The Economic Consequences of the Peace: The Danger of Inflation

During and after the war, many European governments printed money to pay their bills, and prices began to rise fast.In chapter six, Keynes explains why this was so dangerous.

“Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency.By a continuing process of inflation, governments can secretly take away an important part of the wealth of their citizens.And they take it unfairly: while the process makes many people poorer, it actually makes some richer.

When the value of money jumps up and down from month to month, the agreements between those who borrow and those who lend become almost meaningless.Getting rich turns into a gamble and a lottery.People blame the ‘profiteers’ whose goods and property rise in price, but the profiteers are a result of rising prices, not the cause.

Lenin was certainly right. There is no subtler, no surer way of overturning the existing basis of society than to debauch the currency.The process does its damage in a way that not one man in a million is able to understand.”A few years later, German money became almost worthless, and people carried bundles of banknotes in wheelbarrows to buy bread.