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Lear Capital: Could an Ounce of Gold Be Worth Trillions One Day
Sponsored Post by Lear Capital
In a really bizarre moment in history, a single American dollar was actually worth 4.2 trillion German marks.
It really happened. To fund its mega-expensive World War I effort, Germany severed the tie between its mark and gold -- something that's always happened, sooner or later, with government-generated currency.
Today there are no gold-backed currencies in the world.
After 1914 in Germany, the mark became just another fancy piece of worthless paper. No longer tied to gold, there were no longer any limitations on how many marks could be printed. But no worries, either -- the patriotic German populace somehow believed everything would work out fine as long as Germany won the war. Because the winners of wars, everybody knew, always dictated the terms of surrender, including -- and especially -- the economic terms.
The trouble was:
GERMANY LOST THE WAR
By the end of the war in 1918, Germany was a real mess. The Treaty of Versailles imposed steep war reparations, and that did nothing to strengthen a German Reichmark no longer backed by gold or anything else for that matter.
Confidence in the mark continued to nosedive, especially under a deluge of post-war government spending in many new social programs (sound familiar?). But Germany couldn't spend its way back to normal -- no country can pull that off -- and confidence in the post-war currency continued to plummet.
By 1922, just four years after the war, Germany's inflation pest had turned into a gigantic hyperinflation monster.
It was like a dog chasing its tail. The faster the government printed money, the faster business raised its prices. Round and round the whole thing went, never quite catching itself.
After the war, just one of our gold-backed dollars was worth -- ready for this? -- 4.2 trillion marks. That's right...a 1-to-4.2 trillion exchange rate existed between our currencies.
Even our lowly copper penny was worth 42 billion marks. Yikes.
Think a $1,000 bill is a lot? Try carrying around a 100 trillion-mark bill. Germans had to carry those kinds of comical bills around just to buy everyday things.
Denial was huge back then. One professor even wrote, "In proportion to the need, less money circulates in Germany now than before the war." That was said straight-faced, despite an official inflation rate of about 325,000,000%.
People eating at restaurants would watch the prices of the food they were eating rise even as they ate. One maid was tipped a dollar by a visiting American...then met with her family to figure out how to invest this relative fortune.
"The ones who fared best were the small minority who had the foresight to exchange marks into foreign money or gold very early," reported Scientific Market Analysis.
Could our once-mighty dollar suffer the hyperinflation humiliation of the German mark?
Could an ounce of gold be worth millions, billions, even trillions in world currencies someday soon?
Could gold be the last money standing? For a FREE Gold Advantage Investor Kit and FREE Special Economic Reports visit LearCapital.com.
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Yup. Read the Germans would pay for their meal as they sat down, 'cause it would be more expensive when they were done.
I can't wait to be able to buy a new 7 series with a Mercury Dime. I may even buy one for parts.
You won't be able to buy that 7 series as it too would be priced in the trillions....assets retain their value - only debt is your friend in hyperinflation
Only true to a certain extent - see Exter's pyramid.
In the hyperinflation scenario envisaged here, assets normally bought via credit lose value relative to the more basic necessities. So that 7 series you've got your eye on will be exchanged for fewer ounces of silver/gold than it is now.
But I have to agree - hoping to swap it for 1 Mercury Dime might be a bit optimistic.
The quote cited here: "In proportion to the need, less money circulates in Germany now than before the war" was not a case of denial, but an accurate statement of the foreign exchange value of the Weimar money stock.
Even von Havenstein understood that the value of the total stock of marks in circulation was far less in terms of pounds, francs or dollars than before the war. His error was in believing that if he could print fast enough, he could put new money into circulation faster than the market could revalue it downwards.
A hyperinflation is widely misunderstood as a case of far too much money on hand. It's actually the opposite, too little money. There is an abundance of paper, but paper is not money. The real money has gone into hiding, and thus goods become horribly expensive in paper terms. The central bank is unable to put enough paper currency into circulation to meet the nation's transaction needs, as the more paper they supply, the faster the market devalues it.
If this seems counterintuitive, read Adam Fergusson's account of the Weimar collapse, When Money Dies. It's back in print after 30 years.
BTW, many German families said they survived the hyperinflation by means of the small silver pre-war coins they had hoarded.
