Thursday, July 29, 2010

When Money Dies - Adam Fergusson

I have the PDF version which can be downloaded from here.

An obscure little book is capturing reader imagination like never before. 'When Money Dies' by Adam Fergusson was last heard retailing as high as Rs 73,000 at an online retailer! In fact, as per reports, this book has caught even Warren Buffett's fancy. The world's greatest investor has termed it a must read. Now, what exactly is this book and why this new found interest in it? This book is perhaps an indicator of the dangerous times that lie ahead of us. It highlights how an unchecked growth in money printing can cause disastrous consequences if not controlled on time.

We all know that enormous amount of money has been printed in most parts of the world, particularly in the US. And this is certainly quite inflationary. The only thing that is keeping it in check is the fact that people are holding on to their money and not spending it as quickly as before. However, such a scenario may not last long. People's willingness to spend money can change so suddenly that it can catch economists completely by surprise. And then all hell can break loose. Inflation can go completely out of control. So out of control that as per the book, during the German hyperinflation of 1920s, it took 1 trillion German marks to buy just one unit of English currency! Money lost its value so fast that it was not unusual to see people taking home their wages in suitcases or covering their wall with paper money because it was cheaper than wallpaper. Rest assured there are even more chilling accounts in the book of how the economy completely broke down in Germany.

We may certainly not have an inflation as bad as that happened in Germany. But we are definitely setting ourselves up for a huge disaster if we do not act on time. As the author of the book recently mentioned, "Politically, now is the only time tightening can be done. In a year or so it won't be possible politically any more". We hope Messrs. Bernanke and company are listening.

While we try and get our hands on a copy of the book, which book would you recommend as essential reading for a stock market investor? Tell us about it

I have the PDF version which can be downloaded from here.

If you are the owner of a little-known book on economics published in 1923 called When Money Dies: The Nightmare of the Weimar Collapse by Adam Fergusson, then you could have made yourself some money. The book describes what could happen if European governments try to spend their way out of the recession. And shows how the German economy was brought to its knees back in the 1930s by hyperinflation (remember people carrying banknotes about in wheelbarrows to buy a loaf od bread?) after public spending was allowed to run out of control.

The reason the book has suddenly become so valuable is that it was recommended by billionaire investor Warren Buffett to a Dutch financier. The Dutch financier went out and bought up a couple of hundred copies for the Dutch parliament and the book’s price shot up in value (supply and demand in action) copies have been changing hands for up to $2,400 and the copies on sale at Abebooks and Amazon at the moment start at $600.

Publisher Old Street Publishing has rushed out a new paperback edition to satisfy the demand, but if you have an old copy of the 1923 edition lying around then don’t give it to your local charity shop, unless you are feeling generous. You might also like to consider scouring bookshops, the afore-mentioned charity shops, your granny’s attic etc… to see if you can get your hands on a first edition (preferably in good condition).

If you just want to read the book to see what might happen to the economy, it is a very good albeit scary read apparently, then you can get the paperback copy here When Money Dies: The Nightmare of the Weimar Hyper-inflation, but for an investment you will need a copy of the 1923 edition at a good price – When Money Dies: The Nightmare of the Weimar Collapse .

I have the PDF version which can be downloaded from here.