YouSaid · the spoken record

Zach Carter

lines on the record: 44
first: 2021-04-15
most recent: 2021-04-15
sittings or episodes: 1
sources: podcast

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“France and Spain, and you saw less successful versions of it in France and the United States. I mean, when FDR came to power in 1932, there was an enormous amount of violence in American society. And it wasn't obvious that the political project was going to hold together. I hope that that's not where we're going, but I think it would be silly to pretend that there aren't some overtones of that era in our own time.”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“Thought and authoritarian violence around the world right now. And the outbursts of violence in the United States are the sort of outbursts that looking backwards, if something terrible happens, you would say, ah, that was clearly a precursor. I think the Capitol Hill riot on January 6th is an extremely, extremely dangerous event that most of us don't want to think about because it's the implications of it as a sort of 21st century putsch event are really terrifying. But we do have a lot of right-wing resentment in the United States right now. And we are not unique to that. That was true in the 1920s and 30s too. The rise of fascism in Germany was not an isolated event. It played out according to a set of historically contingent German proclivities in Germany, but you also saw it in Italy. You also saw it in France.”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“Financially, no, but politically, yeah, I do worry. It's one of the reasons why I wrote the biography of Keynes when I did. I felt like after the financial crisis, there's a difference between an economic crisis that's brought on by the quick collapse of a banking system and one that's brought on by a world war. So there are clearly differences. But I do think we live in a moment where we have authoritarian violence rising, not only in the United States, but around the world, which makes it, and we're kind of reluctant to see the international dimension to that crisis. It plays out in the United States through the patterns of history that have been here. So the American version of it is different than the British version or the German version, but there's obviously a rising tide of authoritarian”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“Is really consigned to a tiny kind of quirky, oddball intellectual minority. And it's not until the 1970s that this school of thought becomes dominant again. And that's largely due to a lot of really impressive sort of social work that Hayek does organizing people who see the world the way he does and help having them write papers and write books and tell stories about how the economy works that are similar to his own worldview.”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“In the British sort of economic establishment, he's not really a famous guy in the 1930s. He becomes famous in the 1940s with a political book called The Road to Serfdom. But the real economic leader of this school of thought that we've come to associate with Hayek is a guy named Lionel Robbins, and he's at the London School of Economics. And Robbins is someone who espouses views that I think we would today associate with Milton Friedman or Friedrich Hayek. And he's constantly fighting with Keynes over public work spending and whether it's possible to create economic growth through public works or through budget deficits. And within Britain, by the end of the 1930s, Robbins has basically recanted and said, you know, Keynes was right. And this view that we come to call neoliberalism.”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“Enormous amount of money. It was on social welfare programs. And if you are inclined to believe that we live in a hard world and inequality is kind of a fact of nature, not a political choice, then it looks like the German government was reckless in doing things that were irresponsible if you believe that the economic possibilities for our grandchildren, as Keynes once said, are quasi-utopian, and that in fact the world is richer than it's ever been before and has the capacity to improve life for everyone in it, then I think it's easier to believe that this was a political disaster rather than an act of excessive kind-heartedness. Within the sort of debates of the 1930s, Hayek has a lot of all”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“Interpretations of what has gone wrong and what needs to be fixed. Keynes comes to believe that governments need to support their economies in order to prevent the kind of political chaos that has unfolded in Germany. And Hayek comes to believe that it's this irresponsible spending of the German government on these social welfare programs which invited the catastrophe to begin with. So they have totally opposite views of what the source of the hyperinflation was. And of course, data and things like this are nowhere near as precise as they are today. And even today, the exact same set of data can spark wildly divergent interpretations from people in economics. But both Hayek and Keynes have, I think, pretty compelling stories to tell about what went wrong. I mean, the German government did spend”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it's a really complicated question because economics is always kind of moving by fits and starts in different directions at the same time. I think it causes a kind of crisis within the sort of liberal broad enlightenment liberal tradition that had not been anticipated ahead of the war. So people like Hayek and Keynes were very much sympatico in 1912, 1913. I think they had very similar views of the world. Hayek was enamored with the glories of the sort of pre-war Austrian empire Keynes.”