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German Weimar Republic In The Early 1920s And The U.s.

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German Weimar Republic in the early 1920s and the U.S. - Troubling similarities

There's a possibility of something similar (but not as severe) happening in the U.S. - we'd rather at least mention it than not.

The parallel to the German war reparations is the derivatives area today.

Don't shoot the messenger, we didn't invent the facts below.

1914-1918

German Weimar Republic

1. German mark (Reichsmark) worth about 20-25 cents, about 4-5 marks per U.S. dollar.

2. Bank interest rate - 5%

3. Government deficit in 1914 was 1.5 billion, about -16% of the total budget.

4. Government deficit in 1918 near war's end was over 15 billion, about -34% of the total budget.

5. Coins made up 56% of the circulated money in 1913. In 1918 it was a mere 0.5% due to war inflation and metals shortage.

6. German stock market at 126

7. Money velocity - 1.5

2001-2004

United States

1. U.S. Dollar Index falls from $1.20 in 2001 to about $0.85 in 2004.

2. Home mortgage rate varies between 5.5-7%

3. Government (unaudited) surplus in 2001 was $128 billion, about +7% of the total budget.

4. Government (unaudited) deficit in 2004 was $412 billion, about -21% of the total budget. (source)

5. Steel, copper and other key industrial metals prices are up between 30-150%.

6. Dow Jones stock average - about 10,500

7. Money velocity - 1.5

1919-1921

German Weimar Republic

1. Bank interest rate - still 5%

2. German stock market at 97 in January 1919, 166 in January 1920, 278 in January 1921 and 731 in December 1921.

3. The general price level has doubled since 1914.

4. Most of the rest of the world allows their money supplies to contract as a "war withdrawal" effect, and goes into recession or depression (general prices fell 16% in the U.S. in 1921). Germany keeps creating or printing money, and the government deficits continue to increase.

5. Newspapers and many financial folk are very confused by the continual price increases. Its blamed somewhat on the Versailles Treaty and France but mostly on speculators and "foreigners" inside Germany (an ominous sign and similarity to what's ahead with Hitler and the Holocaust, etc.).

6. In other countries, its blamed on the German government deficit. But the real problem is that too much money is being created by the German banks.

7. Money velocity - 1.5

8. Government has currency controls, one couldn't buy foreign currency to help protect one's assets.

9. Many foreign companies have large foreign currency gains, due to the falling value of the mark.

10. August 1920, Germany starts to buy significant amounts of foreign currency.

11. Ocober 1920, Germany's national debt - 287,800 million marks (Britain's was about 8,000 million pounds).

12. The mark varies between 152 and 1040 to the British pound during 1920, ending at about 750.

13. By February 1921, the stock market had dropped about 50% but was still above December 1920 values.

14. Since 1913, bread prices had risen 13x, meat 17x, sugar & milk & pork about 25x and butter about 33x - officially.

15. Unemployment in 1921 - 3%

2005

United States

1. Home mortgage rate averages 5.5-6%

2. Dow Jones stock average - about 10,000

3. Home prices, health insurance, energy and many other costs have roughly doubled or more in the previous 4-6 years.

4. As of mid/late 2005, there are strong indications that the world economy has topped and is slowing down.

5. Newspapers and many financial folk are very confused by the continual price increases. It 'must be' greedy businessmen, housing speculators, mid eastern oil owners trying to stick it to the U.S., interest rates have been raised too much by the Fed, war spending is too high, terrorism, etc.

6. In other countries and per the International Monetary Fund and others, its blamed on the U.S. government deficit. But the real problem is that too much money is being created by the Federal Reserve Central Bank and other banks or financial institutions.

7. Money velocity - 1.5

8. Some currency controls do exist as of mid 2005. All money transfers above $10,000 are required to be reported to the government and there are many other requirements in the Patriot Act.

9. Many foreign companies have foreign currency gains, due to the falling value of the dollar and hedging operations.

...much more on page...

It is very interesting when the current situation is weighted against a historical event such as Weirmar.

