Germany has recently provided an illustration of the extraordinary degree in which the money rate of interest can rise in its endeavour to keep up with the real rate, when prices have continued to rise for so long and with such violence that, rightly or wrongly, every one believes that they will continue to rise further. Yet even there the money rate of interest has never risen high enough to keep pace with the rise of prices. In the autumn of 1922, the full effects were just becoming visible of the long preceding period during which the real rate of interest in Germany had reached a high negative figure, that is to say during which any one who could borrow marks and turn them into assets would have found at the end of any given period that the appreciation in the mark-value of the assets was far greater than the interest he had to pay for borrowing them. By this means great fortunes were snatched out of general calamity; and those made most who had seen first, that the right game was to borrow and to borrow and to borrow, and thus secure the difference between the real rate of interest and the money rate. But after this had been good business for many months, every one began to take a hand, with belated results on the money rate of interest. At that time, with a nominal Reichsbank rate of 8 per cent, the effective gilt-edged rate for short loans had risen to 22 per cent per annum. During the first half of 1923, the rate of the Reichsbank itself rose to 24 per cent, and subsequently to 30, and finally 108 per cent, whilst the market rate fluctuated violently at preposterous figures, reaching at times 3 per cent _per week_ for certain types of loan. With the final currency collapse of July-September 1923, the open market rate was altogether demoralised, and reached figures of 100 per cent per month. In face, however, of the rate of currency depreciation, even such figures were inadequate, and the bold borrower was still making money. In Hungary, Poland, and Russia--wherever prices were expected to collapse yet further--the same phenomenon was present, exhibiting as through a microscope what takes place everywhere when prices are expected to rise. On the other hand, when prices are falling 30 to 40 per cent between the average of one year and that of the next, as they were in Great Britain and in the United States during 1921, even a bank rate of 1 per cent would have been oppressive to business, since it would have corresponded to a very high rate of real interest. Any one who could have foreseen the movement even partially would have done well for himself by selling out his assets and staying out of business for the time being.