Copyright 2013 John T. Reed
A lot of readers had told me there is no point in preparing for hyperinflation because there will be Armageddon. My response was my article saying throwing up your hands was most definitely NOT the right response to the U.S. government’s mindless explosion of spending and money “printing.” http://www.johntreed.com/hyperinflationdepressionthrowuphands.html
In Germany during hyperinflation, they had trouble with the water department going on strike because they were unhappy that their salaries were not keeping pace with inflation. People would fill their bathtubs whenever the water was on because they never knew when the next strike would come. But the police in Germany and Austria were generally more disciplined during the hyperinflation and there was no general rioting or breakdown of authority. There were increased isolated incidents of rioting and property crimes.
In Argentina lately, however, the high inflation there—still lower that the inflation of Austria and Germany in the early 10920s—inspired police in many areas to go on strike out of anger that their pay was not keeping pace with inflation. Residents responded with widespread rioting and looting. The military has been deployed to stop the looting.
I think this points up the difference between the cultures of Austria Germany in the early 1920s versus the Latin American culture of today. You can also see a similar difference between today’s Germany and the southern European countries of Spain, Portugal, Italy, and Greece with regard to fiscal responsibility.
This is cultural, not racial. Americans of, say, Italian descent behave like Americans not like Italians in Italy. Ditto Americans of Latin American descent. Some of my Latin American acquaintances say that they and their children are denounced as “gringos” when they visit relatives in Latin America. Asian Americans get a similar reaction when they visit relatives in the old country.
Note that the problem is Argentina is as much the looters as the police. Reading between the lines, I surmise the police did not intend the looting to happen and are a bit embarrassed about it. It suggests that many of the people in Latin America are not civilized—that they behave when there is a man with a gun within sight, otherwise not.
We had plenty of rioting and looting by blacks in this country in the 1960s. Blacks from out of town typically come to Oakland nowadays to riot and loot whenever some black person is the victim of a perceived injustice. But in general, the good blacks and the could-go-either-way blacks seem to recognize that the riots and looting sprees of the 1960s mainly hurt the blacks. And they are now quick to restrain such behavior. The Detroit riots of 1967 are considered to be one of the main reasons that city is now a bankrupt disaster.
Similarly, I don’t see our police unions as being big on such strikes. In recent years police and fire in places like bankrupt Vallejo, CA and Stockton, CA have made noises along the lines that if the police did not get their pay raises and pensions that the public might have more crime and fires to deal with, but I do not recall any strike threats per se. On the other hand, we have not tested the police and firemen by making their pay checks worthless—yet.
Our local BART unions went on strike twice recently and they are now threatening a third strike because morons in management inadvertently put a big benefit that the unions had not even asked for into a final agreement and now want it removed. It should be removed. And so should the morons who made that mistake. But the unions are claiming that although they did not ask for it or expect and agreed to a new contract that did not include it, they will now go on strike if they don’t get it.
However, you can see in local moods, opinion polls and the behavior of the local politicians that the public support for the unions declined dramatically with the second strike and that a third one might deal a severe blow to the unions. Today’s Americans do not appreciate how much the union movement has declined in the last 60 years. http://www.bls.gov/news.release/wkstp.t01.htm In the 1940s and 1950s there were several hundred work stoppages (strikes) a year in the U.S. involving tens of millions of workers. In the 21st century in the U.S., the number of strikes is rarely more than 20 a year and they involve no more that 4 million workers.
Furthermore, both FDR and the head of the AFL-CIO, George Meaney, denounced the very idea of public employee unions and strikes by them. Again, we do not have high inflation hurting the union members now, but I still think the “greatest generation” use of strikes as extortion is passe' so I would be surprised if unions were dumb enough to inflict that on their fellow citizens who would be similarly suffering from any high inflation.
I wonder if we will emerge from hyperinflation as capitalist or communist. Unions behaving like those in Argentina would likely push it toward capitalism.
In short, I don’t think we will behave like Argentinians in hyperinflation, nor like 1920s Germans. Probably somewhere in between and more like the Germans.
So are we Germany in the early 1920s in terms of civil behavior, or Argentina in 2013 if and when we get similarly high inflation.
See my book How to Protect Your Life Savings from Hyperinflation & Depression, 2nd edition for more information.
John T. Reed