Harry & Teddy and High Inflation
By David Henderson
A little economics goes a long way
This is from Thomas Griffith, Harry and Teddy, a book about the relationship between Henry R. Luce and Theodore H. White, much of which revolved around their passion and thoughts about China under Chiang Kai-Shek:
And as China’s inflation rate got out of hand, space also had to be found on the overcrowded transports to ferry in great bales of new Chinese currency printed in the United States.
Had to? Griffith makes it sound as if the currency was needed to pay the high prices and the high prices were due to something other than the printing of “great bales of new Chinese currency.”
This reminds me of something I read years ago, I think in J. Huston McCulloch’s short book, Money and Inflation. I think he said that there were actually high government officials in Germany during the 1921-23 hyperinflation who thought they needed to print huge amounts of money to help people pay the high prices and totally missed the fact that it was this money that caused the high prices.