What retains value in Inflationary Periods

General discussions about canadian coins.
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What retains value in Inflationary Periods

Post by mkb » Sun Oct 11, 2009 2:43 pm

Here's an interesting excerpt from an article "The Nightmare German Inflation" which about hyper inflation in Germany in the 1920's:

Foreign Exchange: Those who held funds in dollars, pounds or other stable currencies, or in gold, saved their capital. The government set up rigid exchange controls as the inflation proceeded. As usual under such conditions, a black market flourished. The ones who fared best were the small minority who had the foresight to exchange marks into foreign money or gold very early, before new laws made this difficult and before the mark lost too much value.

Personal Property: Capital was preserved by those who early changed it into objects of lasting value--rare coins, stamps, jewelry, works of art, antiques--or into merchandise such as clothing, fabrics, etc. Of course, most people did not understand the advantage of accumulating such property until the inflation was well along. By that time the prices of all goods had risen so much that they seemed outrageously bad bargains. In the event, however, cash proved an even worse bargain.

URL: http://www.usagold.com/germannightmare.html

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Re: What retains value in Inflationary Periods

Post by livingdinasaur » Fri Mar 19, 2010 11:23 pm

This reminds me of the time I was living in Mexico, ans warched the inflation go above 200%, and the exchange rate go from 12-1/2:1, (US, to over 3000:1 The house I rented went lower each year in US, but higher in Mexican currency. Money was "shipped"out of the country as fast as it could hit the border! Short term notes were paying 139.6%/per annum. I was working on thirty-day notes, and lived on the interest paid. At one time there were 1-day notes! that is how bad it got, until the Peso was de-valued, and the interest rate went to about 20% on loans, (if you could find the money), and they even paid a good % on the checking accounts. I returned to the US shortly after the devaluation. I often wonder what would have become of the Peso, had I stayed. (Not that I would have affected it in any way, but the wat that everything suddenlty dropped)!
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