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The Reason For Hyperinflation-phobia
Submitted by Doug French via Mises Canada blog,
The New York Times can be forgiven for blaming the empty shelves in Caracas to the plunge in oil. However, a raging hyperinflation cleared the cupboards before the price of oil was cut in half. William Neuman’s front page story illustrates what the NYT does best, making economic tragedies personal.
Laboratory assistant Mary Noriega must stand in line for hours with 1,500 others just to buy food, “as soldiers with side arms checked identification cards to make sure no one tried to buy basic items more than once or twice a week.” Ms. Noriega has had to barter with neighbors to put food on the table.
In Thomas Mann’s epic short story describing life in Weimar, Germany, “Disorder and Early Sorrow,” the woman of the house, Frau Cornelius, similarly tries to keep food on the table,
The floor is always swaying under her feet, and everything seems upside down. She speaks of what is uppermost in her mind: the eggs, they simply must be bought today. Six thousand marks a piece they are, and just so many are to be had on this one day of the week at one single shop fifteen minutes’ journey away.
Paul Cantor, in his analysis of Mann’s story, “Hyperinflation and Hyperreality: Thomas Mann in Light of Austrian Economics” points out “how one government intervention in the economy immediately leads to others. Having produced scarcities in the market with their inflationary policies, the authorities introduce new regulations to try to deal with the irrationality they themselves created.”
It’s not hard to understand what The Economist called “Germany’s hyperinflation-phobia.” The premier economics magazine in the world wonders “the extent to which these lessons remain appropriate. Deflation is now a greater risk than inflation in Europe.”
However, memories run deep when the exchange from marks to dollars goes from 4.2 to one in 1914 to 4.2 trillion marks to the dollar by November 1923. In Mann’s story with this monetary debauchery taking place in the background, people learn how to work around it.
For no single household is allowed more than five eggs a week; therefore the young people will enter the shop singly, one after another, under assumed names, and thus wring twenty eggs from the shopkeeper for the Cornelius family.
In an eerie case of life imitating art that imitated life, as the Venezuelan people buy laundry detergent, vegetable oil and corn flour, (all subject to government price restriction),
Every purchase was entered into a database, ensuring that shoppers did not try to buy the same regulated staples at the chain for at least seven days.
Soldiers patrolled the line outside, police officers were stationed inside and government officials checked identification cards, looking for fake ones that could be used to cheat the rationing system — or for immigrants with expired visas. An official from the immigration and identification service said that offenders would be arrested.
In Caracas the government won’t be so easily fooled. As the Times reports shortages and long lines are a way of life in Venezuela, but with the plunge in oil,
the government has sent troops to patrol huge lines snaking for blocks. Some states have barred people from waiting outside stores overnight, and government officials are posted near entrances, ready to arrest shoppers who cheat the rationing system.
Healthcare has taken a considerable hit with supplies running out. Operating rooms have been shut down for months despite hundreds of patients on the waiting list for procedures. At one private clinic a surgeon was able to keep the operating room open by smuggling in essential drugs from the U.S.
Thomas Mann shows how quickly money loses value in the Weimar Republic.
Before the young people arrive [Frau Cornelius] has to take her shopping basket and dash into town on her bicycle, to turn into provisions a sum of money she has in hand, which she dares not keep lest it lose all value.
The NYT has a photographer in Caracas, and this photo speaks a thousand words.
“Things are going to be even worse because oil keeps Venezuela going,” Luis Castro, 42, a nurse told the Times while standing in line with hundreds of others at a grocery store. He had arrived with his wife and 6-year-old son at 6 a.m., but by 11:30 a.m., they had still not entered. “We’re getting used to standing on line,” he said, “and when you get used to something, they give you only crumbs.”
Cantor writes that while most people are ruined in a hyperinflation some make fortunes. In its slideshow the Times featured a picture of a speculator with a fist-full of money in Caracas selling black market soap, butter and cooking oil on sale.
In his book The Downfall of Money:Germany’s Hyperinflation and the Destruction of the Middle Class Frederick Taylor writes “people with average incomes, and no access to agricultural produce or foreign exchange, were forced to hunt and queue for food–both because their incomes more often than not did not stretch to buying what they wanted on a particular day but also because there was, as the hyperinflation tightened its grip, a genuine shortage of food.”
