WEBVTT NOTE Currency Failures from Argentina to Zimbabwe: A Brief History of Inflation 1 00:00:00.000 --> 00:00:05.000 I think hyperinflation is the issue that got me interested in economics when I was in high school. 2 00:00:05.000 --> 00:00:16.000 And it's something that's remained interesting simply because it brings into high relief all of the problems that inflation produces. 3 00:00:16.000 --> 00:00:24.000 Not that moderate inflation doesn't create problems, mild inflation, it's just that they're smaller. 4 00:00:24.000 --> 00:00:31.000 You can see all of the problems of inflation much more easily when we look at these episodes of hyperinflation. 5 00:00:31.000 --> 00:00:39.000 And so I wanted to start by saying that there really are just three basic ways that governments can raise funds. 6 00:00:39.000 --> 00:00:50.000 One, of course, is taxes, and the second is to borrow, which implies that there has to be some sort of taxation in the future 7 00:00:50.000 --> 00:00:56.000 or an inflation to effectively devalue the debt or a default. 8 00:00:56.000 --> 00:01:06.000 Or third, the government can inflate and thereby earn some revenue off of the seniorage from printing money. 9 00:01:06.000 --> 00:01:13.000 It's essentially a tax as well, a tax on those who hold money. 10 00:01:13.000 --> 00:01:21.000 So I wanted to go through some examples of hyperinflations in history. 11 00:01:21.000 --> 00:01:29.000 I'm sticking to those that are fairly recent, the last 80 or 90, 100 years or so. 12 00:01:29.000 --> 00:01:36.000 And you can go back and look at earlier examples of monetary fraud committed by governments. 13 00:01:36.000 --> 00:01:42.000 In fact, I saw out on the bookstore table one of Doug French's books. 14 00:01:42.000 --> 00:01:58.200 One of the more famous examples of hyperinflation is that of Germany in the early 1920s. When 15 00:01:58.200 --> 00:02:06.760 I was in Eastern Europe earlier this year, I picked up some examples of German banknotes 16 00:02:06.760 --> 00:02:13.640 from the 1920s and I have them up in my office and students sometimes come in and say, well, 17 00:02:13.640 --> 00:02:16.160 what is all this money on the wall? 18 00:02:16.160 --> 00:02:22.440 And in fact, I had someone from the, I believe, the education department come over and ask 19 00:02:22.440 --> 00:02:26.840 me about this framed display of German banknotes. 20 00:02:26.840 --> 00:02:32.280 In one upper left-hand corner, I have a one-mark note and in the lower right-hand corner, I 21 00:02:32.280 --> 00:02:39.080 I have a Renton mark which replaced the failed currency of 1923. 22 00:02:39.080 --> 00:02:44.840 The highest denomination note I have in that frame is five billion marks. 23 00:02:44.840 --> 00:02:51.880 The largest note printed, I don't have a copy of, was a hundred billion marks. 24 00:02:51.880 --> 00:02:56.480 And students or other faculty will come in and they'll say, well, what is all this money? 25 00:02:56.480 --> 00:03:00.920 Did it cost you a lot to get this, to put all this together? 26 00:03:00.920 --> 00:03:04.920 And they see all this money, especially when I point out the five billion mark note, they 27 00:03:04.920 --> 00:03:09.680 say, wow, they think I must be made of money or something to have all of this, to be able 28 00:03:09.680 --> 00:03:10.680 to afford this. 29 00:03:10.680 --> 00:03:16.920 And I said, no, I mean, most I spent on any of these was maybe $15 or $20. 30 00:03:16.920 --> 00:03:26.880 And earlier, I think it was early in 2009, I bought two copies of, not copies, but two 31 00:03:26.880 --> 00:03:36.960 Original banknotes from Zimbabwe cost me about $18 or $20 to get them shipped from Britain. 