tag:blogger.com,1999:blog-8764541874043694159.post247967678173552544..comments2024-03-29T07:36:55.897+00:00Comments on Coppola Comment: Russia's desperate defence of the rubleFrances Coppolahttp://www.blogger.com/profile/09399390283774592713noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-8764541874043694159.post-18141973026237580012014-11-11T00:58:56.038+00:002014-11-11T00:58:56.038+00:00When I read the bit about Russian households' ...When I read the bit about Russian households' demand for foreign currency, it reminded me of the behaviour of German households from 1918 on. Germany printed Marks freely during the Great War, increasing the money stock from M2.6bn in 1914 to M26bn in 1918. A ten times increase in the money supply got them 1000% inflation over four years, and the Mark went from 20 to the Pound to 200.<br /><br />During the War, Germans could do little about this, but in 1918 they regained access to markets and visitors to Berlin recounted that whenever Germans got cash, they quickly converted it into real goods. Rich Germans bought gold, silver, foreign currency, real estate and Art, and poorer Germans bought furniture, clothes and other consumer goods.<br /><br />The point is that as early as 1918, Germans were shorting their own currency and following pro-cyclical policies. In effect, Germans could see hyperinflation on the horizon - which finally arrived in 1923 - and they were happy to help it along. If ordinary Russians do the same thing, I guess they will get some of the same results.<br /><br />The German story is told in more detail in "When Money Dies" by Adam Fergusson and William Kimber.jon liveseynoreply@blogger.com