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The conditions that existed then drove a different world. There was no instant electronic money that could be injected into the economy to stave off collapse in those days. The free market actually did exist then, with no collusion between suppliers, farmers and miners to keep prices as constant as possible.

By comparison, today's markets are rigged, electronically, surveillance of every aspect of trade and currency flows ensures that "corrective" measures can quickly be taken by central banks and governments. They will do anything to avoid complete chaos, unless of course, it suits them to do so. I believe they are biding their time and will instigate a complete systemic collapse when they deem it appropriate. The general public will have no warning of this and they will be (practically) powerless to do anything about it unless they have prepared.

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German Weimar Republic in the early 1920s and the U.S. - Troubling similarities

It is very interesting when the current situation is weighted against a historical event such as Weirmar.

no ones listening

i think its more like this period

http://lynncoins.com/fiat-money-france.htm

I have now presented this history in its chronological order—the order of events: let me, in conclusion, sum it up, briefly, in its logical order,--the order of cause and effect.

And, first, in the economic department. From the early reluctant and careful issues of paper we saw, as an immediate result, improvement and activity in business. Then arose the clamor for more paper money. At first, new issues were made with great difficulty; but, the dyke once broken, the current of irredeemable currency poured through; and, the breach thus enlarging, this currency was soon swollen beyond control. It was urged on by speculators for a rise in values; by demagogues who persuaded the mob that a nation, by its simple fiat, could stamp real value to any amount upon valueless objects. As a natural consequence a great debtor class grew rapidly, and this class gave its influence to depreciate more and more the currency in which its debts were to be paid.[85]

The government now began, and continued by spasms to grind out still more paper; commerce was at first stimulated by the difference in exchange; but this cause soon ceased to operate, and commerce, having been stimulated unhealthfully, wasted away.

Manufactures at first received a great impulse; but, ere long, this overproduction and overstimulus proved as fatal to them as to commerce. From time to time there was a revival of hope caused by an apparent revival of business; but this revival of business was at last seen to be caused more and more by the desire of far-seeing and cunning men of affairs to exchange paper money for objects of permanent value. As to the people at large, the classes living on fixed incomes and small salaries felt the pressure first, as soon as the purchasing power of their fixed incomes was reduced. Soon the great class living on wages felt it even more sadly.

Prices of the necessities of life increased: merchants were obliged to increase them, not only to cover depreciation of their merchandise, but also to cover their risk of loss from fluctuation; and, while the prices of products thus rose, wages, which had at first gone up, under the general stimulus, lagged behind. Under the universal doubt and discouragement, commerce and manufactures were checked or destroyed. As a consequence the demand for labor was diminished; laboring men were thrown out of employment, and, under the operation of the simplest law of supply and demand, the price of labor—the daily wages of the laboring class—went down until, at a time when prices of food, clothing and various articles of consumption were enormous, wages were nearly as low as at the time preceding the first issue of irredeemable currency.

The mercantile classes at first thought themselves exempt from the general misfortune. They were delighted at the apparent advance in the value of the goods upon their shelves. But they soon found that, as they increased prices to cover the inflation of currency and the risk from fluctuation and uncertainty, purchases became less in amount and payments less sure; a feeling of insecurity spread throughout the country; enterprise was deadened and stagnation followed.

New issues of paper were then clamored for as more drams are demanded by a drunkard. New issues only increased the evil; capitalists were all the more reluctant to embark their money on such a sea of doubt. Workmen of all sorts were more and more thrown out of employment. Issue after issue of currency came; but no relief resulted save a momentary stimulus, which aggravated the disease. The most ingenious evasions of natural laws in finance which the most subtle theorists could contrive were tried—all in vain; the most brilliant substitutes for those laws were tried; “self-regulating†schemes, “interconverting†schemes—all equally vain.[86] All thoughtful men had lost confidence. All men were waiting; stagnation became worse and worse. At last came the collapse and then a return, by a fearful shock, to a state of things which presented something like certainty of remuneration to capital and labor. Then, and not till then, came the beginning of a new era of prosperity.