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“Doing away with the banking system's ability to meet the industrial demands of society. And so you have terrible deflation that takes hold and massive, massive unemployment. And the period that we now know, we now think of as the Great Depression sets in. And that's where Hitler comes from. Economically, there's all sorts of other cultural things happening in Germany. The anti-Semitism is obviously very well known. But the economic grounds, there is widespread misery in Germany at this period in time, but it's a different kind of the misery is similar, but it's a different cause than in 1923. You've gone from hyperinflation in 1923 to very severe deflation in 1932.”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“To 1931 have a total collapse of the entire international financial system in this sort of latter stage of the gold standard. By the 1930s, everybody's back on gold. It's not working super well, but it hasn't been a disaster. But suddenly with this financial crisis, everybody's wrecked and the gold standard is gone. And you have a period of absolutely crushing deflation that takes over across all of Europe. There has been deflation for much of the 1920s, but it accelerates dramatically in 1930 and 1931 with the collapse of the European financial system. This is also happening in the United States after the big precipitous event in the United States is the crash of the stock market in 1929, which most financial historians now I think accept is connected to the financial crisis of 1930-1931 in Europe. But these events are basically”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“Austrian economy and on the gold standard, of course, if governments spend too much, they can run out of gold and their currency can be destroyed. And there's a fear that is sparked among investors when credit on staff fails in 1930 that the Austrian government is going to spend so much money supporting its banking system that they will no longer be able to support gold convertibility. And so people start dumping Austrian bonds and Austrian currency, you have a run on the shilling. That quickly spreads to a run on the German mark because, of course, the economies of Germany and Austria are closely intertwined. So the idea that Austria won't be able to meet its obligations creates fears that Germany will support it and not be able to meet its obligations. And this eventually spreads to a run on the British pound for similar reasons. So the idea being that British foreign investment in Germany will make the British untenable. So you very quickly, over the course of 1930,”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a long period of time, so it's hard to classify it as one particular thing. But I'm our Germany has its ups and downs like the rest of Europe over this period, but the second half of the 1920s is much more prosperous and much more stable than the first half. It is the financial turmoil of the early 1930s that really unwinds things and brings the Nazis to power. In 1930, you have a huge run on a bank called Credit Onstalt in Vienna. And Credit Anstalt is a very large politically connected bank. It's got people from all of the big European banking families on the board. It's not so much the size that matters by the sort of prestige of the institution. If this bank could fail, think about what this means for the...”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“It matters symbolically because the United States has come in and said, okay, we get it, we need to support Europe here. And if we don't, everything will fall apart. And so this buys several years of relative economic stability in Europe. And you have this system where essentially the United States lends a lot of money to Germany through different channels. Germany pays some form of reparations duties to France and to Britain, and then Britain pays the war debts that it's accumulated over the course of 1913 to the United States, which then has all this money, which it lends back to Germany. So this cycle of funds keeps going basically until you have financial crises that unwind it, and then you have the Great Depression. You have 20 years of economic dysfunction, but a relative period of stability here once the United States steps in and says, we're going to pay to keep Europe afloat.”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“So that both France and Germany stopped complaining about the terms of the treaty. The reason German reparations are so high during the war is partly just Victor's sort of excess, but also because there's really serious damage that's been done, particularly in France. And so there's a very expensive project of rebuilding that needs to take place. And the French economy has been damaged in such a way that it's hard to do with domestic capital. So getting money from Germany helping France rebuild, having France then pay its war debts to Britain and the United States. The United States ends up with all this money at the end. The obvious player to support Europe through this period is the United States. And so with the young plan, I think there's a $200 million loan to Germany and a $100 billion loan to France. And this matters not only financially because Germany can then afford to start actually meeting obligations with money that isn't printed out of thin air.”