The Formula for Weimar Germany… Showing Up in the US Today?

Phoenix Capital Research's picture

History is often written to benefit certain groups over others.


Indeed, you will often find the blame for some of the worst events in history placed on the wrong individuals or factors. Most Americans today continue to argue over liberal vs. conservative beliefs, unaware that the vast majority of economy ills plaguing the country originate in neither party but in the Federal Reserve, which has debased the US Dollar by over 95% in the 20th century alone.


With that in mind, I want to consider what actually caused the hyperinflationary period in Weimar Germany. Please consider the quote from Niall Ferguson’s book, “The Ascent of Money” regarding what really happened there:


Yet it would be wrong to see the hyperinflation of 1923 as a simple consequence of the Versailles Treaty. That was how the Germans liked to see it, of course…All of this was to overlook the domestic political roots of the monetary crisis. The Weimar tax system was feeble, not least because the new regime lacked legitimacy among higher income groups who declined to pay the taxes imposed on them.


At the same time, public money was spent recklessly, particularly on generous wage settlements for public sector unions. The combination of insufficient taxation and excessive spending created enormous deficits in 1919 and 1920 (in excess of 10 per cent of net national product), before the victors had even presented their reparations bill… Moreover, those in charge of Weimar economic policy in the early 1920s felt they had little incentive to stabilize German fiscal and monetary policy, even when an opportunity presented itself in the middle of 1920.


A common calculation among Germany’s financial elites was that runaway currency depreciation would force the Allied powers into revision the reparations settlement, since the effect would be to cheapen German exports.


What the Germans overlooked was that the inflation induced boom of 1920-22, at a time when the US and UK economies were in the depths of a post-war recession, caused an even bigger surge in imports, thus negating the economic pressure they had hoped to exert. At the heart of the German hyperinflation was a miscalculation.


You’ll note the frightening similarities to the US’s monetary policy today. We see:


1)   Reckless spending of public money, particularly in the form of entitlement spending

2)   Excessive spending resulting in massive deficits.

3)   Little incentive for political leaders to rein in said spending.

4)   Intentional currency depreciation in order to make debt payments more feasible.


This sounds like a blueprint for was US leaders (indeed most Western leaders) have engaged in post-2007. The multi-trillion Dollar question is if we’ve already crossed the line in terms of setting the stage for massive inflation down the road.

We believe that it is quite possible… for the following reasons.


·      The US now sports a Debt to GDP ratio of over 100%.

·      Every 1% rise in interest rates will result in over $100 billion more in interest payments on US debt.

·      Indications of inflation (stealth price hikes, wage protests, etc.) are showing up throughout the economy.

·      Indications that other countries are moving to abandon the US Dollar are present.


In a nutshell we are in a very dangerous position. This doesn’t mean hyperinflation HAS to occur. Indeed, history often times rhymes rather than repeats. However, the fact of the matter is that the same policies which create Weimar Germany are occurring in the US today. How they play out remains to be seen, but it is unlikely it will end well.


For a FREE Special Report outlining how to set up your portfolio from this, swing by:


Best Regards

Phoenix Capital Research 







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moman's picture


Gold moving from west to east. Fiat paper always goes to zerooooooo. Paper gold BAD, real gold GOOD.  Conclusion:

"He who has the Au makes the rules"


andrewp111's picture

All that is needed to bring on Weimar is a major US military defeat. This could happen in a US-China war.

Quaderratic Probing's picture

China would need to use coal powered submarines as the USA can block all oil day one.

Vendetta's picture

Yeah but the citizenry in Beijing already have a strong protective coating in their lungs from living in the city so they can man the subs with ease.

MontgomeryScott's picture

"The Weimar tax system was feeble, not least because the new regime lacked legitimacy among higher income groups who declined to pay the taxes imposed on them."

I think I see a comparison here.

Title: Big No-Tax Corps Just Keep On Dodging

Pub. Date: April 9, 2012

Length: 8 pages

The difference here is that the 'LAW' allows these corporations to dodge the tax on profits (which actually IS the basis of the illegal taking IRS 'tax law' in the FIRST PLACE).

I wonder how many pages the Weimar 'tax code' was. as of April 17, 2012, the U.S. tax code was 73,608 pages long.

Damnit, Janet, crank up the presses, for god's sake! (Memo from United States, Inc., Title 28 U.S. Code)

Laughing Stock's picture

You are a fucking idiot

This post sucked monkey balls


whidbey-2's picture

 Niall Ferguson’s is an historian, not an economist. His favor since it allows him to write books that sell,but he is still dangerous.   We must not be mislead: the Fed is the response to American politics which runs on feeding the public the mantra "the Economy can grow out of this debt habit (we hope)".  But since the American national taste for debt has reached unspeakable levels for those who understand (and will continue to rise), but is a total mystery to those who do not understand debt, the result will be very like Japan: so long as you are able to export something and pay a little on the debt things roll on (for a while). The money illusion is "we are all in this together and the banks will not let anything happen since they too will suffer".  When it becomes evident that consumption, including exports, will not support current levels of production, profits will fall and with them comes down equity prices. Another recesson in short.  It is really more, it is deflation about which the Fed can do very little except what you see BOJ doing - print money and drink tea.  No inflation Niall, but a slow refusal to use US dollars or buy US goods.  It can end several ways not the least of which is the death of commerce, and a world preference for gold.  The frozen economy. It is not over by a long shot. "own things of value to living". A new currency? Why not, none of them last long ...a Niall??

kurt's picture

We've got articles on Weimar, Hitler's book, Hitler's Finance Minister... 