32 00:03:36.960 --> 00:03:46.480 They were two $100 trillion Zimbabwe notes and I pass these around in classes sometimes to make a 33 00:03:46.480 --> 00:03:51.760 point and students look at this $100 trillion and they say, wow, this is a whole lot of money and I 34 00:03:51.760 --> 00:03:56.800 say, well, you could probably buy a cup of coffee with it in Zimbabwe at the time. We'll talk about 35 00:03:56.800 --> 00:04:16.800 I'll talk about that a little bit later. Here's an example. This is the price of a newspaper in Germany from 1921 to 1923. January of 1921, about a third of a mark. By November 17th of 1923, 70 million marks to buy a newspaper. 36 00:04:16.800 --> 00:04:27.800 Most of that, as you can see from looking at the dates in this table, occurred late in 1923, from about September through November of that year. 37 00:04:27.800 --> 00:04:45.800 This, I don't know if you can see very well on the display up here, but the picture on the left is that of a woman in Germany in the early 1920s who's starting her wood stove with bank notes that she had accumulated that had lost so much value. 38 00:04:45.800 --> 00:04:52.800 50 Million Mark Note 39 00:05:15.800 --> 00:05:24.800 This graph here, you can see the money supply rising very rapidly there late in 1923 and the price level as well. 40 00:05:24.800 --> 00:05:30.800 Notice this is a logarithmic scale, so it's even worse than you might expect. 41 00:05:30.800 --> 00:05:39.800 This was a moderate hyperinflation compared to a couple of those that I'll talk about today. 42 00:05:39.800 --> 00:05:47.800 The highest nomination, as I said, was 100, well, I think I said 100 billion marks. It was 100 trillion marks. I'm sorry, off by three zeroes there. 43 00:05:47.800 --> 00:05:57.800 But that was the highest nomination note that they printed. They did engage in a fiscal reform in 1923, ending the inflation. 44 00:05:57.800 --> 00:06:02.800 They cut the number of government employees by third. Sounds like a good idea. 45 00:06:02.800 --> 00:06:16.400 and a new central bank was created which demonstrated a commitment to ending this massive printing. 46 00:06:16.400 --> 00:06:24.720 Here's a graph of Austria, 1921 to 1923 also, Mises mentioned this when he was talking to 47 00:06:24.720 --> 00:06:30.040 an audience in Argentina in the mid-50s, I was recently reading, re-reading his book 48 00:06:30.040 --> 00:06:35.940 Bureaucracy, which is an excellent, not bureaucracy, I'm sorry, economic policy, thoughts for today 49 00:06:35.940 --> 00:06:39.440 and tomorrow, which is an excellent little book if you have a, there's a chapter there 50 00:06:39.440 --> 00:06:45.440 on inflation which is concise and beautifully stated, very good, and Argentina we'll see 51 00:06:45.440 --> 00:06:51.560 later has had repeated problems maintaining a stable currency. 52 00:06:51.560 --> 00:07:00.120 Same sort of story in Hungary. 53 00:07:00.120 --> 00:07:05.400 This is the price level and the money supply in Hungary from 1921 to 1924. 54 00:07:05.400 --> 00:07:11.760 Hungary is an interesting case because it resulted in the largest denomination bank 55 00:07:11.760 --> 00:07:14.480 note ever printed to this day. 56 00:07:14.480 --> 00:07:21.840 This is a 100 million Bill Pingo, which was, I don't even know what that number is, it's 57 00:07:21.840 --> 00:07:26.880 so many zeros, it's essentially a million, million, million. 58 00:07:26.880 --> 00:07:34.800 So you mathematicians can tell me what that number is, it's extremely large. 59 00:07:34.800 --> 00:07:40.200 The 1946 inflation was the one that generated this banknote. 60 00:07:40.200 --> 00:07:44.980 They had an earlier inflation in the 20s, of course, like Germany and Austria and several 61 00:07:44.980 --> 00:07:50.040 other Eastern European countries, but this is the one that was still to this day the 62 00:07:50.040 --> 00:07:54.640 largest denomination ever in history. 63 00:07:54.640 --> 00:08:01.240 Prices were doubling about every 13 to 15 hours. 64 00:08:01.240 --> 00:08:09.260 I believe that is still a record today in spite of Zimbabwe's efforts to break the record. 65 00:08:09.260 --> 00:08:19.380 That is 41.9 quadrillion percent a month. 