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The Art of Hyperinflation


Influential design emerges from economic collapse.


One the most remarkable things to me is how the American people have been sold on accepting, even preferring, inflation over deflation. It is truly amazing that government and central banking bureaucrats could successfully instill the belief that lower prices for assets are bad. The reality is that lower prices are only bad for artificially-constructed economies.

Deflation is necessary to restore market and economic stability. It is not without pain. But inflation, even mild inflation, is like an intoxicant that slowly destroys the body over time even as its narcotic properties mask the pain. By comparison, hyperinflation is ruinous. How ruinous? Consider this passage from Adam Fergusson's book, "When Money Dies: The nightmare of the Weimar collapse":

"In hyperinflation, a kilo of potatoes was worth, to some, more than the family silver; a side of pork more than the grand piano. A prostitute in the family was better than an infant corpse; theft was preferable to starvation; warmth was finer than honour, clothing more essential than democracy, food more needed than freedom."

Fegusson's book is a stark reminder that arguments over inflation and hyperinflation are not merely academic. I was reminded of this recently when I stumbled across a Flickr page featuring a large collection of German Emergency Currency notes, known as Notgeld, owned by Miguel Oks and his wife.

Why would someone choose to collect Notgeld? Well, as you can see in the image to the right, the artwork on the emergency currency notes is extraordinary. As Oks, explains, "They made it very pretty on purpose: many people collected the bills, and the debt would never have to be paid." But that's only part of the story as to how this collection came into being.

Oks explains:

"After 800 years of life in the same region, my wife's family left Germany. In 1935 Nazism had become unbearable. They were lucky enough to understand the risk it posed for Jews living in Germany and they left. Until then, her family was part of a comfortable and prosperous middle class, involved in the tobacco business in the city of Karlsruhe.

At the end of the First World War her grandfather started collecting Notgeld produced by many German and Austrian towns and companies to [fight] deflation first and inflation later with the objective of providing stability to workers and residents.

Notgeld was issued by cities, boroughs, even private companies while there was a shortage of official coins and bills. Nobody would pay in coins while their nominal value was less than the value of the metal. And when inflation took off, the state was just unable to print bills fast enough.

Some companies couldn't pay their workers because the Reichsbank just couldn't provide enough bills. So they started to print their own money - they even asked the Reichsbank beforehand. As long as the Notgeld was accepted, no real harm was done and it just was a certificate of debt. Often it was even a more stable currency than real money, as sometimes the denomination was a certain amount of gold, dollars, corn, meat, etc."

The currency notes were not legal tender, mind you. The only people who dealt in it were people who wanted to, but it was very stable and debt free. To keep it flowing, the notes were sometimes issued with stipulations that they would lose 2% to 3% of their value each month. That kept people from hoarding it. The effect was that the notes created a process of orderly rationing of staples.

But there is also something else at work. When you view the slideshow below, note the imagery used, the artistic vision displayed and the craftsmanship on the notes. According to Oks, the notes were printed on all kinds of materials; leather, fabric, porcelain, silk, even tin foil. As well, many of the notes were, in fact, illustrated by artists that would later gain wider audiences for their more traditional works.

The notes provide a unique window into how people responded aesthetically to a horrific economic collapse. When viewing the notes, however, there is also the specter of the National Socialist movement that found its roots during that 1914-1923 decade of economic despair.

Oks explains his interest in the notes this way:

"At a personal level, my interest in these notes lies in the fact that everyone of these pieces of paper carries the seed of the development of twentieth century artistic and political movements. These artistic and ideological movements still influence our thinking and inform our consciousness, our taste and every aspect of our lives. I cannot help but shiver at the emergence of National Socialism palpable in the art of many of these notes."

The slideshow below has just 10 of the more than 4,000 Notgeld in Oks' collection. Oks' images and text accompany the 10 shown in the slideshow.

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