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“It's an international fix, and then there's essentially a wipeout of the currency and a starting from scratch. So the German government never stops its campaign of passive resistance. So it's 1.5 billion dollar year deficit is continuing. And the idea that the French occupation is illegitimate is held across the political spectrum in Germany. No politician wants from any party wants to be caught saying they don't support resistance to this unlawful thing that the French government has done, even though, of course, it's perfectly legal under international law. What happens is a new currency, but a new currency with a new political milieu, which is the young plan. And the young plan is essentially a program of issuing large loans to France and Germany.”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“If not the industrial powerhouse of Europe, one of the two alongside Britain. It was a major rising superpower in world affairs. And suddenly it's just a complete mess. And you have people on the streets talking about exchange rates and concerned with these things that have nothing to do with the course of ordinary life in a prosperous society. So yeah, it's a It's something that, I mean, Friedrich Hike never forgets it. He carries this with him for the rest of his life. And it's not just the blow to national pride is not just on the right. It's not just people like Hitler. People like Hitler are able to rise to power because there is a widespread feeling of resentment and humiliation across German society. It is very difficult for social democracy in its sort of more moderate modes to sustain itself.”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, and it was humiliating to people in Germany. I mean, national pride was complete. They just lost a war, which was, you know, people don't like to lose wars. And now they were sort of an international laughing stock. They couldn't even run a monetary economy. And Germany had been prior to the war.”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“Or something at a diner. I mean, how do you get that stuff across the counter? I mean, you just can't. So you do have this kind of funny wheelbarrow thing, but that's mostly workers taking their cash home from work that they then can't do anything with. The actual terms of commerce becomes a barter system and you have a total breakdown.”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“They couldn't, is the answer. I think over the course of 1922, you could go into the grocery store one day and say, okay, well, this is how much a bag of flour costs. And the next day you say, oh, it's even higher. The money became worthless. And so you had people, you had huge theft and looting problems where people just steal from stores and then go into sometimes referred to as flea markets, but you basically had barter in the streets where ordinary people trying to make ends meet were having to trade goods for goods instead of paying with wheelbarrows full of cash. I mean, workers were still being paid in these giant stacks of money, but you couldn't really do anything with them. I mean, you're talking about millions of marks to pay for a salary.”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“It's officially performed by a couple of JP Morgan bankers, but they're really acting as sort of deputies for the U.S. foreign policy establishment. And this changes the way that Germany is governed. And so the politics change and the currency can be stabilized. But first, you basically have to have a completely new international political regime and consensus that replaces the old one. And that until that happens, Germany cannot be stabilized financially.”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“The mark just immediately spirals out of control and it just goes into complete crazy land after this. I think they stop measuring when it gets to about a trillion to one sometime in 1924 marks to dollars. So it's a political collapse is what happens. And you have, of course, the Beer Hall push from Hitler and Ludendorff, which is more famous than the uprising in Hamburg, but politically the government is just wiped out and they have to essentially start over. I think one important factor here is, that's not just one important factor, but an important factor here is the way that this is viewed internationally. The hyperinflation”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“A large deficit, but about 10% of pre war GDP, a little more than 10%. So not something completely ludicrous, but they are going deeper into the deficit territory than they already were. And of course, they're having 40-fold price increases beforehand. So I don't think when I say I don't think it's completely ludicrous, it's a very large deficit. It's not like you can dollar for dollar COK, this currency issuance led to this amount of inflation. There is a huge loss of confidence in the political project of Weimar Germany. And then there's no reason that the government is giving to have any confidence in their willingness to abate from inflationary policies as that collapse is happening. So the German government invades.”