Eureka! Bernanke must have been desperately searching for a copy of “When Money Dies” four years ago. Perhaps that’s how he came to the conclusion that running the printing presses creates doesn’t raise prices. Then he might have leaned on the BLS to severely overweight the book in the CPI since it should be required reading, unlike his “Deflation: Making Sure It Doesn't Happen Here.” There is always an innocent explanation for the CB's mischief-
Correct. More currency was circulating, but a lot less money.
Fiatscos gone wild !! A million fiatscos for a loaf of bread.
All hail the central bernankers !!
haven't taken my thorazine yet, so i'm a little confused. i thought the Swiss Franc was backed by gold. Could one of you financial geniuses explain this to me? I spoke to someone at BFI Consulting in Switzerland the other day and asked her outright. She said yes it is. So wtf, over?
I thought muslim nations used some kind of gold backed currency, too.
Sharia banking specifically forbids currency that is not backed against "something". Gold, oil, silver, whatever. The Germans/Swiss brought us the fractional reserve system. The French the printing press banking system and the British brought us advanced accounting techniques to hide the debt (hail britiana!!). America built an entire financial empire on it...it being the concept of lying on the books.
The Sharia advocates Austrian Economics? Wow!
yes, true. & SHARIA law is AGAINST USERY ! against outrageous interest rates & taking advantage of their customer base with USERY rates or fees ........... unlike some religions I can think of !
Other way around.
The Sharia advocates Austrian Economics? Wow!
I believe you are referring to the Indonesian gold Dinar and silver Dirham
http://www.youtube.com/watch?v=qs9_dZK_fnw
The Swiss Franc is backed by whatever assets the Swiss Central Bank holds, since the Franc is its obligation.
In the case of Germany, not mentioned was the fact that Germany was under crushing sanctions a la Zimbabwe & also that the political situation was in flux in the years after WW1. Various groups were shooting at each other on the streets a la Libya.
Hardly an oasis of stability.
The link between the CHF and gold was severed in 2000. For some time before then, it was partially backed by gold. I don't know what the mechanism was, but it is certainly severed now.
Exactly. There was a referendum in 2000 and the people decided to end the gold backing of the swiss franc. Swiss franc is another fiat currency.
Per the 2000 referendum the gold link to the CHF was severed. I suggest you use discretionary Swiss Francs to purchase physical.
I thought the SUI had some backing too. Not. Reply below is correct -- they changed their constitution in 2000 to remove the gold backing requirement.
But then they even had to dump their gold to join the IMF. How stupid was that? Looks like there really is a conspiracy to form an IMF NWO global fiat. Why else would the IMF require everyone to get rid of their gold... and where'd it all go? The Swiss also just joined the UN a couple of years ago.
(from: Forex online.)
Foreign Currencies Backed By GoldThe US Dollar was once backed entirely by gold, thus earning the term “greenback.” The Swiss Franc (CHF) was once 40% backed by both gold and silver, until 2006 when the country had to sell its gold and silver reserves to join the IMF. Today, not a single solitary currency on the face of the world is backed even 1% by gold or silver, as all nations have inflated their currencies to unprecedented levels in the past 50 years.
greenbacks , refered to the money issued by lincoln, to pay for the civil war .It was not backed by anything. one side of the bill was green.
Greenbacks were later redeemed for gold.
Wrong. The Vuvuzelan currency is backed by gold. Not backed 10%. Not backed 20%.
Backed by OVER 150% gold.
Look at the chart at the bottom: http://www.gold-eagle.com/editorials_08/hewitt071408.html
She was wrong, the Swiss dropped from the Gold std a few years back.
Lear Capital: Could an ounce of gold be worth trillions one day?
Akak: Are advertisements masquerading as articles worth anything?
Who would go to Lear Capital to buy gold?
Go to your local coin shop.
Lear has some fair priced items.
They are in Kali, big issue.Frt costs $35.00 a shipment, I made a mistake and ordered rounds and got bit bad.Placed orders take at least 4-8 weeks for delivery.
But, they deliver, and no probs other than those above.
At least they are honest dealers.
Our 3 Tiered $$$ Sellers, bug my ass.Along with jacked prems.
Hmmm.
Sponsored post...
Never noticed that before.
Me think gold good.
what's this submitted by zerohedge thing? most stuff is submitted by TD
TD is many people, Zero Hedge is the original. All I can do is follow up with a quote from Voltaire that is published many times here, and ignored anywhere else in the MSM.
