Exploring inflation and economics through the lens of history

Inflation means more than just higher prices at the grocery store. For one group of Penn students, it’s meant an avenue to explore the big-picture concepts of debt, money, and currency across the span of human history.

Inflationary Times, taught by Melissa Teixeira of the Department of History, covers economic challenges from the present day to those dating back centuries, looking at the United States and other countries. As an economic historian who studies Brazil and Latin America, Teixeira uses the tools of history to understand how particular crises emerge and what programs or solutions are used to solve those problems, but she also keeps people at the center.

“The economy is comprised of people buying, selling, borrowing, and investing,” she says. “As historians, we’re interested in exploring how people react and respond in particular moments of crisis, of uncertainty, of change, of transformation.”

At a recent class, students presented their ongoing research projects that explore inflation-related topics, including the 1997 Asian financial crisis, the Confederate currency during the American Civil War, the causes of Peru’s hyperinflation crisis in 1990, and consumer behavior in the United States during the Great Depression.

Ramsey Radwan, a fourth-year philosophy, politics, and economics major from Chicago, investigated President Richard Nixon’s use of wage and price controls during a previous inflationary period in 1971. While the “failure of these wage and price controls are often used to criticize modern proposals,” Radwan says, in their day they were popular, with a 70% approval rating. “It’s a really intuitive idea for how you solve inflation,” he says. “There’s this idea that inflation is a result of corporate greed and price-gouging,” and controls are framed as a populist way to push back.

Inflationary Times covers more ground than an economics or business course. While it does include some fundamentals to ensure students understand the basic economic concepts, it goes beyond to explore how people are impacted by inflation, debt, and financial crises in various parts of the world. That includes either how people ensure they have enough food and basic resources or how they can profit from a crisis.

“I encourage my students to think about the economy not only by analyzing key indicators and graphs, but also by considering how different social groups face unique hardships during an economic downturn and hold diverse beliefs about the necessary solutions,” Teixeira says. More broadly, the history of money is also the history of different visions of progress, growth, and economic justice and how those shape government decision making and societal responses, she says. 

Based on trust

A significant part of the idea of money has to do with trust. In addition to being a unit of account and serving as a store of value, money has to be accepted by people as a medium of exchange, Teixeira says. “Human societies have been exchanging money for goods and services for thousands of years. You have to build social trust in that, so that people feel confident in using their agreed-upon currency to buy, sell, trade, or invest in the future.”

View large image

The question of trust led some students to examine confidence schemes and scams. Fourth-year Thomas Wright, a finance and international studies major in the Huntsman Program, looked at the role of infamous flimflammer Charles Ponzi in a land speculation scam in Florida in the 1920s: “He basically sold swampland, land that was underwater, to investors.” While this came after Ponzi’s more well-known scheme in Boston, for which he served jail time, during his career, Ponzi was seen as a financial genius of sorts, Wright, who is from Milwaukee, says. “People actually thought that he was really good at what he did.” 

Nicholas Angellino, a fourth-year economic history from New York City, studied the “Republic of Poyais,” a confidence scam hatched in the 1820s by Scottish adventurer Gregor MacGregor, who created a fake country in Central America and sold “land” to investors in London. Echoing the maxim that history doesn’t repeat, but rather rhymes, the scandal undermined investor confidence for newly independent Latin American republics, making it more financially difficult for the region later on, he says. “These types of schemes happen again and again,” Angellino says.

Teixeira taught the course for the first time in 2023, when the effects of the pandemic were still being felt and inflation was beginning to rise. “That’s where the course became really relevant to our contemporary world,” she says. “Inflation caught everybody by surprise. For a long time, it hadn’t been an issue that directly impacted many people working or studying in the United States.”

Learning from students

The course developed from Teixeira’s current research into inflation and hyperinflation in Brazil during the post-war period. She says teaching a course on her research interests is a way to learn from students as much as students learn from her. As a Benjamin Franklin Seminar, the course has consistently attracted “a very strong, engaged, intellectually curious and motivated group of students,” Teixeira says. 

She recalls that, when the Silicon Valley Bank was having financial difficulties and collapsed in early 2023, her students from the Wharton School provided a solid grounding. “Many of the students in my class were very up to date on the issue and explained it to me in a way that really clarified the underlying factors contributing to this bank failure,” she says. In the current class, a student from Argentina has provided perspective on the everyday economic strategies that residents rely on amid the country’s inflation struggles; other students have brought grandparents’ coin collections in to examine and show off coins no longer in circulation.

In addition to working through primary and secondary sources as is typical in historical research, guest lectures have come from Benjamin Nathans and Peter Holquist, fellow historians who lived in the USSR during its collapse and spoke about the hyperinflation they experienced. Economists from the Federal Reserve Bank of Philadelphia have also come by to share their perspectives on the current economic outlook.

“That way, students get a comprehensive overview of the issue,” Teixeira says. “I want to offer students some real-world insights into some of the theoretical and somewhat abstract concepts that we’re talking about.”