This is a review of a book written over 50 years ago by a central banker.
Based on that introduction, even most finance geeks will probably think “boring!” or “irrelevant!”. Until you learn it has Nazis, hyperinflation and the Nuremberg trials in it. And those are not even the interesting parts. Continue reading “The Magic of Money”
David Beckworth recently interviewed (podcast) professor Jesús Fernández-Villaverde. Among other things, they discussed the hyperinflation in the Weimar Republic, i.e. Germany after World War I. The economists ponder why a hyperinflation that occurred in 1923 has had such a large impact on German economists and central bankers, even to this day. After all, the NSDAP rose to power in the 1933, at a time of mass unemployment and austerity. This was almost a decade after the hyperinflation ended.
The professors get to the hyperinflation at 8:20 into the conversation. Fernández-Villaverde tells the story of how inflation got out of hand when French and Belgian troops occupied the Ruhr. The Weimar government encouraged workers to resist the military occupation. Strikers were paid with money freshly printed by the Reichsbank, the German central bank. The combination of no real economic production with an increasing amount of Papiermarks tanked the purchasing power of the currency. The hyperinflation began. Continue reading “Why do Germans remember the Weimar hyperinflation?”
As the end of 2016 is quickly approaching, it is time to reflect on the past year. For people working in large bureaucratic organizations like banks and government, this means filling out performance evaluations. Organizations collect these records of their employees’ professional histories. Managers can use old reviews to motivate (non) promotions of their subordinates.
One intriguing aspect is the fact that employees are expected to write negative things about themselves. In management speak this is called “opportunities for growth” or some other bullshit term. But basically the writers have to incriminate themselves. The self-evaluation provides the proverbial rope for somebody to hang them with.
This reminded me about something I read in a book by historian Orlando Figes on the Soviet Union. Members of the Communist Party had to write an autobiography which was regularly updated. The higher-ups in the hierarchy could use these documents to control their underlings and their rivals.
The more you think about it, the more parallels there are between modern business life and Soviet society.
It is well known that corporations are not democracies nor markets. But this post focusses on the cultural similarities that caught my attention. Continue reading “Annual reviews and other Soviet business practices”
Elites cannot act against their own interests, right?
Donald Trump has been running a populist campaign against the establishment. To many of his critics, this is absurd.
Why should a billionaire care for the working class? How can a man whose shirts and ties are made in China be against trade deals? Is Trump credible when he calls for a wall at the US-Mexican border, knowing he hired Mexican workers himself?
Trump is so much part of the elite that his Democratic rival Hillary Clinton even attended his wedding to Melania.
It appears that Trump belongs to the establishment which benefits from the status quo. Why would anybody who is a ‘winner’ in the system want to change it?
These critics, however, miss two important points.
First of all, the critics assume that members of the elite are only motivated by their personal financial interests. This, however, denies human nature. People have strong feelings on what is just and right. Elites have the means to become champions for others they sympathize with. Continue reading “From Moses to Trump: elites against the establishment”
A conflict with Turkey and Russia on opposing sides. The violence causes a stream of refugees towards Europe. Are we talking about Syria in 2016?
Although history never repeats exactly, there are a remarkable number of similarities between events of today and what happened in 1864. Over 150 years ago, there also was a caliphate and terror motivated by religion.
The Ottoman Empire has fought a series of wars against czarist Russia. These great powers had conflicting interests in the territories bordering the Black Sea.
When Russia conquered the Caucasus in 1864, it ethnically cleansed the indigenous peoples. Hundreds of thousands of Islamic Circassians fled to the Ottoman Empire. Many of them went to the Ottoman provinces in the southern Balkans, what is now Romania and Bulgaria. Continue reading “The sultan, the czar and the refugees”
The recent terror attacks by Islamic State (IS) in Brussels and Paris have shown once more that the terrorists are willing to sacrifice themselves for their cause. After the suicide bombings in Brussels, IS has threatened that more attacks will follow.
By doing this, they are following a strategy that is as old as the hills. Continue reading “Does the Islamic State employ classicists?”
The reason historical analogies are useful, is because hardly any political, social or economic problem is really new. The problem is that it is easy to cherry-pick some event from thousands of years of recorded history. That is why you always need to keep in mind that no situation will match the past 100%. However, what is interesting is that similar relations and feelings occur time and again between individual humans and groups of people. This leads people to use the same strategies, no matter what time and place they live in, or what languages they speak or what clothes they wear. Continue reading “Historical analogies”