Farmers didn’t want to part with their produce in exchange for worthless paper. ‘In what was rapidly becoming a barter economy, the agile and the cunning, not to mention dishonest, citizen was top of the Darwinian heap,” writes Taylor. Doctors “in rural areas demanded payment in food from farmers who came to them for treatment.”
Workers began to be paid everyday and the men would hurry off with their wives to buy whatever they could. They would then hurry to a bank to buy whatever ‘hard’ currency could be had. The number of banks mushroomed to handle the business. Deutsche Bank had 15 branches in 1923 and ten years later it had 242. The number of bank staff quadrupled. In 1921 67 new banks were founded, 92 more were created in 1922, and 401 opened in 1923-4.
Economic activity didn’t create the need for new banks, “the banks were overloaded with orders for buying and selling shares and foreign exchange proceeding from the public which, in increasing numbers, took part in speculations on the Bourse.”
“The collapse of money and the collapse of morals became identical,” writes Taylor. Flesh was for sale as is depicted in “Cabaret” and not just with traditional prostitutes but “the newly dispossessed daughters (and sons) of the educated middle class, who had now also taken to the sex trade, were endlessly available at a price–preferably in cigarettes, precious metals or hard currency rather than paper marks.”
With the inflation wiping out the savings of the middle class, it meant young women had no dowries to offer. “When the money became worthless,” wrote one woman, “it destroyed the whole system for getting married, and so it destroyed the whole idea of remaining chaste until marriage.”
The author cites a story from Russian writer Ilya Ehrenburg about a night out with friends from Berlin’s foreign colony. he writes that they ended up at a “thoroughly respectable bourgeois apartment.” They were offered lemonade with a little alcohol in it and
Then the two daughters of the house entered, in an unclothed state, and began to dance. The mother looked hopefully at the foreign guests: Perhaps her daughters would please them and would pay well, in dollars, of course. “And this is what we call life,” the mother sighed. “Actually it’s purely and simply the end of the world.”
Nobel Prize winner Paul Krugman, always annoyed with hyperinflationphobes wrote, “No, the 1923 hyperinflation didn’t bring Hitler to power; it was the Brüning deflation and depression. Hard money and a gold standard obsession, not excessive money printing, was the proximate disaster.”
Oh really? In 1923 Hitler said, “Believe me, our misery will increase. The scoundrel will get by. But the decent, solid businessman who doesn’t speculate will be utterly crushed; first the little fellow on the bottom, but in the end the big fellow on top too. But the scoundrel and the swindler will remain, top and bottom. The reason: because the state itself has become the biggest swindler and crook. A robbers’ state!”
Hitler wasn’t talking about hard money, he was talking about excessive money printing by a robber state. Krugman himself echos those words in another column,
Hyperinflation is actually a quite well understood phenomenon, and its causes aren’t especially controversial among economists. It’s basically about revenue: when governments can’t either raise taxes or borrow to pay for their spending, they sometimes turn to the printing press, trying to extract large amounts of seignorage — revenue from money creation. This leads to inflation, which leads people to hold down their cash holdings, which means that the printing presses have to run faster to buy the same amount of resources, and so on.
Out of control government that can’t borrow or tax enough to pay its bills? Zimbabwe, Iran, Venezuela…what country is next?
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How many quadrillion dollars are floating around the derivatives market?
BEAUCOUPS BITCHEZ
Whatever happened to the Krugster? He used to hang out here. Probably one too many "ad hominem" attacks.
And I ask the question: "Are those soldiers protecting the food markets eating eggs each morning?"
What other countries?
ObamieLand!
Right up the street and to your left down the hill from WallyWorld
Paper money is Socialism for the Rich. With Gold and Silver you're paid what you earn.
6,000 Reichsmarks for one egg?
I think I'll stop making fun of the neighbors damn fool hens.
Damn...you could build some well insulated houses out of all of the paper if you had a chicken coop. I wonder what the R-value is for a stack of USD fiat benjis.
if i could teach roosters not to crow, i would never buy a chicken again.
the local council limits me to 6 chicken.....
Me: Hello council, are quails counted?
