In 1925, currencies across the world underwent massive devaluation, and the Bulgarian lev was no exception. Only because the government had held fast to the gold standard had it avoided plunging in a headlong collapse.
Measured against gold, the lev's value had not changed. But Ferdinand knew that was merely something meant to fool people—the lev had in fact been depreciating for a long time.
Inflation continued unabated. From 1914 until now, Bulgaria's overall price level had risen by 24 percent, while the purchasing power of its currency kept declining. That was an indisputable fact.
Over those ten years, the world's total gold supply had increased by nearly 50 percent. Under the forces of supply and demand, how could the total volume of currency issued worldwide have grown by only 50 percent?
At the very least, Bulgaria's money supply was now more than triple what it had been in 1914. Although its gold reserves had also tripled on paper, that merely stabilized the international exchange rate.
Domestic inflation still inflated as it must. In economic terms, those who borrowed money had all profited, while interest on deposits had barely managed to outrun inflation.
All of this had been concealed beneath the backdrop of Bulgaria's rapid economic growth.
The public could remain unaware, but Ferdinand could not. These problems had to be addressed; otherwise, if they continued, Bulgaria's economy would sooner or later run into trouble.
"Mr. Kennedy, what do you think about domestic inflation?" Ferdinand asked.
"Your Majesty, this is a very complicated issue. Inflation is occurring throughout the world now, and the principal cause began when the French abandoned the gold standard.
"After that, the franc's value plunged in a headlong collapse. Because of the currency's depreciation, French exports gained a tremendous competitive advantage.
"Struck by French goods, prices