66 00:08:19.380 --> 00:08:24.660 You'd be in a situation where you walk into the grocery store, you load your cart, and 67 00:08:24.660 --> 00:08:30.800 by the time you walk out and check out, the prices have changed significantly in terms 68 00:08:30.800 --> 00:08:33.940 of the number of pingos. 69 00:08:33.940 --> 00:08:47.540 They replaced this with a forint in August of 1946, and at that point 400 octillion pingos 70 00:08:47.540 --> 00:08:50.380 would buy you one forint. 71 00:08:50.380 --> 00:08:56.340 I did see one estimate, I didn't see, it wasn't a real high quality source on this, 72 00:08:56.340 --> 00:09:04.460 I wasn't sure how much stock to put into this figure, but one estimate was that the entire 73 00:09:04.460 --> 00:09:09.300 money supply of Hungary had lost so much value by the end of this hyperinflation that the 74 00:09:09.300 --> 00:09:16.660 entire money stock was worth less than the U.S. sent. 75 00:09:16.660 --> 00:09:21.860 I'll have to check on that to make sure, but it's these kind of crazy things that happen 76 00:09:21.860 --> 00:09:34.700 Inflation in Argentina Argentina has run through several bouts of inflation, in fact they 77 00:09:34.700 --> 00:09:39.780 seem to be going through one now, although it would not qualify as hyperinflation. 78 00:09:39.780 --> 00:09:46.900 In the late 1980s they had one of their worst inflationary episodes, about 200% a month. 79 00:09:46.900 --> 00:09:50.860 To qualify as hyperinflation it has to be at least 50% a month. 80 00:09:50.860 --> 00:09:56.860 So they're well within the bounds of a hyperinflative economy. 81 00:09:56.860 --> 00:10:06.020 In December of 89, they peaked at about 4,900% annualized inflation, certainly not a record 82 00:10:06.020 --> 00:10:12.940 breaker by any means, but far, far worse than anything that we're accustomed to in recent 83 00:10:12.940 --> 00:10:17.340 history in the U.S. 84 00:10:17.340 --> 00:10:22.340 This is one of the banknotes printed in Zimbabwe about 1983. 85 00:10:22.340 --> 00:10:30.820 This is a one million peso note. 86 00:10:30.820 --> 00:10:35.900 Joseph Salerno has written an excellent article that you can find on the Mises website on 87 00:10:35.900 --> 00:10:41.820 Argentina's monetary history, and he was writing this about 2002 or 2003. 88 00:10:41.820 --> 00:10:52.420 So it covers the 80s inflation as well as what was appearing in 2001, 2002 as a very 89 00:10:52.420 --> 00:10:56.160 serious repeat episode of inflation. 90 00:10:56.160 --> 00:11:01.140 But they had moved toward privatization and markets in 1990. 91 00:11:01.140 --> 00:11:04.700 It looked like for the next several years things were improving. 92 00:11:04.700 --> 00:11:09.060 In April of 91, Argentina had pegged their currency to the dollar. 93 00:11:09.060 --> 00:11:26.060 So they were linking their currency to the U.S. Fed, which we understand from Professor Selgin's talk is not exactly ideal in our economy, but it certainly was better than what the Argentinians had struggled with up to that point. 94 00:11:26.060 --> 00:11:39.060 It didn't work, because even with a currency board, you have to maintain sufficient dollar reserves, just like under a gold standard, you have to maintain sufficient gold reserves to make the whole thing work. 95 00:11:39.060 --> 00:11:55.060 And it failed, partly because from 91 to 94, even though their economy was growing at a fantastic rate, 7-8% a year, it was a false growth, it was really a re-inflation. 96 00:11:55.060 --> 00:12:02.560 Now, one good thing that did come out of this is that the share of GDP accounted for by their government shrank. 97 00:12:02.560 --> 00:12:10.060 So at the beginning of this period, in 1989, government expenditures had been about 35 to 36 percent of their GDP. 98 00:12:10.060 --> 00:12:14.960 And by 95, they were down to about 27 percent of GDP. 99 00:12:14.960 --> 00:12:20.760 Not because government was shrinking so much, but their official GDP numbers were rising. 100 00:12:20.760 --> 00:12:26.360 So the government was becoming relatively smaller compared to their economy. 