The Penniless Billionaires: A Tour of Inflationary Eras Past and Present
By Alec Nevalainen, Coinflation.com
Orig. Published: December 3, 2010
Updated: December 5, 2010
I just finished reading The Penniless Billionaires for a third time in ten years and it occurred to me that I've never really recommended the book to anyone. It was written by Max Shapiro in 1981. He explains the history/evolution of money followed by four well-known hyperinflationary episodes. The final three chapters focus on his present-day situation in the U.S. and similarities to past hyperinflations.
These final chapters in the book are entertaining because we know how the episode ends. Then Federal Reserve chairman Paul Volcker steps in and raises the fed funds rate to 20%, the rate eventually required to kill inflation, and causing the early 80's recession. But this book was published at the peak of inflation in 1981, that's the most interesting part. It really captures the mood of the era before the interest rate spike.
One of the common themes mentioned by Shapiro's book, from all episodes of high inflation, is the existence of a class of people who benefit immensely from the process. These may be government officials, bankers, or entrepreneurs (e.g. today's equivalent are Internet hucksters predicting infinitely higher gold prices to help sell their product). These entities amass fortunes because they recognize the compounding phenomenon of inflation and use this knowledge in all their financial dealings.
But my favorite chapter in the book is about the German "Weimar Republic" Hyperinflation from 1922-1923. I know this period is referenced often, but most writers never delve into the details that led to the hyperinflation.
One of the better anecdotes from the book is below, and it introduces the chapter on the Weimar hyperinflation (from page 170):
The book is out-of-print, but there are several used copies available at Amazon.com and they come up on eBay often (see below for current auctions). I would also call around to your local used book stores.
If you can find a copy at a reasonable price, I think you'll enjoy it as much as I have. Shapiro's book illustrates that the events that are happening around us right now are not unique. They have happened before and there's no reason to get hysterical about it. Protect yourself with tangible assets and you'll likely sleep peacefully through the noise.
Update #1: If the flash auction widget (above) doesn't appear in your browser, you can view all current Penniless Billionaire auctions here on eBay. But I recommend calling your local used book store, they may know how to locate a copy at a much cheaper price.
Update #2: It appears there are no more listings on eBay at the moment. BookFinder.com is another resource to find used books.
About The Author: Alec Nevalainen publishes several websites to help investors price coins and bullion products including Coinflation.com, GoldGramBars.com, and SilverGramBars.com. He can be contacted at [email protected]. You can also follow Coinflation.com on Twitter at http://twitter.com/coinflation.