Council: no
well, 55 quail eggs in the incubator then. a nice $15 birthday present to myself.
storing 12 months of human food is hard and/or expensive. storing bird feed is easy.
Rabbits don't have to be listed on tax forms in Missouri. So, I guess when I go back, I'm buying some rabbits!
you can show people your real rabbits and sell them roof rabbits instead
6,000 Reichsmarks for one egg?...
I continue to be amazed at the 3# broiled chicken at Costco for 5 bucks. My grandson insists on seeing the "chickens going round and round" every weekend when we do our shopping and get our obligatory frn1.5 "all beef" "Kosher" hot dog.
I have to confess to buying the 2 dozen “organic” eggs this past Saturday, they were less than the normal “in-organic” variety by about .05 each.
Thank you California voter! Eggs have jumped from ~ .12 each to ~.30 each now that chickens have an opportunity to eat food covered with their own feces.
That broiler at Costco also makes a great bullion for soups, something that should be of interest to ZH'ers.
Those of us with damn fool hens appreciate that.
Hens raised at home in the city that are treated well (i.e. given room to roam) bestow a few very nice qualities (in AZ at least):
1. The eggs command a premium from people that don't trust our gov't approved stores, or who are really into free range "hippy" stuff. I get $5 a dozen for mine - meaning I turn a small profit even though I eat some of them too.
2. I and my neighbors no longer need to call exterminators. I dunno specifically how this works, but since I got the chickens, we see very few roaches (none in the house), no more kissing beetles, no more black widows, no more scorpions, and the number of crickets has cratered. The population of sonoran geckos has exploded - and they keep down the moths, mosquitos, and other night time creepy crawlies.
3. Compost that is like rocket fuel for plants. My garden, my sister's garden, my dad's garden, and my girlfriend's garden are all producing far more than any chemical based fertilizer we've ever used. The key is composting the chicken manure - it removes the smell of the coop and in a couple months you have some amazing stuff for your plants.
4. Women dig chickens that are halfway domesticated. I have yet to meet a woman that doesn't think it's just a ton of fun to hold my most personable bird, Hildy. She purrs somewhat like a cat when held and petted. It's adorable.
5. Feathers. The chickens molt twice a year, which means twice a year I get lots of chicken down that I can make into stuff. I have a friend that makes jewelry out of shed tail feathers and the trimmings from the flight feathers when I clip them.
6. Yard waste disposal. They LOVE grass clippings, and they are crazy about leaves from my biggest tree. Anything they won't eat (which is next to nothing) gets put into the composter along with the manure.
That was more than a little tongue in cheek. We had chickens on Mule Creek and Muddy Creek, and I'll have more soon. It is amazing how good they are at finding their own food.
Hah, gotcha. I never imagined they would have so many knock-on benefits. And they're so easy to care for!
I have wooded land where fox roam and hawks hunt. Are they compatible with chickens?
So, green up arows = yes, they are compatible? Red arrows = no, the hawks and fox will be eating many chicken dinners?
#3 - my olive trees are putting out so hard right now.
I have three near their coop. two of them arent even supposed to be producing this year (olives yield every second year) - and i found a snapped branch last weekend because it was so heavily laden with fruit. :)
My Grandmother raised chickens on the farm and we slaughtered some in the fall for winter food.
She had a handy little broom, which was as chickens, fully feathered wing. Dried out it worked very well.
Urbanization has ruined us.
promises of dollars. TARP will look like pocket change when the derivatives bubble pops
I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... www.globe-report.com
"How many quadrillion dollars are floating around the derivatives market?"
That's easy $0.00.
None of it is 'dollars' It's all CREDIT/DEBT, an obligation to pay in 'dollars'.
People get so confused simply because they use the same name for their debt obligations as the money they're supposed to be paid in.
There are $1.33-Trillion in actual Legal Tender Dollars in circulation around the globe, all the rest is Credit/Debt, an obligation to pay dollars, or the assumption that dollars will be paid.
NYTimes: "Socialism ruins peoples lives, support socialism here in USA"
Welcome to the National Socialist German Workers' Party. Welcome to Obamaville...
Read the article's comment thread -- especially from all of the socialist apologists that read the NYT. To nobody's surprise, they all live in an alternate universe; and one thing they're all absolutely certain of -- it's not socialism's fault. Liberals are truly insane.
