It’s been a little more than a century since the Weimar Republic experienced its famous inflation. I read about it in the book When Money Dies, which I recommend to anyone with an interest in money.

Two things really stood out for me when I read the book.

First, Germany didn’t simply experience a straight up, Zimbabwe style inflation. There were regional differences, periods of relative calm, and periods when it appeared as if the inflation genie had been put back in the bottle. I wonder if we’re living through this now.

Second, politicians, the press, and the consumers influenced by the propaganda began accusing individual businessmen or companies of price gouging. The supposed rich businesses are easy scapegoats, and blame is deflected from the real culprits.

I’m reminded of the first one because I am personally experiencing what I would call extraordinarily high inflation, although most people in the U.S. probably aren’t. I manage commercial real estate. Fortunately I don’t manage office buildings. The portfolio is mostly small retail centers. Nothing fancy, just older buildings serving local communities. The typical tenants are nail salons, hair salons, chinese take outs, small family restaurants, pizza places, etc. Mom and pop businesses who somehow managed to survive the covid lockdowns or are picking up the pieces and starting over. I’ve been doing this for more than 30 years. The financial crisis was no fun, but we survived mainly because of low leverage.

Things have changed recently. For the first time we’re operating in the red. I’m confident we’ll survive, but we might be the exception.

Everyone reading this knows that the US government understates inflation. Their 4% per year might be closer to 10% if you do your own math. It’s worse where I sit. Here’s one example. I typically expected that property insurance would cost about 85k per year as recently as two years ago. The number would fluctuate and of course creep up by a few percentage points per year, but it was predictable. In 2023 that same coverage was more than 300K. We’re not a huge business, so that in and of itself would wipe out our profitability. That’s not the whole picture, though. Minor repairs and equipment replacement has recently doubled. Property taxes have soared. We’re limited in how much we can increase our rent because of long term leases. It wouldn’t matter regardless. Our tenants are barely surviving, and they’re more like partners anyway. If they go out of business, we might too. We can handle the increases better than they can. I can already hear the “bitcoin solves this" chorus, but I’m not the only decision maker. I have already orange pilled most of the principals to the extent that they own bitcoin personally, but they have yet to take the leap in the business.

I’m not saying all this to complain. I’m just wondering if there are people like me in far flung corners of the economy who are already experiencing what feels very much like hyperinflation? To be clear, it doesn’t fit the standard definition, since that would require an extraordinarily high 50% per month inflation, but it still feels out of control

Mention of price gouging really aggravates me. The phrase is used by every government that is losing control of its depreciating fiat currency. They need a scapegoat. The other day I was listening to Richmond Fed President Thomas Barkin on CNBC. He gave a predictably optimistic outlook on inflation, but he felt that the reason it was a little “stubborn” was because many industries still had the “pricing power”, and they would milk it as long as they could get away with it. Keep in mind, this is a central banker spouting these deceptions. The Biden administration, of course, has been slinging this nonsense for three years, and his press lapdogs kick it back up every time there is an unexpectedly too hot inflation number.

Is it possible that the U.S. is starting to lose control of inflation right now? The inevitable interest rate cuts will only make things worse. The wikipedia page I linked above presents many historical accounts of hyperinflation. Perhaps the U.S. will be on that list someday.