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Weimar vs USA: The Fall Of The Second Empire Of Debt
While being distracted by the developments of this insolvent European sovereign or that, coupled with increasingly prevalent episodes of deposit confiscation, is all the rage these days, the fundamental problems summarized by these three simple words, too much debt, remain. And as has been explained over and over, while confiscation of wealth merely shuffles the various dollar (and euro) signs on the table with the spoils going to the wealthiest, there is no resolution of the underlying problems plaguing a world that has tens of trillions of excess debt.
As is by now is well-known, there are two ways out of such a conundrum: default, or inflating the debt away. What is also well-known is that as long as the US preserves legacy reserve currency status even by the tiniest of threads, inflation through debt deluge-funded money creation will always be chosen outcome. Just as was the case in Germany in the 1920s. In fact, as the following video shows, the parallels between where the US is now, and where Weimar Germany were just before everything took a turn for the parabolic, are a few too many for comfort. The only major difference so far is that in Weimar, the creation of massive rampant inflation was what economists would call, "successful."
Source: Visionvictory
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Not directed at you, Fonz, but I've seen deflationists get torn a new asshole around here. So I say, what if FED cuts off the spigot and crashes everything right after smart money gets out? Then smart money comes back and buys up everything for pennies, creating just enough rise in asset prices to put everything of significance out of reach permanently for Joe Blow and his industrious younger brother alike.
Until I get the Fight Club elbow-to-the-chops on this, I'm going to continue to think that this is what will happen.
there is a big difference between the deflationist argument and the deflation as a prelude to massive inflation argument. Many on here subscribe to that.
I would think that what I've outlined would cause a general drop in money supply, which is purely deflationary.
The dollars, or whatever, that remain after the carnage would be mostly concentrated in powerful hands, and they would buy up hard assets, which would give the appearance of price inflation but it would not actually be monetary base inflation.
The nobodies would then scramble for scraps and throw what little cash they have into subsistence, which again would appear to be price inflation in commodities to a degree, but without the monetary base expansion necessary to call it pure inflation. We're already sort of there in that respect.
I guess I'm saying people's gonna starve, and walk a lot.
"When people lose everything and have nothing left to lose - they lose it."- Gereld Celente
DHS knows it...
The point you're missing is that as deflation, by its very nature, decreases the velocity of money, then the economy stops growing altogether. If the elites bought up everything and the economy came to a grinding halt, they would have nothing but paper and real estate but have no one to sell it to...except each other.
Then what? Keep trading back-and-forth until your APPLe shares are over $700...oh, wait! (Bad example... :0)
All of their interest-bearing anything stops making money for them at that point and they have effectively killed the goose that laid the Golden Egg.
Another reason that it is obvious that that is not what they want is that they have been trying everything in their power to avoid that very deflationary end-game you mention.
They would wilt on the vine without us doing the work for them.
:D
Power.
Slaves and lords, this is the deflationary future (should it come to pass).
well, let's just say I don't know specifics, details, but I have an idea of the bigger picture - a wide-angle perspective perhaps, one that doesn't rely on allegiance to a nationstate or religion that frames opinions. . .
if one subscribes to the story that the Banking Class has a history of creating debt that allows the nationstate leaders to posture murder and destruction, and that the Banking Class also creates more debt for the ruins to be rebuilt, like some childish game of blocks endlessly toppled/restacked, then like the parasites they are, the world is literally their oyster, they are not a part of the story, they fund & create the story (from their perspective).
nationstates come and go, maps are redrawn regularly, as resources are fought over and appropriated. boundaries are for the inhabitants and their politicians, to be fought over, to wave flags and feel patriotic, etc. as we are witnessing now, those with the least allegiance consider themselves inter-national nowadays. the Banking Class have always held this perspective.
