Operation Bernhard, was an ingenious Nazis plan to forge as many British pounds as they could, dump them into the British economy and force the UK to hyperinflate, bringing down its economy.
The article explains that the plan failed because not enough pounds could be printed in time, the operation started late in the war and there were problem in getting the pounds in the UK. Not one of these makes any sense to me, though.
I believe that if the Nazis had rally wanted to, they would have busted the British economy. So,my question is: why didn’t they do it? Fear of retaliation on the mark, or perhaps they where not supposed to win the war at all? I’m interested in you point of view.
(By the way, overinflating the other guy seems the ultimate weapon, especially for a potential future anarchist commonwealth to defend against a foreign attack)
I remember reading something about problems with the notes being obvious fakes, but I'm not sure.
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Or to generalize: can a serious, protracted war between fiat money states erupt? Wouldn’t that lead to mutual economic ruin?
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When war started to go badly for Germany (Britain not giving in after the Blitz, the Italians' blunder in the Balkans forcing Barbarossa to be postponed etc) , their leadership started to become even more detached from reality and dreaming up wilder and wilder plans to win the war. Bernhard was one of these.
I think the Bank of England was so busy printing its own notes by that time, that it wouldn't notice a few more fakes. ;)
More seriously, if the Wikipedia page is to be believed, they used at least a part of it to buy war supplies - maybe this added purchasing power was too useful to risk, and they decided to spend it more slowly all over the world (there would be still negative long-term consequences for Britain, and they could eat the cake too). By the time to BoE would give up its notes or print others, they might have lost their advantage.
But unless somebody has good sources on that, this is sheer speculation.
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Merlin: Or to generalize: can a serious, protracted war between fiat money states erupt? Wouldn’t that lead to mutual economic ruin?
Yes and good.
It would be more like a war between centralized banks, with their governments used as tools.
Operation Bernard was a good idea, though Britain ended up in shambles anyway. But it had a vast worldwide empire to suck resources out of for free, including Africa, India, Canada, Australia and the U.S.
On the other hand, Germany had a very poor war economy and little outside help. Germany never fully mobilized until the tide had already turned and they did not use mass production methods. They were still building tanks like Rolls Royces in 1942. The first mass produced and well designed tank was the Panther. Had they been thinking like that since 1940 instead of expensive junk like the Tiger they probably would have steamrolled through Moscow. In general they wasted a lot of resources on useless things: secret projects with hardly any return, grand construction projects that had no war use, poor production methods.
There was a movie about this. The Counterfeiters. Based on a true story. Won the Foreign Oscar a few years ago.
The plot(true story) was about the Nazi's capturing a jew who was the best counterfieter in Europe or something like that. They put him in a concentration camp with several other jews but they were put to work on counterfieting. And they were treated better then the other jews in the consentration camp.
So they perfected the Eruo or the dollar, and showed a scene with a dude testing the fakes at a bank, and it worked.
But in the end, the Nazi's lost the war before they could destroy the Brits economy, which was what they were trying.
Good movie for anyone who enjoys movies.
Hypothesis: the fully mobilized war-economy is enough of a command economy not to be severely shaken by inflation (though it would definitely be shaken by hyperinflation) within the time-frame in which it is continued. There is one point to the war-economy: armaments, and that simplifies the knowledge necessary to run such an economy enough so that it can be continued despite the distortion of price-signals
Abstract liberty, like other mere abstractions, is not to be found.
- Edmund Burke
The aspect that inflation would mainly affect is public morale to pursue the war.
I saw some documentary in which a German veteran said that he heard Hitler explain that he didn't want to invade Britain because he respected British people and didn't want to be at war. One British war historian said that operation Sea Lion would definitely have been successful. Funny if true because then everything else was pointless shenanigans.
I agree with Caley, Hitler made it abundantly clear to anyone who would listen that he had no intentions to attack Britain or its empire, and this is the true reason why OB was not pursued diligently until too late. Yet I believe that a determined attacker in any war could use a similar idea to good use. The other guys would of course retaliate. So if a modern war isn’t over in a year top, it must end with the utter destruction of both parties, I believe.