5 Historical Financial Crises That Make This One Look Posh – Part One

5 Historical Financial Crises That Make This One Look Posh

In case you weren’t aware, America’s kind of in a bad spot, moneywise. The national debt is at almost $17 trillion, which is more than America’s GDP. America, right now, is like the kid who takes seven advances on his allowance to purchase Pokémon cards, except his parents have recently lowered his credit score to reflect a history of spending and repayment issues.

“Yes, but what we really care about is Timmy’s S&P rating.”

Things may seem bad now, but crying over our current financial troubles is like crying over a misplaced staple compared to…

#5: In My Day, Greeks had a Damned Good Excuse for Their Economic Catastrophes

Before the euro, there was the drachma. The Greek drachma traces its history back thousands of years, and both real and fictional persons have appeared on its face. You’d think with thousands of years of history, the drachma would be pretty stable.

The Cause

For starters, when reading an article headlined with the words “financial crises,” you really shouldn’t have thought that. I hope you feel very silly now.

The frugal Greeks of 1938 waited, on average, 40 days before spending one presumably hard-earned drachma note (because there is apparently a way to measure this).

However, by 1944, the national attitude had changed to that of an eternal Black Friday. Those crazy Greeks were spending their drachmae at an unprecedented rate of one note of indeterminate value every four hours (seriously, how the hell is this measured?). What could it have taken to turn such a parsimonious country into four-year-olds with briefcases of cash?

Well, World War II kind of sucked for the Greeks. Economically, after Poland, the Soviet Union, and Yugoslavia, Greece was the worst-affected country under German occupation. The drachma’s value plummeted so quickly that if money wasn’t spent soon, it was worthless. In other words, if you didn’t go on daily shopping sprees, you were financially irresponsible.

They were so badly impacted, that even today they still claim Germany owes them $95 billion. This is totally due to historical justice, and not at all because Greece couldn’t lose money faster if it boxed up all its banknotes and mailed them to Bernie Madoff. Yes, I still remember Bernie Madoff.

“Seems legit.” – Greece

The Aftermath

At the height of the hyperinflation in October 1944, prices doubled every 4.3 days. The United States has never experienced anything remotely approaching that in terms of inflation. Ever. So stop complaining.

Eventually, Great Britain stepped in, and offered to make some changes. Through new measures, Greek confidence in the drachma rose to pre-German-shenanigans levels, and Greece has continued to be an economically sound nation ever since.

Pictured: Fiscal responsibility.

The Worst It Got

The one-hundred billion drachma note.

The 1953 new drachma replaced the old drachma at a rate of one 1953 drachma per 50,000,000,000,000 pre-1944 drachmae. That’s a lot of drachmae.

Ten million of these.

1944 Greece was a (now) hilarious comedy of drachma drama. A drachmedy. Though if you ask me, the whole affair was a bit melodrachmatic. If the drachma were a desert animal, it would be a drachmadary. If “drachma” read the same backwards and forwards, it would be a palindrachma. If you hop up and down while whistling “Sgt. Pepper’s Lonely Hearts Club Band” and fiddling with a rubber band, you could call that grounds for institutionalization. I like the word “drachma.”

But Greece’s German-engineered financial crisis was nothing compared to tomorrow’s featured economic apocalypse. Hint: It’s the Germans.

Tomorrow: Germans.

Be sure to check out our regular features:

Dear Socially Awkward – Boyfriends and bats, Valentines and Hungary, and Spain or something. Submissions welcome.

The Media Manifesto – Because Communism does, in fact, mix well with mass media.

Compass Rose News – Walmart declares bankruptcy after deciding to be nice to people, and a Kansas youth reports seeing colors besides sepia.

And, of course, Xavier’s Original Miscellany – With The Superallergy, The Apathy Argument, and the reason mail on Sundays causes increased therapy.

Finally, The Pavlov Candid Creativity Awards (a.k.a. The Streeties) have been extended. Submit photos of your favorite street performer, food vendor, panhandler, or other roadside personality to pavlovshairconditioner@gmail.com. You’ll be glad you did.

Xavier Yes will be appearing at the Burlington Book Festival this September, so if you’re in the area, check your sanity at the door and sit awhile.