so, when discussing "the Fed" one needs to understand where it came from, when and why, and as always, who benefits. and then, back up history some, then some more - wide angle, devoid of flag-waving - who benefits? and where to next? because this is a very long timeline for them, life-times of mafia-like la familia guiding those who seek to control humanity, the corrupted politicians, clergy, administrators, endless list really. remember Nixon & Kissinger opening up China as the US went off the gold standard? lots of clues to "now" can be found in the early 70's manipulations. . .
so yes, we may be in agreement - in my opinion, the Fed was created to fulfill a particular function, and seems to have been working as intended - not the overt reasons, but the covert, of course - it has also been a lightning rod for hate, so dissolving it seems smart, not to say the blueprints won't be used again, because as long as there are corrupt, greedy sociopaths to install as "rulers" over "nationstates" then there is endless exploiting to be done.
it's the model that is fucked. the model of greed, of debased humanity, that keeps the cycle in repetition. . .
in my opinion, heh.
Just Speculating, IC3-N1N3, but maybe the members of the board of the Fed are also on the Board of the IMF. IBS, CFR, Bildeberg Group, etc. The documents written by these Banker Oligarchs usually talk about Order and Unity. If they werent so greedy and compeditive with one another, they could have perhaps colluded more efficiently by now and would then be further along in their New World Order agenda, One World Bank, One World Government.
They want control of people and resources, not FRNs. FRNs are just a device to gain control of real assets.
They like to divide people (ergo Left-Right Paradigm).
The Rothschilds, Rockefellers, Schiffs, Wargergs. Carnegies (founders of the Fed according to 'Creature from Jeckyl Island') dont want to divide geographical areas, they like to divide people (ergo Left-Right Paradigm) and get them fighting over side issues (Gay Marriage, etc) They want the entire world enslaved "as one", but they are having particular trouble with pesky Arab nations that don't want fractional reserve debt slavery through IMF loans. Thats why they get Liberated and they hate our (cough) freedom.
Look at Iraq when they tried to trade oil with the Euro, Libya when they created the Dinar, etc.
I am not defending or endorsing any nations, Arab or otherwise, just trying to observe the world objectively.
I see the MIC and the banks as the same entities. Bankers have controlled mercinaries and private armies for centuries.
The Fed/IMF/IBS is a jealous monster. Cant have any truly free markets out there, nations might catch on and realise that private central banks that charge interest on money creation is a scam .
Yes, Cathartes Aura, I agree with the idea that laws are social machines, and there are differences between the machine itself, versus the way that machine is navigated, or driven.
One of my vainglorious day dreams is that it is possible to retool the fascist plutocracy, to do what it does better. My overview is that there is nothing too wrong with the American Constitution, the problems are that the vast majority of the People have been reduced to Zombie Sheeple, because the machinery of government has been so totally taken over by drivers who were the best organized covert criminals, who have navigated that machinery towards accomplishing the goals of that tiny group of transnational criminals, with more and more utter disregard for the vast majority of the Zombie Sheeple, and mainstream morons, who were brainwashed to believe in bullshit.
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the vast majority of the People have been reduced to Zombie Sheeple, because the machinery of government has been so totally taken over by drivers who were the best organized covert criminals
That happened because the population became addicted to finding the quickest possible paths to dopamine production, none of which involve general awareness or responsibility.
I believe the cultures have been led down their paths by design, that paths have been laid intentionally.
there are many places to read of "futures" directed by cultural media deceptions - Century of Self springs to mind, as does Marshall McLuhan's The Medium is the Message - add to that the many futurist books, novels, etc. that speak of cultural mind warps, and you can see that we're not so very far off from what was expected many decades ago - why is that?
a study of comparative cultures over long timelines also gives clues. . . I can see massive shifts in just my own lifetime, one of the most obvious (to me) is the legitimising of pornography, and its ubiquitous use in most media, to the point where kids are normalised into sexual behaviours/ways of thinking very early on.
I know this sounds like an old tune for me to be singing, but anyone who's paying attention can see that TV, the movie industry, the "pop" music industry, etc. have shifted rather dramatically in say, 30 years. go back and watch old shows, say, old Academy Awards shows, see how folks are dressed, how they act towards each other, and compare to the "scandalous" way they are now.