I don't expect HYPERINFLATION in AmeriKa as much as I expect EMPTY SHELVES...
The EMPTY SHELVES part of it will exist more on the fringes [ie, for lack of better description 'BLUE CITIES']...
I imagine 'flyover' America will escape the worst of this [though it's too vast a land mass to go into all the various POCKETS]
"fringes"
Jut so you know, 80% of Americans live in urban areas.
Fine... Then 80% are fucked & should consider moving... I don't give a FF if they do or don't... If they happen to be 'late to the party', then I hope for them they're either:
- packing
- packing more than 9mm
- have a posse
- posse is packing more than 9mm
- their aim is good
- their clips are full
- they have spare mags
Carry on!
Anyone know where I can buy gold coins in Venezuela at the official exchange rate?
Sadly, I suspect the PM dealers are a lot smarter than the government.
How much TP you got, cabron?
Why didn't I think of that?
Desperate times, amigo.
The replacement for TP is a cob of corn with that has been shuct? kernals removed. Never tried it myself. But may have been the origin of the word "cornhole".
Note: only good for use in the outhouse. Do not flush.
But, but, but, we're told falling prices are evil, not hyperinflation.
"Its all very simple really, we'll just print moar money to pay off the debt!"
Not hearing much about that rocket science anymore ;-)
Yeah, whatever came of that brilliant "trillion dollar coin" idea?
lol...that was a good one...right up there with parking a beat up old Yugo outside the Treasury spray painted with a "One Trillion Dollars" on it.
So easy even a socialist shaman can do it ;-)
The world class "tell" was when Lies Man says "there is no exit plan", and Maria, fat assed Bartiromo damn near lost her cookies. I thought she was gonna choke to death or have a heart attack on camera.
Not as dumb as she looks. I see more "deer in the headlights" looks all the time. There is no plan.
Juries still out on when they start slitting each others throat trying to get out.
But its coming.
Ha,ha!
Theoretically brilliant, minor flaw being that recipients of the CB's largesse pay off debt with their ill gotten gains thereby shrinking the economy.
QE, it turns out appears to be deflatonary (who'd have thunk it ?)
Printing Money destroys liquidity (WTF)
The true question, the one we will get to when all this fake shit has been shown in the true light of day is 'Title' have you got it and can you defend it because if you can't then it isn't worth shit.
That's deflation bitchez
Yeah, I thought about that; what would happen if the Canadian goverment just cut a $20000.00 cheque to every citizen. With such a "small"amount of money, I bet most of them would...pay off their credit cards. Is this another example of how magically printing money, ends up being deflationary?
It doesn't matter what Governments mandate any more
There is the Alt Market
Gov:=Irrelevance
German and Dutch gold repatriation is a farce:
http://bullionbullscanada.com/gold-commentary/26591-secret-gold-repatria...
Everything is a farce and everything is a conspiracy. No links needed.
Including you.
Hitler was right
Far right.
"Hitler was right".
Oh yeah? Well, it's easy enough to praise Adolf Hitler.
I don't have a negative or a come-back to that. I just think it's easy to praise Hitler.
Even if you're Jewish, you have to admit the guy did wonders for the History channel.
'Hitler' is history's most convenient scapegoat. He is the 'gift that keeps on giving' for a certain class of people who use his 'legacy' as a highly effective tool of social control.
The schmucks here praise Putin so go figure. One thing is true about ole Adolph. Had he won, the current Islamification, ghettoization, and browning of Europe would be a non-issue.
Of course Hitler was right (once)
It's just locals didn't really want war with their neighbours, they just wanted fair trade and equality before the law.
Call your fucking war, I'm not coming, nobody I know is coming, call your fucking war round here pal and we will give you war, war like you have never seen before, you dream of total war, the havoc and destruction that theordinary people will wage upon your world will be like nothing that has ever happened in history. You misunderstand the will of the people, we have fad enough. The past passivity is no reflrection of the future, it is a symptom of the pent up anger.
Wage your fucking war, amongst yourselves but do not involve us
the common man will bring total warfare, against combatant and civillian alike
There will not be a war.