"Paper money eventually returns to its intrinsic value -- zero."
This is a paid article.
If you don't like it, DONATE.
how do you know this ZH poster is the original?
The good side of hyperinflation is politicians die like flies. Between 1921 and 1923 more than 400 politicians were assassinated.
Lets pray for hyperinflation!
I like the way you think.
Link or GTFO. Globally or just Germany? If true, this would be the best of silver linings.
Germany only
http://www.kitco.com/ind/Wieg_cor/roger_mar042011.html
That was an interesting read. Thanks.
this man understands.
Okay, any regular here who hasn't coughed up to help Tyler keep the lights on, PLEASE do so now. We'll take a roll call later. Then, and only then we'll decide what these B.S. posts really mean. Most likely possibilities:
1. Sellout gold shilling. (not necessarily most likely, but they are a PM dealer)
2. Can't pay the light bill.
3. Agreed to "x" number of "posts" for "x" amount of $$, and can't get out of it now, despite the scorn of its readers.
4. Not enough Tylers to keep up with demand for new material. (reaching here)
Col, more folks would donate if they they did not have to do business with PayPal, you can use a CC, but it's still routed thru PP.
PP is owned by eGay, both are sorry SOB's, anti gunners, and until we get a direct line into donations outside that scumsucker outfit, I fear the donations will stay far lower than if we had alternatives.
The Versailles treaty, dictated by the House of Rothschild, demanded that German reparations be paid in gold. Figure it out. No wonder Hitler rode to power by pointing out what the international Jewish banking cnspiracy had done to the German people.
Sound familiar?
http://hidhist.wordpress.com/hitler/was-hitler-a-rothschild/
Yeah my Grandfather told me about these times. We are heavily spoiled brats in comparison.
Yes, Germany got itself into the hyperinflation mess. They went to war, bet the farm, and lost. And as sore losers, they blamed someone else for their mistakes.
Makes you wonder who they'll blame when the euro finally does implode.
awful
American?
i don't know, they already killed all the jews... greeks?
The French, Greek, ect.. Who else ?
you related to TK-421 by any chance?
No, but i consider him a Hero
All that printing made those Krauts Sour.
Poor Lear Capital.. Sounds like they're confused in which character to portray in the 2011 edition chapter of "Lord of the Flies".
The Au/Ag ratio is going to take a big Silver dump all over the pretty yellow metal before that happens. For me I'm going to chicken out and grab some more Gold at 11 or 10 and watch what happens after that. That ought to be a good one.
And the NEW content and thought in this article appears where?
I think it is supposed to be sung as a mantra while polishing your bars of silver and ore in your nuke-proof basement on Saturday morning.
Switzerland is a small country with an export driven economy (37% of the size of Virginia). After the Gordon Brown maneuver, the SNB still maintains reserves 3.89oz of gold per capita and foreign currency reserves of over $28,000 per capita. The US government, meanwhile, maintains gold/tungsten reserves of 0.77oz per capita and foreign currency reserves of $0,000 per capita.
Since Switzerland’s economy is export driven a gold standard is not practical, since it would add to the cost of exports as the price of gold appreciates (Think big pharma is bleeding the economy now, what happens when pill-poppers are effectively measuring the cost of their pills in gold or silver coins…)
One of the other big exports (financial services) is even more problematic. Swiss and Austrian bankers have financed much of the central and eastern European mortgage boom in CHF. If the Swiss Franc rises too much or too quickly, membership in the PIIGS will explode faster than protests in the MENA, and the global fiat ponzi scheme will melt down faster than a Fukushima reactor.
So if a gold or fractional gold standard is implemented, it needs to be coordinated across the globalized/integrated economies. In the meantime, half-baked money managers and investors need to stop piling into the CHF for safety, since it actually destabilizes the precariously balanced fiat pyramid.
Please, can we get a grip on these idiots?? Ok, so let's get this straight, I go and buy an ounce of silver and one day soon I'll be a billionaire? Please, just disappear you cretins.
Lol
Yes, lets get this straight.
Taken in context I think what the author is referring to is Weimar or Zimbabwe style depreciation of the currency in the wake of inflation from the FED. Everyone will be a billionaire at that juncture.
http://www.youtube.com/watch?v=eA0OMcsx1S0&NR=1
how to spot fake silver rounds.....
Excellent video!
