If you want to peek into the abyss of hyperinflation, there are certainly South American examples like Argentina and Brazil. But the definitive economic cases are European - Germany, Austria, and Hungary during the 1920s, when people took wheelbarrows of bank notes to buy a loaf of bread. Staring down the daily devolutions in those examples is instructive.

"When Money Dies: The Nightmare of the Weimar Collapse" is now available online, for free, which a lot less than Amazon will charge. It's an interesting book, for a lot of reasons.

Instead of dry economics, it offers snapshots of daily life as inflation destroys peoples' savings, and then their daily lives, and finally their livelihood. The accounts include significant excerpts from British Foreign Office records and reports, with a few appearances by Ernest Hemmingway (who wrote for the Toronto Daily Star!).

If nothing else, reading it will help make some of the events in the 1930s make a lot more sense. Madness, it was - but not madness without antecedent.

The other thing that makes it interesting is the very quality that makes it so thriller-like. Every time you think it can't get worse, every time you think that the effects should finally be obvious, the widely-respected "smart people" in charge plunge in deeper, and make things worse. All without serious examination by mainstream opinion, no matter how low things go. After a while, it's like a firestorm, unstoppable by any internal force, and spent only when it runs out of fuel (i.e. willing and coerced creditors). As the book's final pages note:

"Much as it may have been recognised that stability would have to be arranged some day, and that the greater the delay the harder it would be, there never seemed to be a good time to invite trouble of that order.... The conflicting objectives of avoiding unemployment and avoiding insolvency ceased at last to conflict when Germany had both.... The take-off point in the inflationary progress, after which the advent of hyperinflation was but a matter of time, the point indeed when it became self-generating and politically irreducible except for short periods.... lay on the falling curve of political possibility, with which was closely linked the degree of political power and courage that the government, sorely pressed as it was, was able to muster.

What really broke Germany was the constant taking of the soft political option in respect of money. The take-off point therefore was not a financial but a moral one; and the political excuse was despicable, for no imaginable political circumstances could have been more unsuited to the imposition of a new financial order than those pertaining in November 1923, when inflation was no longer an option. The Rentenmark was itself hardly more than an expedient then, and could scarcely have been introduced successfully had not the mark lost its entire meaning. Stability came only when the abyss had been plumbed, when the credible mark could fall no more, when everything that four years of financial cowardice, wrong-headedness and mismanagement had been fashioned to avoid had in fact taken place, when the inconceivable had ineluct-ably arrived."

Weimar Germany is the most extreme example. Understand that I'm not saying we're headed for hyperinflation (though I am willing to predict 15%+ interest rates by the end of Obama's first term), or that Weimar's fate shall be ours. History depends on a lot of specifics, and does not repeat itself. But it does rhyme some, and so watching how things devolved in Germany et. al., and the effects on daily life, are instructive. Instructive in America, and also instructive in Europe as their demographic bubble and debt bubble become mutually reinforcing over the next 2 decades.

Some of my take-aways:

• Never believe that "people couldn't be that stupid" with respect to anything humans do. The answer is always "yes, they can." So, what are you gonna do about it?

• Never believe that anything must eventually become obvious to everyone if they get bad enough, or even to most people. Oddly, larger, seismic things can be less clearly grasped than smaller things. In the case of Germany and Austria, the only limits they ever reached were external.

• Democracy, by itself, is not proof against any of this. Nor is dictatorship. Germany's example from 1919-1924 illustrates both.

• If you're looking for positive signs on the way down, there are always things you can point to. But the larger trend remains, as long as its underpinnings do.

• High inflation gathers supporters and friends in high places, and they cut across traditional interest lines. It isn't always who you'd think.

• The ability of hostile foreign creditors to make things significantly worse should never be underestimated. A creditor who wants to weaken you for strategic reasons (for Germany, France's Poincare), absolutely will. Even if it costs him to do so.

• One error that makes the others so much easier to commit is believing that total money supply and inflation are disconnected phenomena. Which is why I understand the arguments being made, but am not sanguine about this background page from the NY Fed.

None of these bullet points can convey the impact of reading the actual story, and watching it unfold on page after page. Read it yourself, and decide what you take away...