Zach Carter on the Real Story of Weimar Hyperinflation

Joe Weisenthal (0:11)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:17)

And I'm Tracy Alloway.

Joe Weisenthal (0:19)

Tracy, you know, it's interesting, having watched the aftermath of two separate crises now, because you start to see similarities in the sort of stories that people tell after each one of them.

Tracy Alloway (0:32)

Yeah, that's true. I also think it's really interesting to see how much opinions kind of change in retrospect. So I remember, for instance, after the 2008 financial crisis, people would get upset if you suggested that quantitative easing could have an impact on stocks. Like, if you actually said there was an asset substitution effect, people would think that you were crazy. I remember writing an Alphaville post on this at the time and getting a bunch of comments saying it was completely wrong. And now, of course, the idea that QE pushes up stocks, most people sort of accept that, even if it may or may not be true.

But yeah, you're right.

Joe Weisenthal (1:11)

You were really ahead of the curve back then, I think.

Tracy Alloway (1:13)

Thank you, I'm just humble bragging.

Joe Weisenthal (1:14)

Like talking about asset substitution effects.

But I also think the dominant narrative out there just in the sphere and the broad thing is all this idea of QE would inevitably lead to inflation, maybe even hyperinflation, all this government spending. And obviously, we saw a lot of talk around that in 2010, and we see a lot of talk about it now, just this idea that government policies, particularly US government policy is reckless, and we're going to destroy the value of the dollar.

Tracy Alloway (1:47)

Yeah, and to offset what I just said about that Alphaville post, I'm pretty sure I also wrote things on Alphaville about the coming hyperinflation, or at least I summarized a bunch of notes about that back in 2008, 2009 But you're right, that was sort of, well, it was the big concern after 2008 And we saw it kind of come back in 2020 with the announcement of all this additional government spending.

There are always concerns that it's going to lead to inflation, even though we've now had, you know, over a decade of central banks missing their inflation targets.

Joe Weisenthal (2:24)

Right. So if you ever point out, it's like, actually, inflation isn't mild or whatever, you know, QE doesn't have much of an inflationary impact or misunderstanding of the deficit.

What happens is if you say that, that gold bugs like yourself or silver bugs like your dad respond with like memes of people pushing wheel barrows of the Deutschmark during the Weimar hyperinflation and tell you why you're wrong.

Tracy Alloway (2:50)

Let me tell you, Joe, if the inflation ever comes, I'm going to be stacking my silver and gold in your face. And you're going to be very, very jealous. Look, I'm joking.

Joe Weisenthal (3:01)

You will definitely have the last laugh. But if we're going to like talk about, okay, the prospect of what happened with the Weimar hyperinflation seems like, okay, it's probably not going to happen. I don't think our existing policies are on that route, but maybe we should actually learn about what really happened beyond just the memes of people pushing wheel barrows, wheel barrows of cash.

Tracy Alloway (3:20)

No, I totally agree. And I also think, you know, the Weimar Republic is sort of this scary story that everyone brings up when they're talking about inflation and people sort of throw the term or the name around, but actually not that many people know exactly what happened, what drove it, and how bad inflation actually got during that period. So I think it's a great idea to dig into the details.

Joe Weisenthal (3:47)

Great. Well, I am very excited about today's episode. We are going to have a repeat guest. We talked to him back in the spring or summer. We're going to be speaking with Zach Carter. He is the author of the New York Times bestselling book, The Price of Peace, Money, Democracy, and the Life of John Maynard Keynes, paperback coming out April 20th.

And there is a section in his book where he talks about the Weimar hyperinflation.

So we thought we would dive into that and find out what really happened. So Zach, thank you so much for coming back on Odd Lot.

Zach Carter (4:21)

Thanks so much for having me.

Joe Weisenthal (4:22)

Before we start, have you heard of this? I saw this on Wikipedia last night when I was doing my research.

Zero stroke, had you heard of that?

Zach Carter (4:31)