101 00:12:26.360 --> 00:12:30.360 But again, this was generated by a repeat of the inflation. 102 00:12:37.000 --> 00:12:45.000 Argentina's money supply during this time was growing about 60% a year. 103 00:12:45.000 --> 00:12:54.640 Their prices were not rising that fast because they had managed to suppress that price increase 104 00:12:54.640 --> 00:13:04.640 for some time and finally it all popped out in the late 90s as a massive correction. 105 00:13:04.640 --> 00:13:11.000 Their economy went into a recession in the late 90s because they, instead of inflating 106 00:13:11.000 --> 00:13:18.320 Looking at 60% a year, they suddenly reverse this, and not that they should have kept increasing 107 00:13:18.320 --> 00:13:24.000 their money supply at 60% a year, but eventually a central bank runs into a choice. 108 00:13:24.000 --> 00:13:29.360 They can continue to increase the money supply at a rapid rate and generate hyperinflation. 109 00:13:29.360 --> 00:13:31.560 Argentinians had just been through that. 110 00:13:31.560 --> 00:13:35.320 Or they can reverse their policy and suffer the corrective recession. 111 00:13:35.320 --> 00:13:39.040 It's a very painful process either way. 112 00:13:39.040 --> 00:13:50.520 And in Argentina's case, they went through several years of this kind of painful deflation 113 00:13:50.520 --> 00:13:54.000 from their previous price levels. 114 00:13:54.000 --> 00:13:59.960 And again, if you take note of Professor Salerno's work on this, it's quite instructive. 115 00:13:59.960 --> 00:14:06.560 He calls it a confiscatory deflation because people were told you cannot get your money 116 00:14:06.560 --> 00:14:11.860 Money out of the bank by law, you're limited in your withdrawals, severely limited. 117 00:14:11.860 --> 00:14:19.240 And so meanwhile, the currency is really losing value, but it's trapped inside the banks. 118 00:14:19.240 --> 00:14:24.760 It was effectively a transfer of money from depositors to the bankers. 119 00:14:24.760 --> 00:14:34.920 And it was maintained in this way by the government for some years. 120 00:14:34.920 --> 00:14:40.400 So I mentioned this, that there was a contraction in the money supply from 1999 to 2001, banking 121 00:14:40.400 --> 00:14:46.240 confidence dropped, there was eventually this run on Argentinian banks, and when Argentinians 122 00:14:46.240 --> 00:14:51.940 run on banks, they don't do so by quietly standing in line like Americans might. 123 00:14:51.940 --> 00:14:56.360 When Argentinians get angry about their monetary system, which happens periodically, they go 124 00:14:56.360 --> 00:14:59.720 out on the streets with pots and pans and they beat them together, make a really loud 125 00:14:59.720 --> 00:15:06.720 and a former mob and I don't know whether, apparently it doesn't work in the long run 126 00:15:06.720 --> 00:15:10.900 because they keep having this problem, but it's, you know, it'd be something interesting 127 00:15:10.900 --> 00:15:14.560 to try here sometime instead of people kind of quietly sitting at home on their computers 128 00:15:14.560 --> 00:15:21.560 trying to transfer their money out of their bank, you know, bank runs today happen rather 129 00:15:21.560 --> 00:15:22.560 quietly. 130 00:15:22.560 --> 00:15:26.680 Wachovia had a bank run and people didn't really know much about it because there weren't 131 00:15:26.680 --> 00:15:33.200 Lines outside the banks and certainly nobody banging on pots and pans, simply people shifting 132 00:15:33.200 --> 00:15:38.200 their deposits around electronically or what not, and maybe it would do some good to try 133 00:15:38.200 --> 00:15:39.200 that sometimes. 134 00:15:39.200 --> 00:15:44.920 So if your bank goes under sometime, clean out your kitchen cabinets and go in the street 135 00:15:44.920 --> 00:15:51.320 and see if anything different happens, it might not hurt. 136 00:15:51.320 --> 00:15:54.000 Prices eventually rose significantly in 2002. 