I've said it before. . . everything is debased, the money, the culture, the food, water, air we breathe, our personal interactions, all debased. and I believe it's intention-all. they want life to feel cheap, human interactions cheapened, respect for the environment debased. it's the mentality of infants, gimme, I want, fuck you! mine!! not adults capable of compassion, insight, patience, hard work, etc.
and yes, the drugs, the dopamine receptors, the Soma. . . it's all a part of the escape from the pain of seeing cultures degrade.
Isn't this the NIA's new brand?
You know, the rebranding that followed the exposure of their pump and dump schemes?
Every country, every company every person on the planet needs to default all on the same day.
Erase all the zero's in the computers. and just start over.
Does anyone reading here expect the masses to understand what is really going on? Whew, if you do, you are really naive! The great mass of not just America but the rest of the world cannot even conceive of the great deception going on right under their noses! We are only the pawns in a game that most of us wish so desperately to avoid. It's really too late for anything other than regret.
Pretty much. I think the best we can hope for now is a "I told you so" at some point, but I imagine it really won't be that rewarding, as the zombies will likely be ripping off my head and eating whats left of my brains by then!
“The powers of financial capitalism had another far reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements, arrived at in frequent private meetings and conferences. The apex of the system was the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the worlds’ central banks which were themselves private corporations. The growth of financial capitalism made possible a centralization of world economic control and use of this power for the direct benefit of financiers and the indirect injury of all other economic groups.”
-Carroll Quigley, Tragedy and Hope, page 324, first published 1966. Quigley was Bill Clinton’s professor at Georgetown and also taught at Princeton and Harvard.
"The only major difference so far is that in Weimar, the creation of massive rampant inflation was what economists would call, 'successful'".
Except, perhaps for that buffoon (remember "we need another bubble") Krugman.
A country has never chosen deflation, at least not for the wealthy. Deflation destroys unearned wealth because it attacks the stock market first. If there is the belief that growth has been impeded, the lofty valuations of stocks must fall. How can a 900:1 P/E stock grow into that valuation if there is no growth? Inflation is seen as guaranteed growth, a complete fallacy, but believed by the lords of wealth without labor.
Stocks will plummet in an avalanche of selling and a company can be destroyed in a day. Did the company all of a sudden become worthless? Did its product or service disappear? Employees drop away and fail to come in to work? The business still exists, right?
If the corproation can become worthless in a day, it never really held any value. It's stock was always worthless and completely overvalued. The only value was in the belief there would be unlimited growth, and that you could sell that belief to another for ever greater sums. A banrupt entity allowed to exist to serve the needs of the majority shareholders.
What is so bad about deflation? A producer will see lower input costs. He may be able to produce cheaper goods, perhaps even sell a greater quantity of goods as demand increases for quality goods at a cheaper price. A producer always has value, if not in currency, but in trade. Imagine if the price of all usefull traded commodities was cut in half.
Deflation, however, decimates artificial profit. Deflation discourages wasteful channel stuffing. Deflation discourages fraudulent accounting. Because deflation increases the burden of debt. So deflation destroys the value of the publilcy traded corporation and the value of artificially created wealth. If debts can not be inflated away, no amount of credit can faciliate growth.
That is why governments choose inflation. Because those in power are not part of the productive class. They can not create wealth through their own labor, and stand to lose all they hold if infinate growth can not be achieved.
I don't think you can really deflate the "value" of something that is in demand. I agree with your take on stock evaluation as they have no value. They are but a bargaining chip used to offset the declining value of the currency they are denominated in. Maybe the problem modern economies are experiencing reflects what we value, rather than how much?
Let me summarize it for you:
- A normal economy is inherently deflationary, since overtime more goods get produced hence prices go lower.
- However, a banking system can exist only in inflation. Banks cannot exist in deflation.
