[Nervous Tick]

>> Actually, people who are IN debt win in hyperinflation...those who have saved assets will have to go to work as Wal-Mart greeters.

Hmmm... would that be that so-called “moral hazard” that Paulson says they’re “aware of”?

“...we’re aware of the moral hazard, but so what?”, say Paulson and Bernanke. “Suffer and die, you financially responsible chump!”

[DeaconBenjamin]

In 1923, at the peak of the German inflation, the prices of goods in Berlin as denominated in pounds sterling were higher than the prices of the same goods in London. Why? Because production had collapsed. The division of labor had collapsed. To get goods imported from outside the country, entrepreneurs had to take greater risks. Uncertainty increased. Because the orderly markets had disappeared in the wave of price inflation, supplies of everything became much tighter than outside Germany. Buyers in other nations could outbid German buyers, even in those cases where German buyers had foreign currencies and gold.

Gold and foreign currencies kept families alive. It did not make them rich.

Then who won? The great winners were farmers. They easily paid off their pre-War debts. Even before 1923, a farmer could pay off all of his debts by the money generated by the sale of a single egg.

What counted most in 1923 was your ability to keep your job. What made jobs desirable were products to sell that everyone wanted: basic foodstuffs, coal, and liquor. People in cities sold off their prized possessions and heirlooms in order to get food. The flow of grand pianos to German farmers never again reached such a rate.

There was almost no way to get rich in cities. There was no asset, other than stored food and coal, that could have made someone rich. But rich as measured in what? The greatest urban wealth was food and coal. Holders refused to sell.

What Will You Do With Your Gold?