137 00:15:54.000 --> 00:16:01.200 I've got a graph here to show you. This wasn't exactly hyperinflation, but it's still an interesting chart. 138 00:16:01.200 --> 00:16:09.300 This is the red line. There's the producer price index in Argentina, and you probably can't see the small numbers at the bottom of the chart. 139 00:16:09.300 --> 00:16:19.500 But the beginning of that sharp peak is about 2002, and the decline on the other side of the peak is about 2003 to 2004. 140 00:16:19.500 --> 00:16:26.660 and the blue line that doesn't spike quite as much is consumer prices. 141 00:16:26.660 --> 00:16:34.220 So it was a repressed inflation enforced by the regime in Argentina at the time, 142 00:16:34.220 --> 00:16:43.060 which eventually just burst into this rapid and fairly short-lived inflation. 143 00:16:43.060 --> 00:16:53.340 Estimates today are, well not today, but this year, are that Argentina is still struggling with inflation. 144 00:16:53.340 --> 00:17:03.180 The official inflation rate is not very high, certainly by their standards, 11, 12 percent maybe. 145 00:17:03.180 --> 00:17:12.140 The unofficial estimates are that Argentina right now is suffering about a 20 to 30 percent annual rate of inflation. 146 00:17:12.140 --> 00:17:29.700 This is the third, makes it the third highest in the world this year, sorry, last year after the Congo and Venezuela, not exactly a very good place to be in rankings. 147 00:17:29.700 --> 00:17:43.700 Actual inflation, as I said, might be 20 or 30 percent, even this year, and I was looking at estimates yesterday, and this has not changed much in the last year or so. 148 00:17:43.700 --> 00:17:49.700 This is a Brazilian note, the Réol. 149 00:17:49.700 --> 00:17:57.700 Brazilian hyperinflation reached a level of 2,075 percent in 1994. 150 00:17:57.700 --> 00:18:08.700 A colleague of mine is from Brazil. I asked him a little bit about this and unfortunately he's young enough that he really doesn't remember a lot about this hyperinflation. 151 00:18:08.700 --> 00:18:25.700 I did have a conversation with him about it and he remembers that there was some money being sent to him or his family from outside of Brazil to help them through this process or this inflation. 152 00:18:25.700 --> 00:18:35.860 A Cruzeiro from 1967 would have been worth about a trillionth of a US cent by 1994. 153 00:18:35.860 --> 00:18:44.340 At that point, they adopted this new currency, the Réal, and one Réal would have been worth 154 00:18:44.340 --> 00:18:54.220 about, I don't know what that number is either, let's see, billion, trillion, quadrillion, 155 00:18:54.220 --> 00:19:03.520 from Septillion, I don't know what that is, old rails, so obviously it lost a lot of value. 156 00:19:03.520 --> 00:19:08.460 They had a kind of a repressed inflation in Brazil as well, it seems to be a typical reaction 157 00:19:08.460 --> 00:19:14.260 of governments whenever they have inflation, they will try to prevent it, even in the U.S. 158 00:19:14.260 --> 00:19:19.140 under Nixon and wage and price controls, they'll try to press the inflation down through price 159 00:19:19.140 --> 00:19:22.900 controls, all this does is create shortages, massive shortages. 160 00:19:22.900 --> 00:19:28.580 There were cases when in Argentina the shortages had become very severe under their inflation 161 00:19:28.580 --> 00:19:36.380 in the late 80s, and people were rioting and raiding grocery stores and looting. 162 00:19:36.380 --> 00:19:42.300 And it was a sad story of a man who had run a grocery store for 25 years and he saw his 163 00:19:42.300 --> 00:19:48.880 entire inventory looted, shot himself later that day because of the loss of his entire 164 00:19:48.880 --> 00:19:50.640 livelihood. 165 00:19:50.640 --> 00:19:54.940 So inflation has a number of effects, especially when governments try to prevent that inflation 166 00:19:54.940 --> 00:20:00.360 through these draconian kinds of wage and price controls, and this happened in Brazil 167 00:20:00.360 --> 00:20:01.360 as well. 168 00:20:01.360 --> 00:20:04.320 Shortages are the inevitable result. 