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“Essentially invades. And when that happens, you have a total loss of international confidence in the mark. It happens very quickly. You start seeing the mark instead of being 65 or 1,000 to 1, it starts being measured in millions against the dollar. continues in part because of the political situation, in part because of the German government's choice to finance a campaign of what they call passive resistance to the occupation, which basically means paying a lot of money to people who don't want to leave the Ruhr Valley because once the French troops arrive. So Germany had been running about a 750 million a year budget deficit that doubles to 1.5 billion dollars a year. Again,”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“There's a very clear break that happens when the French government decides to occupy the Ruhr Valley. And this is the border between France and Germany. It is the industrial core of the German economy. It's where all of the mining and industrial wealth of Germany is. And under the Treaty of Versailles that ended World War I, if Germany fails to make its reparations payments on time, on schedule, then France will get the right to take over this territory. And Germany misses its reparations payments, even under the lower negotiated figures of the reparations commission and these further efforts from the British government to lower even the reparations commission's amount. The German government misses the payment and France.”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“Reasonable level. You don't have the high joblessness in Germany during this period that you have, say, in Britain. Britain's basically suffering from double-digit unemployment from the end of the war to the outbreak of World War II. Same thing in France. So you have an inflationary problem that is hurting German investors. For ordinary people trying to go to work, it's kind of annoying to have to keep track of prices. But wages really are keeping apace and people are working. So it doesn't feel like a material disaster in the moment. And I think that alleviates a lot of the political pressure to adopt what we would consider a more sound or fiscally responsible budgetary position. Because economically, it seems to be working for most people.”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“In 1923. But over this 1922 period, wages are basically keeping pace with price increases. So people don't feel materially poor. The people who are really getting screwed are people who have large holdings of assets that are demarcated in the market. And even then, if you can dump your marks for something else and if you can trade them for gold or other currencies, you can live pretty well. There's a remarkable phenomenon of foreigners living in Berlin at this period of time where because the prices in Marx are just going totally crazy, if you have a lot of foreign currency, you can live like a total king if you're hanging out in the Weimar world, which was just, you know, despite all the violence of really culturally vibrant vibrant place. But the unemployment rate is for the first time in several since the war has basically come down to a”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't know if class in Germany at this period of time translates as obviously to class in our own moment, as I think we might intuitively want it to. I think your point there, though, that someone like Stennis is talking his own book is almost certainly true. It certainly is true. But I also think a lot of these people, you know, people have a tendency to believe things that benefit them, right? And Stennis says otherwise a conservative. So you do have these kind of conservative thinkers thinking this could be smart policy and good for me. If you look at the unemployment rate, though, during this kind of 40-fold increase in prices that happens in 1922, and here we are not talking about the hyperinflation with 40-fold increases in prices. I mean, this is an enormous, enormous inflationary period, but this is not anywhere near what's going to happen.”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“Break through this line, but it's the only chance we have. So that's how he feels about the hyperinflation. This is not great, but it's what we've got. And if we don't do it, we're going to be destroyed. And maybe he was wrong, but the political judgment at the time, they don't have a whole lot of good options. And of course, Rathenau is literally assassinated by right-wing death squads hours after making that comment. So the parallels, there just aren't a lot of parallels politically between what's happening in Weimar Germany and any of the crises that we've seen, certainly in the United States in the decades since. But the devastation that results from the hyperinflation is so severe. I think people, thinkers from this time are scarred by it in ways that are hard to understand.”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I think in the current context, people who declare with absolute certainty what they think the consequences of running these multi-trillion dollar stimulus programs are going to be, I think that certainty is difficult to take seriously. But the idea that there is a risk that's worth taking seems to be the assessment from people who are supportive of these packages. They're not saying, you know, we're certain to get double-digit inflation if we do this. So let's do it because double digit inflation is good and that's the best outcome we can hope for. I think Rath and Al shortly before he was murdered, just a matter of hours, he's in this big meeting where they're talking about the budget. And he says, our economy is like a city that's surrounded by an army. And the only way out is to break through the lines somehow. And it's going to be really costly and we're going to lose a lot of soldiers if we.”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“The coalition in Germany, you have very conservative members of the Reichstag, people like Hugo Stins. I get my German pronunciation mixed up, but this is like a coal baron who's saying lives are worth more than money. The only choice we have for keeping this government together is to inflate the currency. We can't have the productive power right now after this war to make this happen with ordinary wealth.”