Conclusion: As long as there is expansion of production chasing demand, banking and real economy help each other.
As soon as the economy goes through deflation, banks start closing down, hence they fight back.
Sorry, but you must be talking about a managed economy. In free market systems, demand drives supply during periods of growth. Investment pursues profit. Yes, competition and development can reduce the cost of production, but a "normal" economy is one of production increasing to meet demand.
If everybody has computer, the demand goes down.
"If the corproation can become worthless in a day, it never really held any value."
I believe "Hostess" belies this statement
But you know, there are key elements that need to be dealt with in any scenario. Frankly the prices tend to come last, first is demand (potential demand if you wish to begin with basics, constrained by income and infrastructure) and there is a complex supply system, complex in that capital is fixed in different industries over different time frames. What is the average US household actually worth? What might it be worth in 50 years? If wages do arbitrage globally, say to a Mexican level (I often use Chiapas because I am a bit of a pessimist), then what is the consumption basket actually going to be able to swing?
I think we'll see many of today's excesses wrung out, like mass entertainment, crappy plastic toys, and expensive pet grooming salons. Housing much much cheaper. Many kinds of tech and gadgets still around because they can be cheap and ubiquitous.
The financial sector in the end only thinks it is King, Lord and Emperor, but in the end they will find themselves desolated, if not destroyed.
US households, all 100 million of them, minus the tiny global elite who deign to list a US address...eventually, given enough real income stagnation or decline, WILL adapt. Savings must increase to make up for the corruption and zombification, and therefore consumption must decrease. As it does, in a slow grinding rachet, all this bullshit from the Fed will just dissipate. And society will change, not always for the worse.
Values will be the key to whether America is worth living in in 2063. Happy Easter.
Further, a discussion of Weimar needs to add a discussion of wages. Wages are important. Inflation is irrelevant when wages rise. Housing is abundant. Will house prices shoot up to $20,000,000,000 a month to rent? Not likely. Weimar stories constantly referrence food inflation (loaf of bread cost $69,000). I just printed a $10,000,000 bill on my printer, will you accept it for a loaf of bread? The point is, the nominal price of bread may have been $69,000 but that does not mean people will need $69,000 to buy a loaf of bread when hyperinflation hits, it just means that at one point, a loaf of bread was bought for $69,000 in Weimar dollars. I do believe inflation will hit, but at $100 a loaf, you will see serious social unrest. At $1000 a loaf, you will see full blown martial law. We will never get to $69,000 a loaf at the rate we are going. The country's social fabric is already in tatters. It is politically impossible to print the dollar down to $69,000 for a loaf of bread as the current paradigm exists. The charts will ultimately look the same between the two, however, the time scales will be much different
Just because something seems unlikely is no evidence that it can't or won't happen. Exhibit A: no one thought the Fed could stop deflation in its tracks, worldwide, particularly in equity prices. But, it happened for a while.
The Fed can create any kind of 'flation it likes. It controls the money supply. But hyperinflation would be highly unprofitable for the Fed as the Fed owns most of the debt
Anyone who has been paying attention knows that the people who were running Weimar Germany's monetary system are the same people who are running it in the United States today, isn't that right Ben Shalom Bernanke?
The article is rampant nonsense. We've been hearing all about Weimar from Glenn Beck, Peter Schiff and other assorted lunatics. No sign of it, never going to happen.
As to the unveiled anti-Semitism of the Bernanke reference, you'd be happier over at Stormfront. Jew-hatred is the sure mark of the inferior mind.
Click on the down vote for this comment to show your abject stupidity.
"We've been hearing all about Weimar from Glenn Beck, Peter Schiff and other assorted lunatics. No sign of it, never going to happen."
Q1 ends with the Dow up 11.25%
With the S&P 500 on track for an 11% gain in Q1
http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2...
Yeah, Mmm hmm, right.