NOW UP: Part Two: Germany Doesn’t Understand How Money Works.

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34 responses to “5 Historical Financial Crises That Make This One Look Posh – Part One

    • They’re evidently in hot demand now. Zimbabwe’s financial crisis caused them to completely abandon local currency. But that’s a story for another day (Wednesday, specifically).

  1. The author doesn’t explain why the Greeks turned into “four-year-olds with briefcases of cash.” What were the people buying? What was the government purchasing/spending money for? Here In the US, the people buy more than they produce and the government spends on programs it should not. That is our problem.

    • Yes, that was one major issue with this piece: Not enough was explained. It’s rather difficult, you’ll understand, to operate an entertainment site and write about finance at the same time, because many people do not find finance particularly entertaining. (For those people, I highly recommend you stick around for Zimbabwe and Hungary, which are the two main reasons I am writing these.) I cannot always express things as fairly and as non-biased as other, more finance-dedicated sites, because those sites are typically for a different audience. Here at Pavlov, we are only really afforded little “trivia bites.” However, if you wish to know the reason, it was largely due to Germany forcing Greek banks to finance certain efforts, and the Greek banks being forced to have more money printed. Similar to how the increased production of the Papiermark led to a decreased value, the increased production of the drachma led to the same end. So, less about people wanting to spend more, and more about them being forced to spend more (in terms of denomination). Thanks for bringing that up.

  2. Interesting. I hope you’re going to provide the most important information in order to understand money, banking, and financial crises: Who actually owns the international banks, and who actually controls the creation of money in each country that you write about. (Most money is created by bank loans, and the rest is issued in currency and coin.)

    I don’t want to steal your thunder, so I’ll not give the answer. I’ll wait and see. The Germany installment will surely tell the tale.

    Sincerely,
    James Laffrey

    • I probably won’t get too deep into the shady financial underworld, nor is this site about finance. This was just the article WordPress happened to choose. However, if this is something you are interested in, feel free to post a link to a relevant site as a reply. I am sure many of my readers would be interested, as would I.

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  5. Ah well, it’s only money, and we’ve all seen the value of money go up and down over the years.

    Here’s the Master Plan………………………

    In years to come, all the worlds wealth will be in the pockets of the 10 richest people, and the rest of us will have nothing.

    At that point, the rest of us (the majority rule) can introduce a brand new form of currency which is not trade-able with the currency held by the 10 rich.

    Everyone will be given 100 “Madracks” each, and we’ll start all over again.

      • Your article was uncommonly good, as compared to raccoons who are very common (we cross paths daily) and often are up to no good. The one in my icon was on a tree trunk 15 feet from a bunch of chops on a BBQ and was so deep in concentration trying to figure out how to get at them, (s)he stayed relatively motionless for long enough for me to get about a dozen photos of him/her. Beware the raccoon with a plan!

  6. I love the look back at history and am amazed by how people, leaders, kings and queens, yes, entire countries dealt with debt. Often the solution was to simply attack the country you owe money. – Insane.
    Today we often forget: money can not disappear. It’s simply owned by other people when it is “gone”

  7. I can’t wait till Greece gets its Drachma back and a new history begins…For the Greek vacation comment: it will get even cheaper for the Euro holders!

  8. very interesting, thanks for sharing, we often forget to put things in perspective, and if Americans think their suffering now, with their iphones and designer handbags, they really have no idea…

  9. All I’ll say is that Burty and me went to Rhodes (a Greek island) for TWO WEEKS in the spring of 1979 and we only took £50 in cash, changed into drachma at the bank.

    We couldn’t spend the stuff, I mean we tried to spend the stuff by buying random stuff in shops that we didn’t want but just wanted to get rid of the drachma, but everytime we bought an unwanted piece of junk in a shop the shopkeeper seemed to give us more drachma back in change than the value of the note we’d given to him – it was like they were paying us to take their junk home with us.

    And this isn’t a word of a lie, we came back to the UK with more drachma than we’d gone with but when we changed it all back to £’s in our local bank we only got about three pennies for it all, but at least we had all the junk stuff as well.

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