The inflation in the Weimar Republic is widely understood to be one of the worst periods of monetary debauchery in the history of the world. Of course, I agree with this notion. However, in the spirit of a true contrarian, I’m interested in one of the great trades that you didn’t hear about: betting on deflation in 1923/4.

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Here are the updated charts from the daily treasury statement: the total operating balance chart and the deposit insurance fund chart. In addition, I’ll write about the mysterious lagged correlations between stock prices and the total operating balance line.

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