denier. He does not dispute that man has had impacts on the environment. However, as a philosopher, Alex applies a humanistic approach to evaluating risks and benefits. “What will promote human life? What will promote human flourishing – realizing the full potential of life? How do we maximize the years in our life and the life in our years?”

Environmental thinkers hold as their standard of value “pristine nature or wilderness – nature unaltered by man”. Alex holds “human life” as the standard of value. He observes that “fossil fuel use so far has been a moral choice because it has enabled billions of people to live longer and more fulfilling lives.”

Alex explains that fossil fuels have allowed us to create a “world that was not supposed to be possible”. He postulates that there is “nothing intrinsically wrong with transforming our environment – to the contrary, that’s our means of survival. But we do want to avoid transforming our environment in a way that harms us now or in the long term.”

The book is very well researched, and contains a wealth of objective scientific information on a wide range of environmental and energy related topics. At times the book is a bit repetitive. In his quest to comprehensively cover each of his points and arguments, he frequently repeats or reiterates key discussion topics.

“The Moral Case for Fossil Fuels” doesn’t propose that we give up our quest for practical renewable energy sources. Alex is a champion for continued technological development, increased energy efficiency, reduced emissions and environmental impact. However, he offers wise council that the continued responsible use of fossil fuels, including associated human transformation of our environment, is morally responsible and a rational solution to maximize human potential.

Frank T.