Is this bait? NSA running an op? 

Don't you have anything better to do?

besnook's picture

hitler arrives when the jews run the show.

satoshi101's picture

ZH loves to feed shit to the proles

No fucking comparison, the USA today is the MOST powerful killer in all world history.

Weimar Germany in the 1920's was destroyed by WWI, the Germans were broke, fucked, diseased and couldn't pay back their debt.

Good money ran away, leaving all bad money, and that bad money became worthless "HYPERINFLATION"

Today the USA lives 100X better than anywhere else in the world everybody that has a USA GUBMINT Job is a KING.

There is unlimited FIAT every COP in ameriKKKa to buy all the TOYS he wants to Beat, Kill, and Imprison every american citizen working in the private sector.

America's POOR 'working class' grovel for food stamps and live on min-wage.

The USA could go on forever in this mode, only a BLACK-SWAN can change the current path of the GIANT FUCKING SHIP, I mean SHIT.


But what could the black-swan be? Nothing, no fucking war can change, any war will only make the USA stronger. Nobody wants the reserve-currency disease, its the kiss of death, as reserves currency enslaves the people, destroy's jobs and forces the country to be a worlds-policeman, ONLY the NAZI USA wants this power.

Thus in SUMMARY it will go on forever,



Tom_333's picture

Vietnam....? Remember that one? Sooner or later the  most powerful killer in world history will go bungling into another adventure that will be an ultimate quagmire. Frankly I begin to doubt it will be so easy to fund that killing spree.

EFNuttin's picture

Friend of mine wrote "A Nightmare's Prayer" about being a Harrier jump jet squadron executive officer in Afghanistan. He highlighted so much of the USA's fiscal troubles. Napoleon declared "Let war pay for war." Instead, the USA lumbers into Afghanistan and probably spends at least $100k per "jingle truck" destroyed. Those battered old cargo trucks crawling along Afghanistan's horrible roads for Al Qaeda probably aren't worth $5k apiece. In exchange for all the death, destruction, and treasure, what economic benefit can Afghanistan provide to the USA? What are the moral effects on the American citizenry from decades of continuous warfare? If 9/11 marked the beginning of a war, why didn't we move to a war footing? Starve the mullahs and sheiks. Set the national speed limit to 35mph as it was in World War Two. Make sacrifices at home so Johnny can come marching home again. Instead, it's print more fiat and get back to Facebook and American Idle.

Grosvenor Pkwy's picture

"Weimar Germany in the 1920's was destroyed by WWI, the Germans were broke, fucked, diseased and couldn't pay back their debt."

Yes, the comparison of U.S. with Weimar Germany is incorrect, and the comparison to Zimbabwe is even more ridiculous.

Germany in the 1920's was ruined by war, and much of the existing wealth siphoned off by France and Britain. The original article's dismissal of Versailles is wrong: Versailles made a big difference in Germany's economic condition.

Zimbabwe was impoverished by internal strife, with many productive small businessman emigrating to the U.S. Canada or other world locations. You can't blame their economic problems on printing too much money; money-printing was an erroneous attempt to solve already serious economic problems.

Comparing the U.S. today with the Roman Empire might be more reasonable. But the fall of Rome took somewhere between 500 to 1000 years, and there were so many social, technological, and political changes in that time span, that no simple explanation accounts for the entire history.

Optimusprime's picture

"The original article's dismissal of Versailles is wrong: Versailles made a big difference in Germany's economic condition."

Correct.  Ferguson a shill for The City of London and the Rothschilds.

Vendetta's picture

"Ferguson a shill for The City of London and the Rothschilds."  Exactly.  Read about half of 'The Ascent of Money" and it sucked wind... it was probably accurate historically as to what happened in France leading up to the french revolution but he told only half of the whole story about it.... I had to put the book away and may use for shooting practice sometime... he is a total shill.

the0ther's picture

I mostly ignore your spam but this was nice and concise. And may well be true. USD fiat doesn't need stupid gold to back it, it's backed by steel. Gun steel. And nukes! We got sweet nukes and plenty of them.

LMAOLORI's picture



The Fed could be dismantled by congress so IMO far too much blame goes to them (successful misdirection) instead of the politicians who are turning us into debt slaves.  Having said that I agree because in reality our money has been nothing but monopoly money ever since we were taken off the gold standard anyway and the weapons we have are in large part why the dollar is the worlds reserve currency.


This is of course all according to the plan devised long ago.  


As long as we have those weapons and the dollar remains the world's reserve currency they can keep this afloat a lot longer then many may believe.  The price for doing so however will be high for the average person.



