Mar
20
What is a Crack Up Boom?
March 20, 2009 | 4 Comments
What is a Crack Up Boom?
This first stage of the inflationary process may last for many years. While it lasts, the prices of many goods and services are not yet adjusted to the altered money relation. There are still people in the country who have not yet become aware of the fact that they are confronted with a price revolution which will finally result in a considerable rise of all prices, although the extent of this rise will not be the same in the various commodities and services. These people still believe that prices one day will drop. Waiting for this day, they restrict their purchases and concomitantly increase their cash holdings. As long as such ideas are still held by public opinion, it is not yet too late for the government to abandon its inflationary policy.
But then, finally, the masses wake up. They become suddenly aware of the fact that inflation is a deliberate policy and will go on endlessly. A breakdown occurs. The crack-up boom appears. Everybody is anxious to swap his money against ‘real’ goods, no matter whether he needs them or not, no matter how much money he has to pay for them. Within a very short time, within a few weeks or even days, the things which were used as money are no longer used as media of exchange. They become scrap paper. Nobody wants to give away anything against them.
It was this that happened with the Continental currency in America in 1781, with the French mandats territoriaux in 1796, and with the German mark in 1923. It will happen again whenever the same conditions appear. If a thing has to be used as a medium of exchange, public opinion must not believe that the quantity of this thing will increase beyond all bounds. Inflation is a policy that cannot last.
Comments
4 Comments so far
Before I consider agreeing with you, you need to do full disclosure, as in the historical context and actions of their adversaries in and around the years 1781, 1796 & 1923.
Specifically, discuss the effects of counterfeiting in the first two instances and the effects of the Treaty of Versailles in the last instance.
Your readers deserve better, or they could just go to Wikipedia and figure it out for themselves.
I made a comment prior to this one. Has it been suppressed ?
Sorry no, it was not suppressed. The majority of the comments that come through here are automated spam. So it takes a while sometimes to find the live humans.
Does this mean I will I pay more for beer and gas to fill up my truck?
I hope not.