"I'm doing God's work." - Lloyd Blankfein, CEO Goldman Sachs, November 9, 2009
Also worth mentioning again, the Treaty of Versailles specified that war reparations were to be paid in gold, or if in goods (rail cars, cattle etc.) these goods were to be valued in terms of gold by the reparations committee.
http://net.lib.byu.edu/~rdh7/wwi/versa/versa7.html
Treaty of Versailles, Annex II Article 19:
"Payments required to be made in gold or its equivalent on account of the proved claims of the Allied and Associated Powers may at any time be accepted by the Commission in the form of chattels, properties, commodities, businesses, rights, concessions within or without German territory, ships, bonds, shares or securities of any kind, or currencies of Germany or other States, the value of such substitutes for good being fixed at a fair and just amount by the Commission itself."
There is nothing wrong with the creditworthiness of the USA that a good burst of inflation won't solve.
interesting read http://www.oftwominds.com/blogapr13/april-fool4-13.html
House prices may be rising, but it does not mean much because there is no free housing market . The banks have a huge inventory of REO that they are slowly dumping on the market in a very controlled way so the prices do not crash. It is a supply manipulation. The artificial low interest rates also have a major effect on price and sales. These factors make historical comparisons problematic.
Indeed. Home prices are a joke. Anyone who would pay 6 figures for a wood and plastic box deserves to eat a plate full of pinecones. The price of everything always falls back to its input costs in time. Some houses cost as little as $10,000 in materials. The surplus comes from regulatory capture and bloated administrative costs that that entails. You will soon see houses reverting back to the their 1970's prices. Anyone remember the 90's when a $300,000 house was top of the line and a $100,000 was entry level? The chart has become vertically stretched
("Regulatory capture" refers to the cronies at the NAR)
"I'm sick of this crap" - Gerald Celente.
You go bro! Mr. Greg too!!
http://usawatchdog.com/u-s-provoking-north-korea-gerald-celente/
Old news.
An oldie but a goodie.
The whole point of a reserve currency (which the Germans didn't have) is other countries have to hold it. Which means when you print, the entire planet gets inflation.
If you're looking for US inflation, don't look at the US. Look at the countries which hold lots of US dollars. Particularly those with a large trade surplus with the US and even better, a dollar peg. That's where you'll see the inflation.
Same story I have been hearing/reading since Harry Schultz in 1978 and since the lows in Q1/2009, the S&P has been the best place for your money. Gold and silver put in tops in 2011 and gold and silver mining/exploration shares have been horrendous for the past six years.
Never underestimate the replacement power of equities within an inflationary spiral (but you better know how to hedge that inflation).
Sprott Funds were supposed to be "inflation-hedged" but oops...not so much.
The price of PMs is wedged between manipulation and the cost of production and the vice is getting tighter. We will see which force wins fairly soon.
You guys arguing Military Industrial Complex vs Bankers are missing the point, they are symbiotic with each other and parasitic on the rest of the economy. Chickens and eggs. They're not necessarily even in cahoots, but their goals are similar.
Demand for a reserve currency is strong; it would normally cause strong deflation in the originating country. The people become very expensive. So to survive that they have to print lots of money to replace that leaving the country. How are they printed? Government debt. So what does the government spend them on to generate the debt? Whatever the lobbyists tell them to spend it on.
Good thread.
Yes, it is...its got all the elements...power, theft, societal structure, corruption, ethics & morality.
"Sometimes the law defends plunder and participates in it. Thus the beneficiaries are spared the shame, danger, and scruple which their acts would otherwise involve. Sometimes the law places the whole apparatus of judges, police, prisons, and gendarmes at the service of the plunderers, and treats the victim — when he defends himself — as a criminal. In short, there is a legal plunder, and it is of this, no doubt, that Mr. de Montalembert speaks.
This legal plunder may be only an isolated stain among the legislative measures of the people. If so, it is best to wipe it out with a minimum of speeches and denunciations— and in spite of the uproar of the vested interests." - Bastiat
See also, his parable of the broken window ;-)