Posted on 11/03/2014 5:59:17 AM PST by blam
November 02, 2014
MISES
Marcia Christoff-Kurapovna writes: The story of the destruction of the German mark during the hyper-inflation of Weimar Germany from 1919 to its horrific peak in November 1923 is usually dismissed as a bizarre anomaly in the economic history of the twentieth century. But no episode better illustrates the dire consequences of unsound money or makes a more devastating, real-life case against fiat-currency: where there is no restraint, monetary death will follow.
"It matters little that the causes of the Weimar inflation are in many ways unrepeatable; that political conditions are different, or that it is almost inconceivable that financial chaos would ever again be allowed to develop so far," wrote British historian and MP Adam Fergusson in his 1975 classic, When Money Dies. "The question to be asked — the danger to be recognized — is how inflation, however caused, affects a nation."
The US Federal Reserve of 2014 is not the Reichsbank of 1914. Yet today's policy mindset is dangerously reminiscent of the attitudes that helped to excacerbate the economic downfall of inter-war Germany.
(snip)
Former Prime Minister Henry Lloyd George, writing in 1932, remarked that words like "catastrophe," "ruin," and "devastation" were not enough to describe the situation, given the common usage into which such words had fallen. Looting, vandalism, theft, the rise in prostitution, famine, disease, the consumption of dogs; people robbed of their clothes on the street — all were routine events of the "bourgeois" social quotidien. The constant threat of civil war loomed, as did neighboring Bolshevism. Bavaria had to declare martial law.
(snip)
(Excerpt) Read more at marketoracle.co.uk ...
On the other hand, there’s “Deflation: When Gold And Silver Die”.
We ended our last essay, entitled "Phase III , Apocalypse Now" http://goldtadise.com/?p=342329
Once Obola achieves his goal of federalizing healthcare he will nationalize other industries using similar excuses (”inclusiveness”, etc). Then when people are paid in printed money, the hyperinflation can begin in earnest. Voting republican may postpone it for a few years but it seems inevitable at this point. It is after all the common ground between the Wall Street’s one percenters (who like inflation) and the gimme free stuff crowd who now control the elections.
The author omitted the “London Ultimatum” ...
To make the long story short, Germany had gone off the gold standard with a fiat currency, the Papiermark. However, they had to pay massive fines a reparations for World War I, so the German government did a massive printing of Papiermarks to pay off the debt. This resulted in hyperinflation, which got much worse with the International (great) Depression.
The way out of the disaster was to create two new currencies. The first was the Rentenmark, supposedly backed by gold, which was strictly to balance the government and corporate books. Because it was backed by gold, it had no inflation. It did a top down stabilization of the economy.
Then, when things were flowing smoothly at the government and industrial level, the second currency, also supposedly backed by gold, called the Reichsmark, was introduced as the public currency. It was also very stable, and so the Papiermark and the Rentenmark vanished.
The Reichsmark was so good that even the Nazis continued to use it. They tried to tinker with it a few times, but every industrial leader said “don’t you do it”, so they left it alone. It lasted past the end of the war, when it was replaced with the Deutschmark, which lasted until it was replaced by the Euro.
An interesting and historical article.
But, I have to wonder why no one has done a similar study of Zimbabwe? Prior to the total collapse of their national currency in 2009 the Reserve bank of Zimbabwe issued a 100,000,000,000,000 note that was exactly nothing. It was literally “not worth the paper it was printed on”.
Thank you France and England. The gift that keeps on giving 100 years later.
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