The British currency, the pound sterling, takes its name from the fact that, when it first issued, it was redeemable for a pound of silver. That was somewhen in the late 8th century Anglo-Saxon period.
If we do the maths, based on today’s silver spot price, that means that the pound today is worth approximately 1/210th of what it was worth nearly 13 centuries ago.By contrast, the French managed to devalue their currency by more in just 18 months during the early 1790s, as did Germany in less than a year during the Weimar period.
The worst affected ever were the poor Hungarians in the immediate post-war period in 1945. They suffered that level of devaluation in under 6 days at peak. Armenia, Zimbabwe and Argentina have experienced similar horrors.
Why do I mention this? Because it still happens today. Last semester, in Turkey, I saw my wages collapse by more than half in two months. My colleagues there are still living through this. They suffer daily price hikes in fuel and food costs, with static wages. The Turkish people, like the Armenians, Zimbabweans, Argentinians, or the Hungarians, Germans and French of former times, have done nothing wrong. But they were the ones to suffer.
Hyperinflation is caused by only one thing – shitty governments implementing shitty policies. It destroys savings, commerce, and most importantly, lives. We don’t always think too much about Turkey in the West, but we should. Here is a country suffering a preposterously stupid government and massive devaluation of their economy, yet still accommodates 3.6 MILLION refugees.
It was a salutory lesson for me in macro-economics, and in human decency, to spend last semester in Turkey. My heart remains with them in their plight, and I hope to see them in better times soon. It is a beautiful nation with a beautiful people who deserve better.
A caveat: I am not, never have been and never will be an economist. But it doesn’t take a Harvard MBA to understand money.