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.

Inflation is in the eye of the beholder

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

Price Gouging

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.
What I took from When Money Dies is that the root cause is unlikely to be identified. It was much easier for society to latch onto market speculators and Jews as the culprits of inflation than the money printing. It was really heartbreaking to read about the social fabric fraying, millions of people angry and hurting, and then instead of facing the root causes - onerous reparations and the relentless monetary debasement - instead the frustration was all redirected onto innocent people just trying to protect themselves in the midst of a horrible situation.
This book didn't make me optimistic for the societal response to the coming difficult times. Especially with all of the current vitriol toward "greedy corporations." (And it's not like I want to defend some asshole corporate oligarchs, but the reasoning here is just lazy and wrong!) I just hope the transition away from fiat/dollars is slow enough and gets enough people onboard that tempers don't explode and so that a substantial portion of the population can be protected through it. I've got to say, I'm nervous.
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I think this could be the endgame, but people have said that since 1971.
Weimar took 10 years from massive printing to dead currency.
The dollar will take longer because of
  1. dollar milkshake (Brent Johnson)
  2. much larger pool
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I have the same expectation as you. It's looking like the US economy is staying afloat a little longer than the other major economies, which have already entered recessions.
Capital flight still generally benefits the dollar.
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Seems like stables, and the new frenemy status that USDT seems to have w/ the various legit institutions, will supercharge Dollar Milkshake.
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While I was writing this I knew my impressions were of course skewed and biased, since I'm living it. I think your reply is the most likely scenario.
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I think the elites are counting on mass immigration to bring labor costs down. Right now it is too much of a downgrade in lifestyle for most Americans to bother working in low skilled labor as an apprentice or in most low skill jobs.
Migration is their answer, because the migrants will accept a much lower living standard in exchange for their very profitable unskilled labor. This is at the expense of the middle class tax payers’ wealth and safety.
The second goal of immigration is a multicultural society, with no assimilation. “Celebrate diversity.” Western Europe is letting its people be shot, stabbed, raped, acid attacks, and run down with vehicles, while threatening them with jail for online “hate speech”. The more civil unrest, the more freedom can be stolen.
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It’s a disgusting agenda
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What a fitting post for today siggy
It is interesting to feel how real inflationary monetary policy is starting to become and bite people. I've noticed more and more people simply accepting that they probably wont be able to have kids/homes, nice things...
And yes, the price gouging talk is so so frustrating because it so blatantly demonstrates the gaslighting. Makes it easy to lose hope for the US..
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292 sats \ 1 reply \ @Voldemort 5 Mar
Mention of price gouging really aggravates me.
This one drives me nuts too. Last year I bought a custom made titanium bike from a local builder that I wanted to support because he does great work. I follow him on social media and whatnot too. When I called to put the order in, he said the online prices were $500 low because their titanium vendor recently increased their prices. In other words, he had to increase his prices.
Within a couple of weeks he shared a story stating how greedy businesses are for price gouging. I really wanted to comment on it but still had to go through the bike build and didn't feel like getting into it. I can't fathom the cognitive dissonance.
Inflation is in the eye of the beholder
This is nuanced. The reason why inflation is measured across a multitude of goods is because it aims to measure a general price increase. A supply/demand shock in a single industry ought not influence inflation too heavily. This is one of the reasons why oil is often excluded in inflation measurements - it is so heavily influenced by OPEC it makes it difficult to use as a broader indicator.
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I really wanted to comment on it but still had to go through the bike build and didn't feel like getting into it. I can't fathom the cognitive dissonance.
It's always someone else being the asshole.
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Hyperinflation is something I've never lived through, but it's a possibility that worries me.
In hyperinflation, a kilo of potatoes was worth, to some, more than the family silver; a side of pork more than the grand piano. A prostitute in the family was better than an infant corpse; theft was preferable to starvation; warmth was finer than honour, clothing more essential than democracy, food more needed than freedom. ― Adam Fergusson, When Money dies
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62 sats \ 0 replies \ @Lanter 5 Mar
They need to cope up or else the economy dies that's why maybe they think inflation might be solution.
For the citizen that's in the border of "just surviving everyday' will feel the most worst of the inflation, like me.
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Do you think this is worse in your area (geographic area, area of concern) or is it just that so many things are coming together in this use case that you notice it where others may not?
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Good observation. We are based in two regions- northeast US and Florida. Florida insurance is notoriously rough right now, which I used as my example. Still, our northeast properties have also seen more than a 100% increase in 18 months. Replacement costs have become the standard means of assessing insurance rates. Construction costs have soared in both regions.
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Excellent post. I haven’t read the book. Must put it on my list…. The second point you make about scapegoats is important. People who can’t admit they are beyond the limits of their own control will always blame someone else.
And an eye opener to me in the last few years is how ‘relative’ inflation is. The political class only ever talk about aggregate measures - where the reality is that inflation on some items is worse than on others, so it punishes members of society unfairly.
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I have the feel that this might already be happening. Everyone just made it through covid, but now we are going to have to make it through this. How many people are seriously ready for fiat currency to be completely useless?
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Yesterday I received my notice for my insurance renewal. My broker was happy that it was only increasing $60K this year. To put that in perspective, the entire bill was only 85k three years ago, and he's celebrating a 60k increase. He only sees a small piece of the elephant. Does he have any idea how much rents must increase to break even?
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Insurers are leaving California then deal with the expense and regulations
