The delusion that governments can successfully manipulate prices has spanned cultures, nations and epochs.

Inspired by Scheuttinger & @eamonnbutler's excellent book "Forty Centuries of Wage & Price Controls", I have catalogued my top 8 historical price control blunders.👇 Image

In 1754 BC, the Code of Hammurabi imposed a rigid system of controls over wages, prices, production, and consumption.

Legal prices were set for labour, farm animals and goods like wagons and boats.

A decline in trade followed as merchants departed for foreign lands. Image

Debasement of coinage by successive emperors led to galloping inflation.

In 284AD Diocletian tried to combat this by setting price ceilings for beef, grain, eggs and clothing.

Merchants responded by withholding goods from markets, leading to widespread shortages. Image

By 1351 ½ of Europe’s population had perished from the Black Death. The price of labour soared.

A wage-fixing statute called "The Malice of Labourers" was passed in response.

Over 30 years worker discontent grew culminating in the Wat Tyler Rebellion of 1381. Image

In 1584 Antwerp was besieged by Spanish forces. When prices rose City Fathers set price ceilings on food. Higher prices would have compensated importers for risk to their boats. With prices held low imports ceased.

Provisions ran out and the city had to surrender. Image

In 1793 the 1st Law of the Maximum fixed the price of grain and flour in every district. Farmers were required to accept paper assignats, worth less than coin.

Farmers withheld goods, shortages arose and uprisings led to the law being abandoned within 3 months Image

In 1914 Imperial Germany implemented the most strictly enforced system of price fixing in Europe.

Due to their much-glorified efficiency, German police prevented the emergence of black markets.

Predictably this led to shortages: a contributing factor to Germany’s defeat. Image

In 1924 the Brazilian government tried to stablise the price of coffee.

The guaranteed government price floor led to a surge in production and Brazil required 3 international loans totaling $175m to cover mounting warehousing costs.

The system collapsed 1931 Image

In post-WWII London, existing tenants were given rights to remain in their home on fixed rents. Only new tenants could be charged flexibly by landlords.

In the 1960s, this disparity gave Peter Rachman the incentive to intimidate old tenants into leaving their homes. Image
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More from @TheAustrian3

1 Jan
In 2019, I made the decision to radically reduce the number of possessions I own.

Doing so proved to be one of the best decisions of my life.

As we go into 2021, I encourage you to think about how you could live more by owning less.

This 13 tweet thread explains.👇
1/ In 2019, I watched this @LondonRealTV interview with @aantonop.

Andreas articulated something that I had long sensed: that many of the physical possessions I owned were hindering me rather than improving my life.

His words prompted me to take action.👇
2/ Like @aantonop, I was a frequent traveler and had realized that I didn't need or miss the objects I left behind when I was away.

My apartment was unoccupied for several weeks each year.

The space I was renting had become a very expensive storage cabinet.
Read 16 tweets
27 Dec 20
In "A Masterclass in Economic Calculation" @michael_saylor talks to @PrestonPysh about inflation and why he expects more companies to put bitcoin on their balance sheet.

This 6 tweet thread summarizes Michael's argument.

Check out the full episode here:
1/ CPI is losing relevance as a measure of inflation.
Businesses looking to understand how much purchasing power their cash will lose should track M2 money supply growth, which approximates the cost of capital.

While US CPI inflation rose only 0.2% in 2020, M2 soared by 24%.
2/ One reason for the disparity is that key items in the basket of goods that make up the CPI are subject to strong deflationary pressure.
This is especially true for intangible services such as software and digital entertainment where variable costs per unit are low.
Read 8 tweets
20 Dec 20
Weimar Germany's hyperinflation provides perhaps the most dramatic example of the destruction that ensues when money dies.

This 16 tweet thread summarizes Adam Fergusson's definitive account, and explores the lessons we can learn from this dark period in German history.
1/ During WWI, European powers suspended the gold convertibility of their currencies, issued bonds and printed new bills, as a means of financing their war efforts.

With varying degrees of severity, each introduced price controls in a misguided attempt to suppress inflation.
2/ German price controls were the most stringently enforced in Europe.

At the same time, international isolation forced the government to rely heavily on inflationary domestic bond issuance for their financing.

Economic ruin served as a contributing factor to Germany's defeat.
Read 19 tweets
14 Dec 20
In 1997, "The Sovereign Individual" made predictions about the ways in which the internet will radically alter society.

Many of those predictions, including the rise of "cybercash", are playing out before our eyes.

This illustrated thread summarises the book in 12 Tweets.👇
1/ Humans have passed through three societal epochs:

1. Hunter-Gatherer Society
2. Agricultural Society
3. Industrial Society

Now, looming over the horizon, is something entirely new, a fourth age characterised by the rise of the microprocessor: Information Society.
2/ During the industrial era, in order to realise economies of scale, populations clustered around large factories.

Production clustering made it easier for governments to increase taxes on those operating within their territory, allowing the state to grow in size and power. Image
Read 14 tweets
12 Dec 20
The manufacture of collectables by pre-historic humans was the first step on the road to creating money.

@NickSzabo4's epic essay "Shelling Out" describes how and why this happened.

This illustrated thread summarises Nick's 12,000 words in 12 Tweets.👇
1/ Most hunter gatherers lived a precarious existence on the brink of starvation.

But we know from archaeological records that they made and collected jewellery.

The fact that early humans devoted their scarce resources to this seemingly frivolous activity merits exploration.
2/ Biologist J. M. Smith drew on game theory to describe the way humans evolve to propagate their genes.

Whilst individual humans might benefit from robbing the weak, cooperative tribes do better overall. Cooperation represents the "Nash Equilibrium" that leads to group survival
Read 14 tweets
6 Dec 20
To understand economic phenomena we must analyse human action, rather than material objects and their properties.

Inanimate objects are dead matter.

It is human reason shaping humans’ actions that rearranges matter and gives it value, meaning, and purpose.

Attempts to explain social phenomena by reference to objects, abstract nouns, or collectivist entities are ultimately futile.

Entities do not act, only individuals do.

Quantitative economic methods neglect the fact that there are no constant relations in human action.

In the natural sciences, establishing a constant relationship like the Ideal Gas Law is possible because measurements are made in fixed units.

Clearly defined and inter-personally agreed-upon units of measurement like joules and kilograms have no equivalent in economics.

Read 8 tweets

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