169 00:20:04.320 --> 00:20:14.640 Angola hyperinflation from 91 to 95, I won't go through that on that episode too much here. 170 00:20:14.640 --> 00:20:22.120 Yugoslavia, a very long history of inflation, 71 to 91, they had an average annual rate 171 00:20:22.120 --> 00:20:28.740 of 76%, not hyperinflation, but certainly in the top tier worldwide, and in December 172 00:20:28.740 --> 00:20:34.560 of 1990, the Serbian Parliament ordered the Serbian National Bank, which was their regional 173 00:20:34.560 --> 00:20:42.960 central bank, to issue large amounts of credits to friends of Mr. Milosevic, and at that point 174 00:20:42.960 --> 00:21:01.260 The entire scheduled money supply increase for all of Yugoslavia was not much greater than what they had just issued. 175 00:21:01.260 --> 00:21:13.260 Croatia and Slovenia said we've had enough, they seceded, and in January of 92 they had a long, the beginning of a long hyperinflation. 176 00:21:13.260 --> 00:21:27.260 The official monthly inflation rate in January of 1994 reached 313 million percent. You have to get used to working with very large numbers when you're talking about this kind of thing. 177 00:21:27.260 --> 00:21:33.420 This is the second highest monthly rate after Hungary in 1946, which I had already mentioned, 178 00:21:33.420 --> 00:21:40.740 and it was the second longest after the Soviet hyperinflation of the early 1920s. 179 00:21:40.740 --> 00:21:47.020 I had a student early this decade, 01 or 02, that was in one of my classes and he had grown 180 00:21:47.020 --> 00:21:53.340 up in Yugoslavia, remembers his relatives from other parts of Europe sending marks to 181 00:21:53.340 --> 00:21:57.080 his family to allow them to survive during this time. 182 00:21:57.080 --> 00:22:01.240 This is one of their bank notes. They were producing 900,000 of these a month in denominations 183 00:22:01.240 --> 00:22:12.740 of up to 500 billion dinars. And by 1994, the rate of exchange between the new dinars 184 00:22:12.740 --> 00:22:19.360 and the old dinars was whatever that number happens to be. They finally just gave up, kind 185 00:22:19.360 --> 00:22:23.760 of like Yugoslavia, sorry, Zimbabwe did recently. They just said, well, everybody's trading 186 00:22:23.760 --> 00:22:34.960 This is the $100 trillion note from Zimbabwe that I mentioned earlier. 187 00:22:34.960 --> 00:22:39.680 This is a fellow who's stacking up bundles of cash that had devalued. 188 00:22:39.680 --> 00:22:45.720 He probably is going to buy lunch with that. 189 00:22:45.720 --> 00:22:53.360 The government, Mr. Mugabe's government, just printed trillions and obviously $100 trillion 190 00:22:53.360 --> 00:23:01.120 Those on one note, I mean, they're more than trillions. Again, we're in astronomical numbers. 191 00:23:01.120 --> 00:23:07.720 And they're basically trying to pay off their supporters. November 2008, the estimates were 192 00:23:07.720 --> 00:23:16.540 that their annual inflation rate was 89.7 sextillion percent annually. That was price 193 00:23:16.540 --> 00:23:24.220 highest doubling every 24.7 hours, second highest rate after Hungary. 194 00:23:24.220 --> 00:23:31.740 If you look at a chart, which I think I have here, on Zimbabwe's inflation, you can see 195 00:23:31.740 --> 00:23:36.640 the logarithmic increase here, and the numbers are, I couldn't get the numbers to be large 196 00:23:36.640 --> 00:23:40.980 enough for you to see there, but the official exchange rates, the green line at the very 197 00:23:40.980 --> 00:23:44.860 top, sorry, not the official exchange rate, the unofficial exchange rates, the green line 198 00:23:44.860 --> 00:23:56.860 The red line at the bottom is the official exchange rate, which is lagging, they typically will do this, trying to maintain an artificial price superiority of their currency. 