Deflation may be on Federal Reserve Chairman Ben Bernanke's tongue, but inflation is wagging in at least one corner of the economy. Obscure books analyzing the causes and consequences of bone-chilling inflation in Germany following World War I are now hot commodities.

    Jens O. Parsson's out of print economic treatise, Dying of Money: Lessons of the Great German and American Inflations, is selling for $249.90 on Amazon, while an old hard-cover copy of Adam Fergusson's When Money Dies: the Nightmare of the Weimar Collapse was recently offered at $1,705.63. A rushed paperback UK edition of Fergusson's book has held onto the number one spot for business books on Amazon UK for more than twenty-six days and is now climbing Amazon's US rankings, while a scan of Parsson's previously unavailable book has been posted online for the hand-wringing masses worldwide.

    Much like the stifling hyperinflation they describe, it remains unclear where these books first gained traction or exactly when they did. Reports indicated that the rush may have been spurred by the value-investing sage Warren Buffett, who allegedly had an Oprah moment and recommended Fergusson's book to some banker friends. However, Buffett has since denied that report, saying he never heard of the Thatcherite's circa-1975 tome. And even if he had, that doesn't account for the fact that Dying of Money has become an inflated commodity as well.

    But it's easy to see why both books have found a ready audience among those now fearful that the great debt bubble being nursed along by the world's teetering governments will one day end in the sort of inflation that takes both the breath and the bread away. Who wouldn't be scared by passages about the civil unrest that followed Germany's economic collapse, such as this one describing how a hungry mob descended upon one quaint farm: "The cow-shed was drenched in blood. One cow had been slaughtered where it stood and the meat torn from its bones. The monsters had slit up the udder of the finest milch [stet] cow, so that she had to be put out of her misery immediately."

    For those who don't scare easily, how about this fact gleaned from Parsson's book, which also discusses the dismal state of American inflation that ran from 1939 through the 1970s: "[A]ll the marks that existed in the world in the summer of 1922 (190 billion of them) were not worth enough, by November of 1923, to buy a single newspaper or a tram ticket." Ouch.

The optimistic view

    Of course, there is little evidence we're currently sliding into such an economic meat-grinder. Bernanke recently told Congress that inflation was slowing and that there was no indication that it would speed up anytime soon. The consumer price index for all urban consumers has only increased 1.1% over the last twelve months and it declined 0.1% in June. And the languid bond market seems to agree, snapping up two-year Treasuries at previously unheard of low yields.

    Plenty of people agree with Bernanke's view of the situation. Bob McTeer, a fellow at the National Center for Policy Analysis and a former president of the Dallas Fed, opines that a sharp acceleration of inflation is unlikely because there continues to be slack in the economy, the US deficit has predominantly been financed without creating new money, and labor costs remain under pressure.

    Even the skeptical Bernanke watcher, James Grant, had to agree last week writing in his Grant's Interest Rate Observer that despite his own "remonstrances and forecasts" to the contrary, real deflation (which he describes lightly as a combination of falling prices and bank failures) "might be what's on tap" for now

    The problem is nobody knows what's on tap for later. The permanently pessimistic Fed governor Charles Plosser sees inflation "subdued in the near term," and he expects it to accelerate to only 2-2.5% in 2011. But, as he noted in his June 11 speech before the egg and toast crowd at the Blair County Pennsylvania Chamber of Commerce, "the key to keeping inflation expectations well anchored and prices stable is for monetary policymakers to carefully communicate and implement an exit strategy from the very accommodative monetary policy now in place."