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“1919 they agreed that there was this terrible threat from both the left and the right of authoritarian violence if there wasn't some way to feed and clothe the people of Germany that this sort of Soviet Hoover was particularly worried about the Soviet tide sweeping across Germany. Keynes was a little more worried about a right-wing tide, but there was a consensus that authoritarianism was coming if the sort of moderate liberal democracy couldn't prove that it worked with citizens in the streets. So they're paying a lot on these social welfare things and they may be paying too much. I mean, the inflation that takes over before things get really out of control by 1922, I think prices increase about 40 times. This is not a slight amount of inflation that we're talking about. But, you know.”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“In a way that I think people living in European cities today have trouble imagining. So the material conditions are really quite severe, and they are spending quite a bit of money on these things. But the government, which is sort of a center-left government, feels like it doesn't have a choice. It feels like its political coalition will fall apart if it doesn't find some way to materially support all of these citizens. The threat for most people is perceived as being from the left more so than from the right, I think, in the ruling elite at first. At Paris, people forget Keynes before he became this sort of hero for American liberalism. His chief ally at the Paris Peace Conference was the man named Herbert Hoover. And Herbert Hoover, of course, would become sort of his bet noir in the Great Depression.”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“So it's what we would today call social welfare spending in 1920 and 1921. Germany moves to an eight-hour workday. So people are working less than they had been. They start paying unemployment benefits to people who don't have jobs. And during the sort of heavy inflation era right after the war 19, 1920, where all the countries of the world are having heavy inflation, not hyperinflation, the unemployment rate is very high. So there's a lot of people who are having trouble paying their bills and making ends meet. And they're offering health care and food relief to the sick and the poor. And there are a lot of sick and poor people in Germany. The Allied blockade at the end of the war probably killed 400,000 people through starvation. And in the cities in particular in Germany and Austria, you have a lot of hunger and just very, very serious destitution.”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“Situation of hyperinflation, it's not because your finance ministers have done everything wonderfully, but they are in a very difficult predicament. And most of the problems that I think”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“But by 1921, really, for whatever reason, the international community has come to a consensus that Germany is stabilized. And so the sort of wartime and post-war inflation that keeps going up and up and up plateaus. And you have for a few months and about six months in 1921, it looks like things are going to be okay. There's about $2 billion in international investment that comes into Germany through what we would today call markets. And this is, it looks like things are going to be okay. But then over the course of 1921, you have a series of political developments which cause all of that foreign investment to evaporate. And you start seeing the inflation takeoff again. The point I want to emphasize is that there are a lot of decisions that are made by the German government that you can criticize. If you end up in a”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“And that consensus has a sort of political significance that impacts the way currency traders, you have these sophisticated speculative currency markets that develop after the war because the gold standard has been broken and these currencies are not fixed to a certain amount of gold. Traders and markets are relying on these kinds of political judgments and opinions as they make their investments. Before the war, the market was fixed at about four to one to the dollar. By the end of the war, it's about 65 to 1. So Germany has relied on a policy of deliberate inflation to finance its war machine. All of the governments did to some extent, but Germany was the most extreme. has inflated quite a bit over the course of the war too so 65 to 1 against the dollar is 65 to 1 against an inflated dollar”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“That it's something about equal to the pre war GDP level of 12.5 billion. But even this is a very large number for a country that is in the throes of revolution to be trying to meet. In terms of how it's paid, this is the sort of loose era of the gold standard. The gold standard comes apart during World War I, but there is a understanding that the world is going to get back on gold. So what is it denominated in? It's denominated in currencies that are expected to be fixed to gold at fixed exchange rates, but are not quite there yet. And so understanding the true value of these numbers becomes a little bit of a metaphysically uncertain endeavor. But there is a consensus, and not just on the left here, that the figure is too high.”