199 00:23:56.860 --> 00:24:05.860 In December of 2008, the inflation rate had reached 6.5 quindecillion, novendecillion percent. 200 00:24:05.860 --> 00:24:16.860 That's 65 followed by 107 zeros. That's their monthly inflation rate at that point. 201 00:24:16.860 --> 00:24:22.860 I have no idea how to even begin to think of numbers that size. 202 00:24:22.860 --> 00:24:39.860 In late January of 2009, the government gave up. They said, well, you can just use other currencies, that's what you're doing anyway, and you can keep using your dollars or your whatever. 203 00:24:39.860 --> 00:24:45.860 We're not going to fuss at you too much about it. Everybody's breaking the law at that point. 204 00:24:45.860 --> 00:24:51.060 Well, to wrap up here, there are some other hyperinflations I won't spend any time on. 205 00:24:51.060 --> 00:24:56.460 Bolivia in the early, sorry, mid-80s, 20,000% peak inflation. 206 00:24:56.460 --> 00:25:00.460 Chile, which right now seems to be doing very, very well. 207 00:25:00.460 --> 00:25:07.460 Higher rank on economic freedom scales than the United States, but in the early 70s they had very serious inflation. 208 00:25:07.460 --> 00:25:11.460 Greece, what do you say about Greece? 209 00:25:11.460 --> 00:25:16.340 This is one of many problems they've had. 210 00:25:16.340 --> 00:25:22.140 And Russia, of course, after they went out of business, had a lot of inflation. 211 00:25:22.140 --> 00:25:25.620 Ukraine also is a breakaway Soviet Republic. 212 00:25:25.620 --> 00:25:30.060 Let me just close here with a couple of thoughts from Mises. 213 00:25:30.060 --> 00:25:36.340 Mises says, when people talk of a price level, they have in mind the image of a level of liquid, 214 00:25:36.340 --> 00:25:40.700 which goes up or down according to the increase or decrease in its quantity, 215 00:25:40.700 --> 00:25:47.020 But which, like a liquid in a tank, always rises evenly. 216 00:25:47.020 --> 00:25:52.660 But he says, with prices, there is no such thing as a level. 217 00:25:52.660 --> 00:25:56.700 Prices do not change to the same extent at the same time. 218 00:25:56.700 --> 00:25:59.900 There are always prices that are changing more rapidly, 219 00:25:59.900 --> 00:26:04.180 rising or falling more rapidly than other prices. 220 00:26:04.180 --> 00:26:06.460 And this is called a Cantillon effect. 221 00:26:06.460 --> 00:26:10.180 And that effect is what triggers a lot of the problems 222 00:26:10.180 --> 00:26:16.660 from Inflation. And you can get this even with mild rates of inflation. It's a very, 223 00:26:16.660 --> 00:26:21.860 very serious problem that can create business cycles. I won't go into that theory today, 224 00:26:21.860 --> 00:26:26.660 but there's a lot more that could be said. And the Austrian School, I think, has contributed 225 00:26:26.660 --> 00:26:32.940 enormously to our understanding of how inflation can create recessions and depressions. I'm 226 00:26:32.940 --> 00:26:37.940 out of time, but thank you very much, and I'll be happy to answer questions after lunch. 227 00:26:40.180 --> 00:26:56.800 Thanks, Tim. Well, nothing works up an appetite like inflation or hearing about inflation. 228 00:26:56.800 --> 00:27:03.180 But before we unleash the stampede, which these doors will be flung open and there's 229 00:27:03.180 --> 00:27:08.460 a buffet line. It's a little different protocol than what we normally have. But we have a 230 00:27:08.460 --> 00:27:16.180 We have a very, very, very special guest here, and it's very much a surprise. 231 00:27:16.180 --> 00:27:23.980 This is a lady that attended Ludwig von Mises' seminar for two decades. 232 00:27:23.980 --> 00:27:31.900 She is probably the world's foremost authority on Ludwig von Mises. 233 00:27:31.900 --> 00:27:37.700 The Ludwig von Mises Institute awards its most prestigious prize. 234 00:27:37.700 --> 00:27:49.700 It's called the Schlarbohm Award. She won it in 2002, and I would like to introduce her now and have her stand, Bettina Graves.