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Posts tagged hyperinflation

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HOW’S THIS FOR SOCIAL UNREST?

by SIMON BLACK October 18, 2011

Phnom Penh, Cambodia

In his seminal work The Rise and Fall of the Third Reich, William Shirer recounts how the struggling Weimar Republic printed its way out of reparation debt from World War I. Out-of-control printing caused the German mark to fall from 75 per dollar in 1921, to more than 4 billion just 3-years later.

Talk about chaos. After a brief period of credit-fueled economic respite, the onset of the global depression in 1929 had people in the streets clamoring for change. Hitler’s National Socialism promised the world… and under such economic distress, people believed him.

There are two important lessons here. First is that hyperinflation comes very quickly. Confidence languishes for months, even years… until one day the currency begins to slide, slowly at first, then exponentially.

The second is what followed. Economic disaster begets social unrest, the two are inextricably linked. Populist rebellions and roving gangs became a constant presence in the republic.

It’s at this point, when people are really hurting, they’re the most impressionable. They’re looking for somebody, anybody, to lead them out of the turmoil. What they got was a charismatic leader with a grand plan.

Here in Cambodia, a similar story unfolded in the 1970s.

Read more »

Filed under economy economics politics commentary social unrest inflation hyperinflation Weimar republic

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The Case for Hyperinflation in the US
— Posted Wednesday, 21 September 2011
By Jeff Berwick, The Dollar Vigilante
 
The bankers (who are all artificial, non-free market entities in this non-free market financial system) would lose everything if the currency goes to zero.
However, that has never stopped them before.  In fact, during many of the hyperinflations of our time, including Weimar and the ongoing hyperinflation in Argentina, the last people to see the causes of the hyperinflation (money printing) are the central bankers and the economists of the banks.
Remember, they’ve all been brainwashed with modern day Keynesian economics, which is witchcraft and delusionary.  They actually believe that inflation is caused by prosperity… and not money printing. 
 
.  .  .  
And, even when the US dollar goes to zero, it does not mean the banks are out of luck.  Not if they were like the French banks in the beginning of the 20th century.  In a book published in 1912, called “Fiat Money Inflation in France”, Andrew White recounts how the government changed the rules and stated that all debts increased along with the issuance of further currency, so that for every so many additional assignats printed, one’s debts increased by 25%. 
The US Government owns all the guns.  It would not be beyond them to state that all debts held in dollars are now held in the New Dollar.  Or, what they will likely name, the “Patriot dollar”.
As Congressman Pete Stark stated, “The Federal Government can do most anything in this country.”
.  .  .   
.  .  .  Gary North states that because of the boom-bust cycle, the US will be forced to stop printing money before entering hyperinflation.  As example, he states how Volcker was forced by rapidly rising prices to slow money printing and allow T-Bill rates to rise to 22% to stop the inflation.
There is only one problem with this.  The US Government debt in 1979 was hardly anything as it had only been 8 years since Nixon delinked the dollar from gold.  Today, however, the US Government (and most western governments, ask Greece) have had plenty of time to build up mountains of debt.
Today, as we showed here, an interest rate of only 11.1% will effectively take all real income of the US Government just to pay for the interest alone.
 
In other words, raising the interest rates to even 11% this time around will destroy the US Government.
That’s why Paul Volcker, who was on a “panel of experts” advising Barack Obama already quit and left town on January 5th of this year.  He took out his calculator, punched in a few numbers, looked around and decided it was time to retire.
Greenspan left on similar premises right before his housing bubble burst.

 
Read more »

The Case for Hyperinflation in the US

— Posted Wednesday, 21 September 2011

By Jeff Berwick, The Dollar Vigilante

The bankers (who are all artificial, non-free market entities in this non-free market financial system) would lose everything if the currency goes to zero.

However, that has never stopped them before.  In fact, during many of the hyperinflations of our time, including Weimar and the ongoing hyperinflation in Argentina, the last people to see the causes of the hyperinflation (money printing) are the central bankers and the economists of the banks.

Remember, they’ve all been brainwashed with modern day Keynesian economics, which is witchcraft and delusionary.  They actually believe that inflation is caused by prosperity… and not money printing. 

.  .  .  

And, even when the US dollar goes to zero, it does not mean the banks are out of luck.  Not if they were like the French banks in the beginning of the 20th century.  In a book published in 1912, called “Fiat Money Inflation in France”, Andrew White recounts how the government changed the rules and stated that all debts increased along with the issuance of further currency, so that for every so many additional assignats printed, one’s debts increased by 25%. 

The US Government owns all the guns.  It would not be beyond them to state that all debts held in dollars are now held in the New Dollar.  Or, what they will likely name, the “Patriot dollar”.

As Congressman Pete Stark stated, “The Federal Government can do most anything in this country.

.  .  .  

