When money dies

There is an interesting correlation between recent political and financial events and sales of Adam Fergusson's book, When Money Dies, says Merryn Somerset Webb.

I saw Adam Fergusson, author of When Money Dies: The Nightmare of Weimar Hyper-Inflation, earlier this week. I last saw him at Christmas, and given the state of Libya, I asked if he was getting more or less nervous about inflation. "More," he said. He is also beginning to see sales of his book as a canary in the coal mine.

Before Ben Bernanke launched his great experiment with the world's reserve currency there wasn't much interest in Adam's book, which was first published in the 1970s. But within months of the launch of quantitative easing (QE), old copies were changing hands for hundreds of dollars. The book was republished and has sold well ever since. Then last week, when things began to get really nasty in Libya, sales leapt: Adam sold more than 1,000 copies in a week, prompting a note from his publisher asking if he'd been doing any extra publicity. He hadn't.

We agreed that everyone knows how this debt juggling and money-printing crisis will end. Everyone knows that the US Federal Reserve is not, as James Mackintosh puts it in the Financial Times, "immune from the laws of supply and demand". Theory suggests that the more you create of a currency, the less each unit is worth. And so it is with the dollar. "The Fed's own measure of the trade-weighted dollar in real terms the best way to do long-term currency comparisons is at its lowest since the dollar floated in 1973." QE might not have done much for US job-seekers, but it's most certainly debased the currency and created inflation and the conditions for more inflation. Just look at the chart from Sean Corrigan at Diapason, which I've posted on my blog. It charts the growth in money supply against the price of everything from stocks to commodities. With every round of QE, the price of everything else goes up: the more lines you add, says Corrigan, the "less deniable the causation becomes".

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So it may be people aren't buying Adam's book because they wonder how inflation will develop. As Adam says, "everyone knows that". Instead, knowing it will, they want to find out what the consequences are. That's what When Money Dies is really about: the way inflation eats away at savings, destroys livelihoods and political stability.

I asked Adam what he would have done about the financial crisis. His answer? He would never have allowed the Fed to have a dual mandate. He would have taken away any responsibility for growth and employment and charged the bank with nothing but protecting the value of the dollar and fighting inflation particularly given that the dollar is the world's reserve currency. He's horrified that Bernanke has taken global risks in order to use an unproven method to solve a domestic employment problem. I am, said Adam, as we parted, "against inflation". If only everyone else was too.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.