Monday, September 23, 2013

100 Trillion Pound Notes?

Quantitative Easing Worked For The Weimar Republic For A Little While Too

There is a reason why every fiat currency in the history of the world has eventually failed. At some point, those issuing fiat currencies always find themselves giving in to the temptation to wildly print more money. Sometimes, the motivation for doing this is good. When an economy is really struggling, those that have been entrusted with the management of that economy can easily fall for the lie that things would be better if people just had “more money”. Like the Weimar Republic, the U.S. economy is also struggling and like the Weimar Republic, the U.S. government is absolutely drowning in debt. Just like the Weimar Republic, our money supply is beginning to grow at an exponential pace. So far, complete and total disaster has not struck, so most people think that everything is ok

Posted by khards @ 12:30 PM (2057 views)
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11 thoughts on “100 Trillion Pound Notes?

  • The US is not drowning in (public sector) debt, because the world is on a dollar standard. Unlike the Weimar republic, which had to pay reparations valued in other currencies pegged to gold or risk events like the French seizing the Ruhr 1922-1924, its debts are denominated in its own currency. Where is the corresponding hyperinflation in the US despite balance of payments and budget deficits since the 1970s? There isn’t any. Go figure!
    US households on the other hand may well be drowning in (private sector) debt …

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  • Weirofhermiston says:

    Article by Michael Snyder, loony christian fundamentalist who has been predicting the end of the world for many years now. Will it be the economy, will it be the second coming? Who knows but he will have predicted it many times over before it happens.

    It’s always reassuring to see a site that promotes Alex Jones, sort of an imprimatur for considered, high quality commentary.

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  • @nickb – the problem comes when foreign nations do not want to hold US debt any more and start settings t-bills. Effectively the dollar becomes worth less because nobody wants to save in a currency that is being debased.
    Yes it will take longer than the Weimar because there are so many external holders of debt. What we have seen recently with BRIC countries disposing their dollar reserves is interesting development. Their governments are stockpiling commodities to diversify away from the dollar which is being actively debased.
    If the US stopped QE there would be less pressure on BRIC economies to diversify and it would slow down the demise of the dollar, so in essence the quicker they print the faster the time to dollar collapse will be. The dollar will not collapse overnight, but if they do not stop printing it will collapse in the near future.

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  • Unless they expand the use of force to ensure the use of the dollar, destabilising all other competing currencies in their use in trading in said commodities

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  • Is this the same site that thinks “OBL” is alive an well in a plush office in the Pentagon, charged with looking after the aliens
    hidden away a “Groom Lake” ?

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  • Khards
    If it were that simple creditor nations would have done that (dumped their dollar mountains) a long time ago. They can’t, for one thing because during the sell off they would reduce the value of their dollar holdings. And presumably the world would have to move to some other system for settling international debts than the dollar. The US also applies diplomatic pressure, backed up by its status as sole superpower, to ensure that central banks’ dollar mountains are recycled as loans back to to the US in the form of bond purchases. Michael Hudson explains how the US is able to flood the world with dollars in his “super imperialism” book – which ironically seems to have been used as a training manual by the CIA.
    N

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  • After reading through the comments at the bottom of the article, I have to say my mind was diverted away from worries about the global economy and more towards the state of the Western education system. I was really saddened to read some of their comments. Clearly these people can write, why can’t they also use their brains? One person seemed to actually praise a certain nasty chap from Germany. How sad that we see such comments in the twenty first century. How sad too that we see the rise of such stuff in Greece and other parts of Europe once again.

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  • “every fiat currency in the history of the world has eventually failed”

    That’s a tiresome misuse of the phrase “fiat currency”* and simply not true anyway. A lot of them have failed, but there are plenty which have been going without major defaults for centuries.

    * If a government collects taxes denominated in [whatever], then [whatever] becomes the national currency. The government can hand out pink plastic tokens instead of paying welfare and salaries etc, and this works just fine provided there are equal and opposite taxes on somebody or other denominated in the same pink plastic tokens.

    Sometimes countries create such currencies inadvertently – like in days of rationing, to buy half a dozen eggs or a packet of fags or whatever, you needed a ration card/voucher. So people who didn’t like eggs/didn’t smoke/consume whatever could sell these vouchers to people who needed them, the vouchers themselves had monetary value and acted like a tax on eggs/fags/whatever but because everybody got the same number of vouchers they also acted like a Citizen’s Income.

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  • @nickb – “slowly slowly catchee monkey”

    It is happening right in front of our very eyes, BRICs nations are stockpiling commodities, do you think they are just saving them up for Christmas? No they are switching savings from USD to hard currency.

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  • Your speculation about the BRICs is a million miles from the unrelated tripe in that article which naively equates QE and the Weimar republic! I’d like to believe we are indeed coming off the dollar standard, but not holding my breath. And if we do might we end up on a Renminbi standard, operated by monetary terrorists every bit as devious as the US guys?
    N

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