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Injin

Germany In The Era Of Hyperinflation

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http://www.spiegel.de/international/german...41758-2,00.html

Sticking the Populace with the Tab

History may hail "the miracle of the rentenmark," but in reality it constituted an admission that the German Reich was bankrupt. And as always, it was the populace that picked up the tab.

The stupid ones were those who had nest eggs: the thrifty, holders of government bonds, but primarily the country's pensioners. In other words, those who received money without having to work for it, who lived on their pensions or the interest on their savings. Large sections of the middle classes saw themselves stripped of their assets, losing almost everything they had set aside for years. Banks, savings banks, and insurance companies suffered huge losses and were left with nothing but their paper money. As a result, they had to start the majority of their businesses from scratch in 1924.

By perverse contrast, the winners of the hyperinflation were those with massive debts; first and foremost the state, but also private individuals who had borrowed money to buy houses, construction land or farmland, and whose loans were slashed by the switch to the rentenmark.

------------

Take for example the family that sold its house to emigrate to America. On arrival at the port of Hamburg, they found that the money wasn't enough to pay for their crossing -- in fact, it didn't even pay for their tickets back home. Then there was the man who drank two cups of coffee at 5,000 marks each, only to be presented with a bill for 14,000. When he asked why this was he was told he should have ordered the coffees at the same time because the price had gone up in between. And then there's the story about the couple that took a few hundred million marks to the theater box office hoping to see a show, but discovered it wasn't nearly enough. Tickets were now a billion marks each.

The article makes it clear that the hyperinflation was done by the government to clear it's debts.

Edited by Injin

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It's lucky for us savers that we have deflation then :)

Buy bonds.

Thats only lucky if the government fails to inflate away. Personally I think inflation will be the eventual result of QE.

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It's lucky for us savers that we have deflation then :)

The government is printing to run it's operations because the taxpayer is on strike or broke. It won't stop. it's also replacing the lies that bankers told with actual cash.

There is no deflation.

Buy bonds.

And lose everything.

It's one choice you can make, and it's nice to do your bit for the state.

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http://www.spiegel.de/international/german...41758-2,00.html

The article makes it clear that the hyperinflation was done by the government to clear it's debts.

few people ever believes their government would do this. it seems that the more money people have saved, the less likely they are to even conceive such a thing is possible.

there are going to be lots of bears with sore heads i feel after this thing is through.

Edited by Where is my pen?

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If I bought a life assurance that gives me a return of CPI plus 0.5%, would this cover me in the case of hyperinflation?

I mean, if we get a rate in 2012 of 100% inflation, my return would be 100.5%

??? :unsure:

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Heh - I wouldn't have been conceived if it hadn't been for hyper-inflation. My great grandfather had just sold his house and put all the money in the bank when hyper-inflation hit. He lost everything, this prompted his daughter to seek work in London as a nanny where she met my grandfather.

In short, you have hyper-inflation to blame for my postings! Heheheheheh :P

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If I bought a life assurance that gives me a return of CPI plus 0.5%, would this cover me in the case of hyperinflation?

I mean, if we get a rate in 2012 of 100% inflation, my return would be 100.5%

??? :unsure:

Cpi is a price index and would lag the real rate of inflation, which is money printing. It also lags the prices it measures, obviously.

Lets say this months inflation is 10%

It takes a few days to a week to do the CPI for it, check the figures, release them - by which point prices are higher.

You lose just from that. (And this assumes honesty from the index creators.)

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Cpi is a price index and would lag the real rate of inflation, which is money printing. It also lags the prices it measures, obviously.

Lets say this months inflation is 10%

It takes a few days to a week to do the CPI for it, check the figures, release them - by which point prices are higher.

You lose just from that. (And this assumes honesty from the index creators.)

And that assumes all too much in my opinion. It is clear from recent history that CPI in no way compares with what has really been happening.

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And that assumes all too much in my opinion. It is clear from recent history that CPI in no way compares with what has really been happening.

Course not.

I've got a very simple thesis - the government and the central bank are both instruments of theft and extortion. Therefore the people who run them must be amoral at best and evil at worst. Such people don't stop stealing.

As 99% of the public are cheering on the existence of those institutions, if not there specific actions in the moment theres no chance of them stopping until the mob arrives, and that's a way off yet.

In short, printy printy.

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it seems that the more money people have saved, the less likely they are to even conceive such a thing is possible.

there are going to be lots of bears with sore heads i feel after this thing is through.

This is I feel a very interesting point. There are a lot of HPC-ers who were rolling with mirth at the proletariat's claim that they'd not lose their houses as "the government won't let it happen". On the opposite side of that coin are the HPC-ers who believed they'd inherit the earth with their savings.

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By perverse contrast, the winners of the hyperinflation were those with massive debts; first and foremost the state, but also private individuals who had borrowed money to buy houses

Those with fixed rate mortgages effectively get a house for under hyperinflation!