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deleted by author
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It’s not the broker fault. Same thing is happening in California.
Costs increase for insurance companies. Insurance companies raise prices. Customers and regulators complain. Insurance companies leave state. Prices go up for everyone. Cycle repeats
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Im not trying to be hateful, but insurance companies are there to make money. Its like your bitcoin, would you sell it at 19k now? That would be a losing proposition, so you would say no. Insurance companies are doing the same. If you cant afford the insurance, maybe it is time to sell and live in a new place?
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Agree. California is a third world state
I don’t blame insurance companies. I blame regulation in California.
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California has its own rules. The more difficult they make the regulations, the more people will leave. Its not like california is that nice of a place, most of it is desert, right? Its uninhabitable for a reason.
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The coast is nice but expensive
A lot of it is desert.
Agriculture is still big.
Wine country is nice.
The nice places are expensive
Agreed. Same in Florida.
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We are meeting next week and some more carriers may choose to compete, but the simple answer I get is the increase in replacement costs. Many properties have bank lenders who are now insisting on all kinds of absurd, costly coverage. That's also a factor. In this crazy market I am forced to get second, third and fourth quotes, even though I have been dealing with my main broker for 30 years.
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My mom had trouble getting insurance last year for her multi unit property. The old insurance company left the state.
I think we are hitting a perfect storm in California.
Eventually every private insurer will leave the state and the only option is the government option
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It's particularly tough if there's a loan on the property. My discussion now is in Florida, but I'll probably face the same issues in the northeast in July. Frankly, there's little chance that these buildings can be profitable at this point, which means banks are in real trouble.
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I just got the finalized totals for this year. 260k. Less than last year, but that's only because I am going without wind (hurricane) insurance on a bunch of properties that don't have financing. Owners have been waiting 3 years for companies to pay on hurricane claims. They drag their feet, deny coverage, and kill time. Maybe they count on the dollar depreciating while they drag their feet.
I remembered a funny story from last year.
The new insurance company appraised the property. Their appraisal was higher than the estimate my mom gave.
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Yes, because they are doing a replacement cost valuation. Market value is a whole different animal-the price a real live buyer will take it off your hands for.
135 sats \ 0 replies \ @kepford 5 Mar
I share your distain for the use of the phrase price gouging. Its especially rich coming from leech class of politicians and bureaucrats.
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Weimar Republic had a reason for inflating its currency. Reparations from Versailles treaty. Pay using weak currency
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No doubt. Every situation is different. The US motivation is massive government spending.
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6 trillion dollars budget and increasing.
This should be the focus, deficits are noise.
All spending is taxation. Real tax is what government spends.
The problem today isn’t deficit spending but high spending in general.
Deficits are fine if total spending is low.
Keep your eyes on total spending, that is the critical metric
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But they had to pay reparations in gold, didn't they?
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Maybe initially but the terms were revised under the Dawes and later Young plan.
France tried to enforce reparations by seizing the Ruhr valley and Rhineland.
Germany stopped making payments after 1933. Payments were suspended because of the Great Depression
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As a bitcoiner, I can imagine the government banning the ownership of it once when it sucks away value from the dollar, bond market and stock market. Get a second passport.
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Is it possible that the U.S. is starting to lose control of inflation right now?
When your property insurance skyrockets from $85k to $300k in 2 years, that is an example of hyperinflation.
Going to the grocery store, $100 barely fills a bag these days. There is a gnawing creeping concern that the wheels are coming off the rails.
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I think compensation for developers is seeing inflation rates in the double-digit percentage points measured in USD. Might be even higher than 20% annually over the last 2 years or so.
Edit: I'm talking senior devs here. I think the stats are skewed by people who take a 1-week boot camp, then accept a job for $80K. I think there are lots of those. And they pull down the average salaries for "devs". But, ask them to exec into a pod, reduce memory, or increase performance...and they look at you like you have 2 heads.
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42 sats \ 0 replies \ @co574 5 Mar
BUBBLECONOMICS
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@siggy47, one question. Have you read The Mandibles? If not, you should.
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I own the Mandibles. I bought it when I heard Odell raving about it. I read about a third of it. I'm physically ducking right now because I know I am about to piss off a lot of people who I respect, but I didn't love it. Of course I agreed with the message, but I felt the author used a sledgehammer to beat you over the head with it. I also didn't love her writing style. I know I can be a bit of a writing snob. That being said, point well taken. Her plausible scenario was spot on.
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52 sats \ 1 reply \ @kepford 5 Mar
Hey, I hear you. I like the book Its not one of my favorite fiction books. If it was about another topic I probably never would have read it. I feel the way you do about Atlas Shrugged. Rand is so good but she would have benefited from a strong editor.
I haven't read this book you mention but I need to.
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Atlas Shrugged is another good example, though I thought it was a little better written than The Mandibles.
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What about the rise in college tuition? No price gouging there
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As a big fan of Futurama, the us bucks will still be around in like thousand years from now. Sorry.
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Dollars, Real Dollars, Real Dollars brought to you by Starbucks, Extra Real Dollars by Home Depot, Coca-cola presents New Dollar, back to Real Dollar for a cycle, 'Dollars', New Dollars Reboot, back to Dollars, and then finally Tricky Dicky Fun Bills ($300) with the return of Nixons head in the year 3000.
I think its not the same money!
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stackers have outlawed this. turn on wild west mode in your /settings to see outlawed content.