Thursday, Mar 15, 2007
A reminder of what happens when you print too much currency / extend too much credit
USAGold.com: 1920s The Nightmare German Inflation
Foreword: The many parallels between 1924 Germany and present-day United States are cause for concern. It seems we differ from 1924 Germany only in the duration between cause and effect. While the German experience was compressed over a few short years, ours has been more protracted. I think this has occurred for two good reasons: First, American central bankers have learned enough from the German experience to delay and extend the consequences of printing too much fiat money. Second, Germany was a small state isolated from the rest of the world --- a pariah nation of sorts --- and, as a result, it had a difficult time finding a market for its government bonds. German deficits had to be financed internally --- an impossibility which greatly accelerated the printing of fiat currency.
14 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. inbreda said...
Hard work but well worth the read.
Depresses me that the likely outcome (as a STR) is that I lose my savings.
2. sold 2 rent 1 said...
inbreda,
That is why every STR must have at least 10% of the cash made on their house sale in gold/silver (stocks, unit trusts, ETF etc) and preferably ISA wrapped.
You have to cover yourself for both the deflationary and inflationary outcomes. Both are possible. The debate rages on.
We already have both in the economy (HP (infl) and asian manufactured goods (defl).
My wife and I have £40K invested so far and will put in another 14K (2 ISA allowances) in the new tax year.
Remember gold/silver will take off long before inflation does.
Don't leave it too late.
3. inflation is eating my savings said...
s2r1- dealing gold again I see......
4. sold 2 rent 1 said...
inflation is eating my savings,
Not sure what your probem is?
I am just trying to get a balanced portfolio.
Gold plays its part - as does cash and foreign currencies (and to a lesser extent foreign property and foreign stocks)
5. lvmreader said...
@sold 2 rent 1
You are one of the few who seems to understand just how close we are to a currency crash
6. denzil said...
In the process of trying to gain a better understanding of the roots of a lot of US and potentially western problems and Fiat money I stumbled across this link. It's fairly old 2003 but rather ironic considering what is happening now.
I sentence of note from the link is:
"Fiat dollars allow us to live beyond our means, but only for so long. History shows that when the destruction of monetary value becomes rampant, nearly everyone suffers and the economic and political structure becomes unstable."
http://www.lewrockwell.com/paul/paul125.html
7. Inflation Is Eating My Savings said...
s2r and others- no offence was intended- I just think that gold is at the end of a bull run. When the powers that be started being a little more open about inflationary pressures, the dip in commodities (including gold) didn't surge into the stratosphere. Regarding our currency- overvalued it is- but I cannot see more that a 10% devaluation occuring in a hurry (this itself would inflame property markets further). The safest place in the world for your money, as long as you are not being greedy, and as long as the cattle trucks are not at your door, is the the Swiss Franc.
8. lvmreader said...
Fiat Empire - A must watch video....
9. rich said...
lvmreader, have you read "Monetary History of the United States 1867-1960"?
I haven't, but it's been recommended to me by a friend (who is an economist) who says that Milton Friedman argues that inflation is "always and everywhere" a phenomenon of monetary systems. My economist friend also said that "all major western OECD economies only print notes when current notes in circulation need replacement (wear & tear and/or new design etc)".
I've watched some of the film you link to (it's quite long), but the two things don't seem to square up. What's your response?
10. lvmreader said...
@rich
I don't believe I have read that particular tome as yet, but I will put it on my reading list for next quarter.
Have you heard of the M3 money supply figure?
Do you know about narrow and broad money?
If a government suddenly refused to continue reporting on just how much money they were printing, would this make you suspicious? Would you suspect that they were up to something?
Bibliography:
Bernstein, Peter L. - The Power of Gold
Mayer, Martin - The Bankers, the future of electronic money
11. sold 2 rent 1 said...
rich,
"printing notes" is an expression.
All money supply growth now is electronic
12. harold said...
I'm with S2R1 on the issue of gold (and silver) - question is when to purchase? I think there maybe a better opportunity than now if stocks crash...
13. japanese uncle said...
Mission/agenda of central banks: Create and collapse asset bubbles, whereby facilitate the redistribution of wealth from the poor and middle classes to the powerful banks and financial tycoons, period.
14. japanese uncle said...
Mission/agenda of central banks: Create and collapse asset bubbles, whereby facilitate the redistribution of wealth from the poor and middle classes to the powerful banks and financial tycoons, period.