Just as dependent on the law of cause and effect was the moral development. Out of the inflation of prices grew a speculating class; and, in the complete uncertainty as to the future, all business became a game of chance, and all business men, gamblers. In city centers came a quick growth of stock-jobbers and speculators; and these set a debasing fashion in business which spread to the remotest parts of the country. Instead of satisfaction with legitimate profits, came a passion for inordinate gains. Then, too, as values became more and more uncertain, there was no longer any motive for care or economy, but every motive for immediate expenditure and present enjoyment. So came upon the nation the obliteration of thrift. In this mania for yielding to present enjoyment rather than providing for future comfort were the seeds of new growths of wretchedness: luxury, senseless and extravagant, set in: this, too, spread as a fashion. To feed it, there came cheatery in the nation at large and corruption among officials and persons holding trusts. While men set such fashions in private and official business, women set fashions of extravagance in dress and living that added to the incentives to corruption. Faith in moral considerations, or even in good impulses, yielded to general distrust. National honor was thought a fiction cherished only by hypocrites. Patriotism was eaten out by cynicism.

Thus was the history of France logically developed in obedience to natural laws; such has, to a greater or less degree, always been the result of irredeemable paper, created according to the whim or interest of legislative assemblies rather than based upon standards of value permanent in their nature and agreed upon throughout the entire world. Such, we may fairly expect, will always be the result of them until the fiat of the Almighty shall evolve laws in the universe radically different from those which at present obtain.[87]

And, finally, as to the general development of the theory and practice which all this history records: my subject has been Fiat Money in France; How it came; What it brought; and How it ended.

It came by seeking a remedy for a comparatively small evil in an evil infinitely more dangerous. To cure a disease temporary in its character, a corrosive poison was administered, which ate out the vitals of French prosperity.

It progressed according to a law in social physics which we may call the “_law of accelerating issue and depreciation._†It was comparatively easy to refrain from the first issue; it was exceedingly difficult to refrain from the second; to refrain from the third and those following was practically impossible.

It brought, as we have seen, commerce and manufactures, the mercantile interest, the agricultural interest, to ruin. It brought on these the same destruction which would come to a Hollander opening the dykes of the sea to irrigate his garden in a dry summer.

It ended in the complete financial, moral and political prostration of France-a prostration from which only a Napoleon could raise it.

Edited by lowrentyieldmakessense(honest!)

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It progressed according to a law in social physics which we may call the �€œ_law of accelerating issue and depreciation._�€� It was comparatively easy to refrain from the first issue; it was exceedingly difficult to refrain from the second; to refrain from the third and those following was practically impossible.

Bank of England take note

first issue £125bn

second issue £50bn

third issue £?

if they try a fourth i think game over for the £

Edited by lowrentyieldmakessense(honest!)

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The conditions that existed then drove a different world. There was no instant electronic money that could be injected into the economy to stave off collapse in those days. The free market actually did exist then, with no collusion between suppliers, farmers and miners to keep prices as constant as possible.

By comparison, today's markets are rigged, electronically, surveillance of every aspect of trade and currency flows ensures that "corrective" measures can quickly be taken by central banks and governments. They will do anything to avoid complete chaos, unless of course, it suits them to do so. I believe they are biding their time and will instigate a complete systemic collapse when they deem it appropriate. The general public will have no warning of this and they will be (practically) powerless to do anything about it unless they have prepared.

No it didn't. The free market was as much an illusion then as it is now, governemnts had been intervening to try and hold back the excesses of the free market from the 1870's-1880's.

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No it didn't. The free market was as much an illusion then as it is now, governemnts had been intervening to try and hold back the excesses of the free market from the 1870's-1880's.

OK, it was free-er than it is now.

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There won't be any Nazis this time around because it's more difficult to be stupid with the internet. That's not to say we won't hear the most stupid explanations for the crash each given their time in the sun, but none of the will have any traction.

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