In Brazil notes got increasingly grubby, then withdrawn and stamped with a new name (cruzeiro, cruzado, real), three zeros wiped off. Repeated every few years until in the mid-seventies inflation hit 40 per cent a year, and three digits (annualised) in the 1980s. Argentina a basket case, three-digit inflation since 1975 reaching 3,079 per cent in 1989. The people and the country survived.
Then there's the Big Daddy: hyperinflation. Most of us probably only associate this with history lessons about the Weimar Republic, wheelbarrow-loads of notes for a loaf of bread as inflation in 1923 exceeded 1m per cent.
Experiences in the 21st century are few as much of the world labours under some of the lowest ever interest rates - caused by very subdued inflation expectations or deflation. Yet only last week Zimbabwe scrapped the currency it introduced in 2009 and will now work with a multi-currency system. Peak hyperinflation of 500bn per cent since 1997 saw unemployment hit 90 per cent - the truly pernicious cost of the monster unleashed.
I also remember buying my first, very little, West London flat in the summer of 1978. Paying £20,500, I was nearly sick on receiving the title deeds where the vendor had bought it 24 months earlier for £9,800 with a building society loan. This lady was now debt-free courtesy of inflation. So you see, it does have a silver lining.
Eurozone consumer prices in May rose by 0.3 per cent annualised, after being in negative territory all this year - and economists cheered. Why, you might ask, especially if you have been enjoying the discounts and offers you have come to expect at the supermarket. They say it's because consumers will postpone purchases and slow the economy. The real worry they have yet to understand is that debts, and then bad debts, will grow precisely because of deflation.
Likewise the Bank of England, which is convinced that after the smallest price rises in 40 years headwinds to price growth are "likely to dissipate fairly shortly" and could strengthen "notably" by the year-end. For a government so keen on austerity one wonders whether the MPC are on the side of the saver or the borrower.
And now to Greece. During the 20th century sovereign external defaults were far more concentrated in emerging markets, leading some commentators to believe that walking away is an option only for the very poor and weak; they find it unthinkable that a European nation might default on its obligations. Before the euro, sovereign debt could be inflated away, a process France and Italy have used extensively. Getting rid of Greek external debt involved default, a process the country used virtually continuously from 1800 to WWII.
According to Reinhart & Rogoff, "sovereign defaults on external debt have been an almost universal rite of passage for every country as it matures from an emerging market economy to an advanced developed economy". In its early years France defaulted eight times, Spain seven times in the 19th century alone.
Nothing new under the sun.
MORE FROM NICOLE ELLIOTT...
Nicole Elliott is a long standing Member of the Society of Technical Analysts and has just taken over the IC's trading coverage. She is regularly interviewed and quoted by the financial media, is a conference speaker, and author of several books on charting.
