The Book That Buffett Likes

An out of print book about hyperinflation has become a cult hit with professional investors in the United States, including Warren Buffett, reports the Sunday Times. The book is When Money Dies, an account of how hyperinflation took hold in Germany after the First World War, leading to social upheaval and, so many believe, the eventual rise of Hitler.

It was written by Adam Fergusson, a now retired civil servant who served as an adviser to the former Conservative Chancellor, the then Sir Geoffrey Howe,in the 1980s. It was first published in 1979 and was republished last week by Old Street Publishing, a small boutique publisher which, I suspect, has been somewhat taken by surprise by all the attention it is suddenly getting.

The book was first taken up by right wing bloggers in the United States last year to serve as an example of the dire consequences that can follow from an excessive build up of debt. Copies of the original hardback are reported to have been changing hands before that for hundreds of pounds - great marketing, if nothing else.

Mr Fergusson himself, to judge by the comments he is quoted as making in the Sunday Times, which challenged him to draw parallels with the task facing the new coalition government in the UK, is a more measured individual than some of those who have talked up the book on the other side of the Atlantic.

"In Britain today" says Mr Fergusson "there is this debate between neo-Keynesians who want to postpone any tightening of the economy and those who say it should be done at once. To my mind it is a non-debate, because politically now is the only time tightening can be done. In a year or so, it won't be possible, politically, any more".

"When governments are not strong or brave enough politically, finally the economy goes to pieces anyway. If you are trying to decide whether to go for quantitative easing or high unemployment, in the end you'll have both". This seems to me a very valid point, and one that serves as a useful corrective to the somewhat hysterical debate between different schools of economists over how far and how quickly to bring public spending back under control. In the UK, certainly, the new coalition government has to use the political capital the election gave it while it can.