Yen Cross's picture

  If you look up conservative in the "play book" I'm #1

  You have a few screws loose.

MGA_1's picture

There is nothing even remotely similar like hyperinflation happening in the US right now - in face there is little or no commodity inflation.  Don't listen to this author.

Cult_of_Reason's picture

Re: "Every 1% rise in interest rates will result in over $100 billion more in interest payments on US debt"

Actually it is more like $200 billion. US debt is reproaching $20 trillion fast.

Urban Redneck's picture

It is already well over $200 billion in expense per 1% rise in rates. I don't know whether it's the W in WACC or the A in APR that was ignored by the author... but Forrest Gump could do better math.

Transformer's picture

"There is nothing even remotely similar like hyperinflation happening in the US right now - in face there is little or no commodity inflation.  Don't listen to this author."

I guess you don't buy food at the grocery store.  Or pay any medical bills. 

Son of Loki's picture

Donuts are now over a dollar at many places. Not too long ago they were less then 25 cents.

Miffed Microbiologist's picture

There was a wonderful donut shop by my work owned by a cute Asian couple ( skinny as rails, never understand how they maintain their figures and not laugh at the endless stream of fatties buying their wares). I rarely had gone there but had an incredible craving for their blueberry fritters that are to die for. When they rang up the price it was still .65 as it was a year ago but the size was cut in half. I sighed that my donut really wasn't the same price as before but knew I was better off just having a small version. When I walked back to the lab, I got out my favorite coffee and sat down for a delicious treat. The first bite sent me into a seizure-like gag and I imitated Tom Hanks in the movie Big when he ate the caviar. I couldn't get that shit out of my mouth fast enough. They were using imitation blueberries! The glaze was sugary but had a Crisco mouth feel. The only thought that came into my head was "fuck you Bernanke".

The really sad thing is their place is still well patronized though I will never be back. They are intelligent enough to know most Americans won't know the difference.


Vendetta's picture

"Not too long ago they were less then 25 cents."  Yeah but we can buy the hole for 25 cents .... /snark

Grosvenor Pkwy's picture

"Donuts are now over a dollar at many places. Not too long ago they were less then 25 cents."

Donuts have not been less than 25 cents for many years. Inflation in basic foods has not been extraordinary in recent years. And I'm not counting the name-brand junk-food products, whose prices depend on marketing games.

For example, I just bought a pork roast, almost no fat, for $1.79 per pound, and got it custom-ground for free. Only the most select cuts of beef such as tenderloin have increased in price substantially, but these are in the category of luxuries not necessities. If you are only willing to eat the best 1% portion of the cow, then you should be able to pay the same prices as the top 1% of people to buy it.

OldPhart's picture

Church used to buy them from a baker and sell them for a dime (1967) as a fund-raiser.

Tall Tom's picture

The author stated that it does not end well. I disagree. It will end very well for some and not well at all for most. (snark)


WE still have not had replacement scrip circulate due to a lack of available currency. That totally unregulated buildup of unofficial currency was the tinder which allowed the Hyperinflationary spark to ignite.


Of course, TODAY, the Credit Cards, in this sense, can fulfill that role as the Currency spent does not exist and the purchases are made upon a promise of repayment with official money.


Massive default on Credit Card Debt may be the underlying Black Swan Event which sets this off. With the ACA enactment and the subsequent expected jump in unemployment, or, underemployment, then a rash of Credit Card Debt Defaults is to be expected.


No it does not exactly repeat. But it most definitely rhymes.


It is so fun that the psychopaths want to ride the edge of the knife and push this to the limits. It will not hurt them. They are in a position to profit from it. But most will suffer immensely as a result.


They will still sleep at night.

Fish Gone Bad's picture

Every 1% rise in interest rates will result in over $100 billion more in interest payments on US debt.

This will be paid with freshly printed "off the books" money.  How would anyone know? 

NoWayJose's picture

The last chance for the US was the crash of 2008-2009. If the US would have let the banks fail and let housing re-set back to incomes, then we would be into a recovery now on Main Street. Instead we have both the national debt, annual budget deficits, and Fed balance sheet out of control - and we have no real recovery. Look for an overleveraged bank or nation to fail, more extraordinary steps to save it, and a currency collapse somewhere in the world due to loss of confidence. There is no pretty way out of this. Look for a new currency that will allow conversion of the old, for pennies on the dollar.

Vendetta's picture

Yep.  If someone looks at the charts depicting the deleveraging, housing price decreases and savings rates going up during the 2008/2009 time period they were going in the correct direction for a normal and healthier economy ... but noooo.... can't have that.

Dick Buttkiss's picture

I look for a new currency wherein the dollar is had for pennies, until it is no more:

Boris Alatovkrap's picture

Boris is laugh! When is first translate, Google is mistranslate "dollar is for hard penis".

Dick Buttkiss's picture

Dollar is blow-up of monetary condom. No penis inside, just hot air with no head, much less shaft.

Bitcoin is not need or want condom. Is Big Swinging Dick to impregnate world with new life, while make state lean over and take it up ass.