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“Peace conference, and these numbers are just totally ludicrous. They're not arrived at by making any kind of serious attempt to calculate what Germany can afford to pay. You just have the victors of the war sitting down and deciding, okay, how can we come up with the largest number possible, Germany is responsible for this terrible war that has killed all these people. Now we have to make them pay. We'll come up with the biggest figure we can, and then negotiate down as it becomes clear that this is not economically feasible. The result of this is that you have a series of efforts to renegotiate the actual German reparations duty over the course of the 1920s. Every year or two, all of the major diplomats in Europe meet to try and move this figure down a little bit from wherever it was set the year before. And in fact, this happens right before the hyperinflation. The British intervened and said, look, this $33 billion figure is crazy.”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“Right. So the answer is it's extremely complicated. Keynes issues his critique in a book called The Economic Consequences of the Peace that comes out in 1919. An interesting aspect of this critique is that it's enormously persuasive, but there actually hasn't been a formal reparations figure fixed by the conference. They've decided that there were going to be enormous economic duties on Germany. But the peace conference at the end of the war doesn't arrive at a final figure. arrives at a set of principles that are going to guarantee a very, very high figure. But the actual formal number is kicked to a reparations commission, which is going to be sort of overseen by the League of Nations, and they're going to spend the next year or two figuring out what this number will be. And that number comes down from what some of the calls are. I mean, there are calls for 120 billion dollar reparations duties at the Paris.”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“Just tend to fail. Communists like Rosa Luxemburg are murdered in the streets in 1919. Walter Rathenau, who is the foreign minister, sort of the most important diplomat in the German government, he is murdered by far-right terrorists in 1922. There is a communist uprising in Hamburg or Homburg, I think is the pronunciation in October 1923, which is just a few weeks ahead of Hitler's famous Bierhalputsch in November of 1923. So there's just an enormous amount of political turmoil happening right now. You have hundreds of political assassinations happening every year. They do not have conditions of political stability in Germany. And so the political coalition that is trying to govern is making choices with its budget to try and basically fend off some sort of violent takeover of the government. And it's spending a lot of money in order to do that.”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“This is a very standard conventional view within Germany and across Europe. And the size of these duties is so large by 1920, the reparations commission that's established after World War I says Germany is going to need to pay about $33 billion. German pre-war GDP is about $12.5 billion. So this is like the German annual output of the economy. It'd be like somebody saying today By the way, in the United States, you've got to run your economy, solve whatever problems you want, but you owe $70 trillion somewhere else. And it's got to be paid over the next, you know, several years. So these are huge, huge reparations figures that are looming over every decision that the German government is trying to make. And the German government from the end of the war really threw into the 1930s is in a kind of perpetual state of revolution. The revolution.”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, hero of people like Paul Krugman and the kind of center left and further political sphere. He's a very conventional establishment figure in the British government and his critique is heralded by none other than Friedrich Hayek. So this idea is not something that is being harbored.”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I think when we talk about this today, there's obviously a kind of political lens that we see this through. You have gold bugs and inflation hocks who tend to be more conservative invoking this episode and you have soft-hearted liberals and their soft money ways saying don't worry about it. That wasn't really the way the politics of the time were playing out. There was a consensus after World War I that the reparations duties that had been assigned to Germany, which lost World War I, were too stringent, too severe, that they were unpayable, and they would result in economic turmoil for Europe and the world. And the person who issued this critique most famously was John Maynard Keynes, which is why I wrote about in my book. Keynes in the early 1920s is not this sort of...”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source
“Do the hyperinflation. I've read the Galbraith book on money. It's very good. I don't remember that particular episode, though. You know, this was a totally formative event for a lot of economic thinkers who would go on to have an extraordinary degree of influence. Friedrich Hayek witnessed this from Vienna and was just totally horrified and I think embarrassed by what happened after the war in Germany. And I think it shaped a lot of what we now call neoliberal views about how the world works and what the great threats to the economy and democracy are. Obviously, we still talk about it today even when I think it's As you mentioned, I think it's totally inappropriate to be invoking the Weibar experience as something that we might have in the near future here, but it obviously animates our understanding of the economy even today.”
2021-04-15 · Odd Lots · Zach Carter on the Real Story of Weimar Hyperinflation · IDENTIFIED FROM THE TRANSCRIPT · source