There will be a series of hangings of world leaders
They will call it war, it will be over very quickly
"Mary Noriega must stand in line for hours with 1,500 others just to buy food, “as soldiers with side arms checked identification cards to make sure no one tried to buy basic items more than once or twice a week.”"
Im sure the military guy had no problem to access food. To those who have preferential access to freshly printed money or easy credit, food and other resource are never scarce in a finite world.
Or have a small piece of land/small farm. Obama's sons won't feel like going through the effort to go that far out of the hood to loot a farm. That and farmers have guns - but not much bling unless the guns are chrome plated.
That's their one saving grace. Too lazy to commute to work! They will loot and kill within their own 'hood as their numbers revert to the mean. It's not gonna be all that bad. Just Ferguson on a bigger scale.
The original story on the NYT quoted Mary Noriega as a former supporter of Chavez..."as she wiped her feet on a Chavez t-shirt on the floor"
Sometimes it sucks to get what you wish for.
"Hitler wasn’t talking about hard money, he was talking about excessive money printing by a robber state."
He was speaking of the clever nature which exists with the money-changing class and the rather unique knack that class has of getting their slimy palms between the intersection of need and supply, for anything from necessities to financing.
nice anti-jewish post without triggering the filters, you are obviously an intelligent sapient, not a bot, do you want a job ?
Your conscience bothering you again Bobby.
Absolutely right. They are going to have to be careful about quoting Mein Kampf because people are going to start to think umm - that sound right and maybe I should find out some more!
20 years ago, I tried to get a copy in the state library system which includes all state college libraries. Not a single copy available. I knew right then all the history, pertaining to Hitler, was a lie.
Which reminds me of this. Warning, graphic.
http://www.bestgore.com/holohoax/auschwitz-plaques-six-million-myth-revi...
Copters, bitchez
A Memorial for the Victims of the Wilhelm Gustloff sinking, Jan. 30th, 1945 – A “hate crime” of epic proportions
http://justice4germans.com
While I believe in freedom of speech, I also value my time and attention. Economic advice from Hitler!? Why not political advice from Rove and criminal justice advice from Pol Pot? Is Zerohedge on the slipper slope of becoming an "intellectuals" FOX? Please, a little discretion.
If you really think the writer is recommending that we endorse some fascist policy as our own then - fuck - you need to take some reading comprehension courses. Seriously, judging by your statement - seems like your time is not as valuable as you might think.
What's wrong with taking financial advice from a megolomaniac that brought his country to near complete physical and financial ruin? I'm surprised Krugman didn't mention this destruction as part of Germany's current financial prosperity.
The point is, while the quote may not be wrong, there are better people to shine a light on.
German hyperinflation wasa little different than other hyperinflations because German had a complex and dynamic economy and very much the way I see the current strategy vis a vis Russia so it was with Germany: "we will conquer you through economics."
Needless to say Keynes was right on that one when he the huge reparations were a big mistake a d would lead to another World War.
In short once Germany stopped paying them "the sanctions regime has to man up to the military consequences"
And so again we have with Putin's Russia...a sanctions regime resulting in military consequences.
Oil price have shot through the roof again as folks start speculating on "this oldie but a goodie" Generalplan Ost.
CRAZY.
Ironic that Putin would be called "Hitler"... although unlike Hitler Putin has not saves Rusia from this era's Great Recession but appears to have in fact plunged his country into its own variant of it.
Hence " the war option becomes even more viable" in my opinion.
As the Middle East has shown once these things get started they never stop.
I'm still on the fence about my treasury bet but part of me says we will see massive issuance in order to fight this war...even if revenues start to massively increase. That's good news for bond bulls....
And how about the people say 'fuck the war mongers' and say 'hang the profiteering warmongers from the pikes' instead.
Is that long or short war-mongering ?
Hyper-inflation = Rapidly falling trust in your currency, and need to swap it for real assets.
Strong USD = Everybody wants the USD. Cash is King.
Strong USD = Everyone wants out of USD at the same time.
So, the Mises misers say its all about "Out of control government that can’t borrow or tax enough to pay its bills", ignoring the interference by the US and the banksters who control its legislature, who work hard to destroy any attempts to exercise sovereignty by those whose resources they want to control.