But, if the Chinese ever counterfeit Eagles, they may have problems as Eagles are Legal Tender, and then you are talking the Secret Service...
Do,
and the Entire US Fed & Military would do what?
NOTHING.
Like they do now.
I have never seen an article that looks at the issue of debasing currency in order to maintain export competitiveness that examines the issue from a real vs. nominal point of view. If a nation debases it's currency 10%, a company needs to increase exports 10% just to stay even in real terms, because it is being paid by the importer in debased currency.
Then it has to pay taxes on the earnings from those increased exports, so to stay even it has to export even more than 10% extra, the amount depending on it's tax rate. In addition, their holdings of cash and cash equivalents just took a 10% hit.
Am I wrong?
I haven’t seen any articles either, and I wouldn’t trust them if I did- as they tend be written by academics/economists (ceteris paribus). Nothing is ever equal and business tends to involve more variables than economists can properly address in an article. The overly simple answer is they make it up on volume, and if smart or lucky, even more, by the inherent inefficiencies of a floating global fiat currency system. At a minimum, any proper academic examination of the issue would have to take into account the various and different currencies used for Input Cost, Transportation, Transaction Settlement, and Accounting Domicile of the Seller. Throw in the PED for the Buyer’s currency, and the Seller’s hedging opportunities and costs- my brain is spinning before I quantify the currency impact of sales projections in dinners on the town vs. imported sports cars. The money paid to the accountants to prevent an anal raping by the tax man is a fixed annual cost, and if the accountant is good then the tax man takes what he is offered regardless of sales volumes and currency exposure. However, without both a seat at the table and the ability to close a deal, then the entire exercise is entirely academic. Then again, Happy Hour is several hours old over here, and my 48 hours of freedom is almost half gone, so I could be out of my mind.
Yes. Completely.
Peter Schiff on fox business speaking on the lying Bernank
http://www.youtube.com/watch?v=JFNviCqwy8g&feature=player_embedded
check out Lori Rothman,who has bought gold, right at the end. priceless...
She got her some gold.
ONE.
She's safe at 1st..............LOL
Beware of any article that begins with the word "could." It is the ultimate weasel word to justify any insane headline. "Could Ben Bernanke be the best thing to ever happen to the US dollar?" "Could Obama really be a space alien?"
(d)
I have donated in the past via paypal but would happily send over a 1 oz silver englehardt I have sitting around, where do o send it?
(d)
It was apparent that Thursday/Friday the Fed was defending the dollar with a bunch of "no QE3" and other insinuations they jaw boned the dollar higher for another few days. I like what trade Dan Norcini had to say about it:
Long Bond a Casualty of Fedspeak
A very slight upward revision to 4th quarter GDP along with "hawkish" talk by select FOMC governors may be pushing the Dollar higher but it is not helping the US bond market on the long end of the curve.
It has dropped back within the former trading range or congestion zone that was once in place dating as far back to December of last year. You will recall that the long bond had broken out of this range to the downside in early February only to rise, Phoenix-like, from the flames by the surge in crude oil prices as unrest spread across MENA as well as events in Japan.
Since that time however, the bonds have been steadily moving lower. Keep in mind that Bill Gross of PIMCO, who sold his Treasuries because he felt yield was way too low, is undoubtedly being copied by many others. There are also many commentators and analysts rightly asking the question - "once the Fed supposedly stops buying all these Treasuries at the end of June, just who is going to step up and buy all of this US debt especially at these low yields".
While the Fed mouths may be talking up the Dollar and talking down Gold, they also are risking a rise in yields on the long end of the curve. No doubt this is not good news for the beleagured real estate market.
(d)
China's Central Bank recommends Gold for value preservation
http://blogs.forbes.com/robertlenzner/2011/03/26/chinas-central-bank-recommends-gold-for-value-preservation/
(d)
All hyperinflations have occurred in countries which had high sovereign debt and no industrial capacity. We've got the first and have industriously destroyed the second for about 40 years now.
Despite the occupation of the Ruhr region by France, interwar Germany still had an impressive industrial capacity, even as they drove themselves into hyperinflation.
(d)
Yeah gold goes to 1 trillion in USD terms, but I think the $ will get stronger vs. the Euro - gold will be 1.25 trillion Euros. The USD index could rally back to the 90s soon LOL.
(d)
Nope. No contrarian sign here.