.  .  .  Gary North states that because of the boom-bust cycle, the US will be forced to stop printing money before entering hyperinflation.  As example, he states how Volcker was forced by rapidly rising prices to slow money printing and allow T-Bill rates to rise to 22% to stop the inflation.

There is only one problem with this.  The US Government debt in 1979 was hardly anything as it had only been 8 years since Nixon delinked the dollar from gold.  Today, however, the US Government (and most western governments, ask Greece) have had plenty of time to build up mountains of debt.

Today, as we showed here, an interest rate of only 11.1% will effectively take all real income of the US Government just to pay for the interest alone.

In other words, raising the interest rates to even 11% this time around will destroy the US Government.

That’s why Paul Volcker, who was on a “panel of experts” advising Barack Obama already quit and left town on January 5th of this year.  He took out his calculator, punched in a few numbers, looked around and decided it was time to retire.

Greenspan left on similar premises right before his housing bubble burst.

Read more »

Filed under economy economics Keynesian economics hyperinflation US dollar Fed Federal Reserve central bankers debts interest rates Treasury bond interest rates

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Too Much Money - - - Thanks to the Fed

August 11, 2011

 By Roben Farzad

Investors, companies, and banks have too much of it. And it’s just sloshing around not helping anyone much. This is how inflation and hyperinflation begin: too much money chasing too few goods and services. Thank you Mr. Bernanke.

Can too much cash possibly be a bad thing? Right now the answer is yes. In the U.S., individuals, banks, and the Federal Reserve find themselves locked in a vicious cycle of retrenchment.

According to the most recent data available from the Fed, cash held by U.S. banks stood at a record $981 billion in the week ended July 27. That’s more than triple the amount they had in July 2008, before Lehman Brothers failed.

“We’re all drowning in cash,” says Rick Ashburn, chief investment officer at Creekside Partners, a Lafayette (Calif.) investment firm.

Read more:  Too Much Money - - - Thanks to the Fed

Filed under money economy economics inflation hyperinflation FED Federal Reserve Bernanke banks central bank cash

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Ron Paul Speaks Out. Is Anyone Listening?

S&P States the Obvious

By: Dr. Ron Paul, U.S. Congressman

— Posted Monday, 15 August 2011

Politicians did not get much time to pat themselves on the back for supposedly rescuing the economy with the debt limit deal last week.  The ink was barely dry when Standard & Poor’s downgraded the US debt ratings anyway, roiling world financial markets.  Anyone who has taken an honest look at the government’s fiscal situation, taken into account how Washington works and the direction it is going would have a very difficult time arguing with S&P’s decision, although a strong case can be made that this was too incremental a downgrade and that it took far too long for S&P to admit the obvious.  

Nonetheless, the administration nitpicked over a $2 trillion “mistake”.  S&P rejoined with the fact that $2 trillion here or there hardly makes a difference in the time frame under discussion.  That, if nothing else, should tell you the magnitude of the problem.  $2 trillion has become a drop in the bucket.

S&P cited Congress’s inability to act like grownups and make necessary, meaningful cuts, which is true.  I must take issue however, with their suggestion that tax increases are part of the answer.  Taking capital out of the private sector, where it can create real value in the form of new jobs and products, and instead giving it to Washington to waste and squander is not the solution.  Tax increases may seem penny-wise to some, but in reality they would be very pound-foolish.  The government currently takes in $2.2 trillion in taxes per year, which is far too much already.  It spends $3.7 trillion, which is ridiculous and criminal.  The problem is runaway government spending, not the American people having too much money.

And yet we can’t even have a serious discussion about bringing our troops home and ending our expensive occupations around the world – things the president used to claim to favor!

Even without this downgrade, major investors are waking up to what lies down the road for the United States in fiscal terms.  China is showing more signs of losing its taste for our debt.  Others are following suit.  What we are about to see is the end of the dollar as the reserve currency of the world.  When that happens, we will no longer be in a position to have pretend debates about things we probably should spend a little bit less on - we will be forced to implement serious spending cuts as our sources of credit dry up.  Of course, we can try to postpone the day of reckoning by printing more money but the resulting “inflation tax” will be far worse than a reduction in government benefits.

Hyperinflation devastates the middle class.  After Weimar Germany hyper-inflated their currency in the 1920s, an entire life savings couldn’t buy a postage stamp.  The bank wouldn’t even send customers a check for all the money they had saved their whole lives.  It wasn’t worth the paper it was printed on or the stamp to send it.  This is what is meant when it is said that the middle class gets wiped out.  The pieces for this to happen here are all falling into place, and have been since 1971.  The only way to avoid that sort of chaos now is for Congress to immediately reduce federal spending and take the Constitution seriously again.  The welfare/warfare state will end either way, but winding it down responsibly is a far better way to do it.

You can find this address here:  S&P States the Obvious

Filed under Ron Paul debt debate tax increases taxes hyperinflation middle class Congress welfare/warfare state politics economics Weimar Germany