From Counterpunch's "Venezuela: A Coup in Real Time"
"making Venezuela’s economy scream is without a doubt a rapidly intensifying strategy executed by foreign interests and their Venezuelan counterparts, and it’s very effective. As shortages continue and access to dollars becomes increasingly difficult, chaos and panic ensue. This social discontent is capitalized on by U.S. agencies and anti-government forces in Venezuela pushing for regime change. A very similar strategy was used in Chile to overthrow socialist President Salvador Allende. First the economy was destroyed, then mass discontent grew and the military moved to oust Allende, backed by Washington at every stage. Lest we forget the result: a brutal dictatorship led by General Augusto Pinochet that tortured, assassinated, disappeared and forced into exile tens of thousands of people. Not exactly a model to replicate."
http://www.counterpunch.org/2015/02/02/venezuela-a-coup-in-real-time/
I think you're onto what is going on in Venezuela.Our handlers got pissed at the Venezuelan leadership for wanting their gold back. Venezuela probably started hinting they were tired of walking the line and maybe even let slip that they wanted to abandon the petro dollar scam. Didn't work out too well for Saddham or Ghadafi or their people, or countless others either..
Counterpunch is regularly full of nonsense and that commentary confirms it.
The US was and has been the largest purchaser of the primary export of Venezuela, the oil. Those oil revenues gave the country a lot of opportunities. After the communist have run the country they cannot even raise their own chickens or vegetables.
Chavez destroyed the economy of Venezuela and Allende destroyed the economy of Chile. It took them years to reach the predictable and inevitable end. The communists regularly peddle some story of Saint Allende. The man was no different from Chavez and now Maduro.
I'm all for denouncing US imprialism, but the idea that Venezuela's hyperinflation and shortages are anything but self-inflicted and that socialism would somehow "work" if not for the imperialists interfering with it is totally absurd.
What crazy times we live in! Every major currency is backed by nothing. They are battling against each other to see who can print more. It doesn't take a rocket scientist to know that the more dollars that exist (printed from thin air) the less valuable each previous existing dollar is worth. If you have more dollars than your monthly expenses in a bank account, you need a wake up call. You not only lose purchasing power everyday due to the prices going up due to inflation, but you also make it easy for the banks (or gov't) to confiscate when they do their bail-ins. Buy silver while it is cheap and available. If you are trying to get someone started in silver, these candles with a silver coin are perfect: https://www.etsy.com/shop/ScentSavers . Silver has been used as money for thousands of years. It will literally be worth an infinite amount of dollars someday. Each dollar bill, including 100s, only cost a few cents to produce. It's a confidence game. Once that confidence is gone, it won't come back!
Except, its DEFLATION we are more likely to see here in the US as demand falls and QE is no longer able to keep it at bay.
In Weimar Germany they only printed one side of the currency, to save the cost of ink.
I keep re-reading Mein Kampf, at it keeps "re-blowing" my mind.
So much of what is going on today in the Western world, can be found right in the pages of that book. It's almost like Germany had a bad case of fleas, and when America came over to help, all the fleas abandoned Germany and hitched a ride back to the new world. Then they settled in New York and eventually decided to "retrofit"the elevator shafts of the twin towers...and here we are
(this is of course, in no way comparing the good Jewish people to fleas)
Some Nazi fleas were allowed to escape to Argentina.
These fleas became wealthy selling narcotics to stupid Americans.
The dollar will die.
Import prices will climb.
So what other currencies do you see as the big winners in the dollar's death? Where are the healthy economies?
Rubles and Yuan traded on the RMB Hub.
Follow the gold.
Betting on one central bank over another is a fool's game, and gold has been pretty disappointing in the last few years despite all the manipulations.
"The yuan has been on a slide against the dollar since a peak struck in January 2014. That high was followed by a dramatic crash in the exchange rate - which many said was engineered by the central bank to punish speculators.
While the currency recovered through the summer it began sliding again in late October in the face of policy easing by the PBOC in the face of surprisingly weak economic fundamentals, and a massive dollar rally in global markets. Further easing is expected this year.
Offshore yuan bond yields, particularly at the short end of the yield curve, have started trading at a higher yield to their mainland counterparts for the first time, suggesting investors are demanding higher yields to compensate for downside exchange rate risk."
http://www.reuters.com/article/2015/02/02/china-money-idUSL4N0V92CX20150202
Hold on to thoses dollars pinky.
