$1.77 Every Year For Life: What Inflation Can Do To Your Finances: Lessons from Germany and its neighbors during the post-World War I inflation. This series of articles is not intended to imply that the U.S. is likely to encounter a hyperinflationary crisis. However, America has experienced bouts of serious inflation in the past and could easily do so again. The extreme conditions that occurred in Germany help to illustrate the mechanisms of inflation better than a more benign course of currency devaluation could do.

Investors in apartment buildings ought to have been able to retain the value of their investments. After all, the buildings had real value and people needed a place to live. But in the German hyperinflation, investors in rental property were foiled by politics. German governments, from city halls to the federal government, were struggling not to become even more unpopular with their desperate citizens. Legislatures and city councils passed laws to hold down the prices of government services, water and electricity, and rents. Owners of apartment buildings had to maintain the structures, paying current prices for repairs while receiving income based on rents that might be six or twelve months out of date. Since it took ten Reichsmarks in 1922 to buy what one Reichsmark could in 1921, if rents were set at the previous year’s level the landlord was receiving only 10% of the income needed to stay in business. Instead of reaping income from their investments, apartment owners had to pay out of their own pockets to support their buildings while tenants paid a fraction of the fair rent.

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