The thing is though, the government wouldn't want HYPERinflation, because that could lead to collapse of the state and their own removal from power. Surely they just want a nice steady dose of HIGH inflation, so that's a more likely outcome?

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The Germans hyperinflated in 1924 to pay off their war reparations. They daredn't openly default because they knew that would give France and Britain an excuse to take aggressive military action against them.

At present the US (and its satellites) has enough military power to simply default if it feels the need to. Hyperinflation is not necessary.

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The Germans hyperinflated in 1924 to pay off their war reparations. They daredn't openly default because they knew that would give France and Britain an excuse to take aggressive military action against them.

At present the US (and its satellites) has enough military power to simply default if it feels the need to. Hyperinflation is not necessary.

They did in fact default on reparations, so France occupied the Ruhr in retaliation. This led to a massive campaign of civil disobedience and a general strike in that area.

The Weimar government started printing money to pay social benefits to the strikers, and to make up for the 30%+ shortfall in tax revenue.

With hindsight, the French sowed the seeds of their own destruction with this course of action.

Read "When money dies, the nightmare of the Weimar collapse". The whole book free on the Mises site.

Edited by Shoeshine Boy

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They did in fact default on reparations, so France occupied the Ruhr in retaliation. This led to a massive campaign of civil disobedience and a general strike in that area.

The Weimar government started printing money to pay social benefits to the strikers, and to make up for the 30%+ shortfall in tax revenue.

With hindsight, the French sowed the seeds of their own destruction with this course of action.

Read "When money dies, the nightmare of the Weimar collapse". The whole book free on the Mises site.

This episode paved the way to Hitler.Thousands died of starvation in Germany as reparations sucked all the goods from their economy.This was the reason for the Marshall plan after WW2 that did the opposite and created the "Economic Miracle" in Germany in the 50's.

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http://www.bloomberg.com/apps/news?pid=new...id=at8.tVMImgNM

German Consumer Prices Post First Drop in 22 Years (Update1)

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By Frances "Frank" Robinson

Aug. 11 (Bloomberg) -- Consumer prices in Germany posted their first annual decline in more than 22 years in July and wholesale prices plunged after energy costs fell and the worst recession since World War II curbed spending.

Inflation?

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http://www.bloomberg.com/apps/news?pid=new...id=at8.tVMImgNM

German Consumer Prices Post First Drop in 22 Years (Update1)

Share | Email | Print | A A A

By Frances "Frank" Robinson

Aug. 11 (Bloomberg) -- Consumer prices in Germany posted their first annual decline in more than 22 years in July and wholesale prices plunged after energy costs fell and the worst recession since World War II curbed spending.

Inflation?

Read the article. :rolleyes:

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It's lucky for us savers that we have deflation then :)

Buy bonds.

Uk bonds are a terrible investment.There is no deflation,only in asset prices.We have had very high inflation for years.Over a decade.

Oh yes we have.Every bit of deficit spending by government.Every loan made from fractional fiat sterling,all inflation.

It has remained hidden,exported to places like China.QE is flooding banks balance sheets to stop a collapse,but the money created before sits abroad.Already that money is being used to buy assets and sooner or later all that inflation will find its way home.

QE was designed to stop a flood of sterling gilt sales hitting the market from bankrupt institutions crashing sterling.Nothing more.

The best investments in the scenario we are in are Asian equities,they have been since March for sterling buyers and continue to be so.

Injin is on the money and an expert on government/central bank inflation creation.Asian equities are up 60% in sterling terms since march.They will be much much higher in the coming years.

Sterling will be hit.Inflation will rocket,and it will be sharp and quick.For the man in the street a disaster as wages will not follow.The squeeze on sterling savings and earned wages will be huge,long term and will spare no-one.

Money creation IS inflation,not the price of a banana.It is and always has been stealing saved labour from the people,by the central bank.

As big economies return to growth (as now) the UKs huge problems will be shown for all to see.Capital will divert to growth economies and the UK will be left with one thing,,in the words of Injin,,printy printy.

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Hmmmm.... so all this time DaddyBear has been pushed about and posts deleted.....He is actually got some heavy weight support from an unlikley source. very interesting. I have allways found DaddyBears posts interesting and think he is spot on with his claims. Well done Injin. maybe DB will get some credit from here in.

Inflation it is.

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The Germans hyperinflated in 1924 to pay off their war reparations. They daredn't openly default because they knew that would give France and Britain an excuse to take aggressive military action against them.

At present the US (and its satellites) has enough military power to simply default if it feels the need to. Hyperinflation is not necessary.

Not sure this is correct.

Hyperinflation robs the citizens with savings. I am presuming Germanys war reparations were not denominated in a fiat currency but in gold so any amount of hyperinflation would not have reduced the country's external debts.

The USA is in a different position in that its debts are in paper dollars so can be inflated away within limits allowed by its creditors. The creditors have been shafted in that if they decide to stop supporting the dollar they will see their dollar denominated foreign reserves decimated.

Served them right for trusting their future to processed wood pulp.

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