Imagine going to a restaurant to buy a cup of coffee and being told that the price was $5,000. After ordering a second cup, you request a bill and see that the total cost for two cups of coffee was $14,000.

Upon enquiring about the obvious error you were told, “If you want to save money and you want two cups of coffee, you should order them both at the same time.”

You may think that this is just an amusing story. In fact, this was a real-life example of life in Germany after World War I recounted in Adam Smith’s Paper Money, which described the extreme effects of inflation on that country’s economy. Continue reading Inflation and Your Money →