Tuesday, March 06, 2007

Hyperinflation in China

After posting earlier about Hugo Salinas Price's editorial on the role of currency, I took a look at some of the other editorials recently posted to Financial Sense Online. Here's another that caught my eye, and it makes a great follow-up to the Salinas Price piece.

Mike Hewitt fills us in on, "Hyperinflation In China 1937-1949", providing a sort of historical setpiece that illustrates the principles of free banking and the dangers of fiat money and government-controlled currency issuance.

In this essay, Hewitt gives an overview of how China's private banking system was undermined by Chiang Kai-shek's Nationalist Party in favor of a Central Bank and fiat money, a situation which eventually led to the great money printing and inflation of the 1930s and '40s.

I found this to be an excellent overview of one of the modern era's less-discussed inflationary periods. And again, I felt that this bit of economic history compliments the Salinas Price article fabulously. If you're a student of economic and historical events, check it out.