Keep believing your exceptional insight will help you pick the asset that won't deflate when the SHTF.
Heresy!
Call your hyper-inflation, call your mega deflation, call your BTFDs
Call it what you like...
"However, memories run deep when the exchange from marks to dollars goes from 4.2 to one in 1914 to 4.2 trillion marks to the dollar by November 1923."
How would you like to have a neighbor that sent his marks out of the country, and then brought them back at the height of the inflation? He could buy most anything he wanted, including your daughter. Didn't make him very popular. The gold Deutschmark was the currency to hand onto then.
Learn some history - 1923 Coup in Bavaria; 1923 Communist Uprising Dortmund, Erfurt; France and Belgium occupying Ruhr and killing German strikers and seizing factories. Inflation because the Weimar Government was paying them to resist FRance and Belgium.
Inflation ended by Hjalmar Schact 1925 - DEFLATION folowed under Bruening with mass unemployment and US capital repatriated 1929.
In the meantime who made money ? Speculators and Financiers.
Tylers,
You’re confusing your readers when you print falsehoods. Hyperinflation is nearly always an exchange rate phenomenon.
Zimbabwe is the exception, and should not be listed with other hyperinflation events. Zimbabwe printed money, and also land reformed white farmers out of work, so the country lost its economic base.
In the case of Weimar Germany and all the others, it was private banks that destroyed the money supply, and it was Government power that eventually restored order. Ongoing lies about hyperinflation causes, continues to sow confusion in the mind of man.
On May 26, 1922 the Reichsbank became independent (private) – it withdrew from the Chancellor of the Reich.
Versailles reparations were in dollars/pounds/francs and Germany was not allowed to export goods in exchange for these units. Germany built up private debts in Wall Street, which created a triangular flow. Wall Street Credit, to German municipalities, to German Central Bank, to England/France who then paid their debts to U.S. Treasury. Growing debts in Wall Street private banks, then set up a weakness for German Marks exchange rate.
When FX traders smell weakness, they start shorting the currency. This causes self-reinforcing feedback and short sellers obtain high profits at the expense of producers and working people.
During the chaos, Hamburg, Bremen, and Kiel established private banks to issue money backed by gold and foreign exchange. About ½ the money supply was private money from other than Reichsbank sources.
A Rentenbank was set up to loan Rentenmarks to the Reichsbank. Schacht told the population the new currency would not be over issued. Schacht later wrote that credit restrictions were the real secret to controlling volume.
Rentenmarks were put into circulation in three days starting on November 15, 1923. They were not legal tender and there was no fixed relation to the fallen reichsmark. Rentenmarks could not be used for international payments.
Schacht stopped all other private money issuers and sent all Reichsbank holdings of private money back to their source for payment. This of course created howls of discontent from the private moneylenders.
Rentenmarks were expressly forbidden to be transferred to foreigners. Speculators could not trade them for foreign exchange. Schacht crushed the speculators.
Excessive speculation against the mark, the short selling, was financed by lavish loans from private Reichsbank. This then puts more reichsmarks into the supply increasing volume rapidly per unit time.
Also, the FED is a private banking corporation. When it Quantitative eases, it pulls a bond or some other debt instrument out of the supply in trade for freshly created keyboard money. This cash then tends to get caught in reserve loops of private banks. The transmission path for QE is mostly through asset pushing as it drives bond prices up and interest rates down. The composition of the money supply becomes less TBills or MBS, and more cash. Those debt instruments, formerly in money supply, become held on Federal Reserve ledger. TBTF private banks may create loans to themselves to buy debt instruments out of money supply and then transfer them to their FED partner.
This mechanism is emphatically NOT GOVERNMENT PRINTING.
A Government can print cash as seigniorage and then directly spend it. That is NOT HAPPENING today.
A Government in a private banking credit world may issue a new debt instrument and have it monetized by their central bank. To do so, they have to deficit spend as the new bond finds new money.
In reality, the lower loop of the economy (those that use money to live) are under drain pressure to pay private debts. This is depression – not hyperinflation.
Here’s another example, by L. Randall Wray:
…. even if they are, their banks are not necessarily prudent. (Think Ireland! While the government was the paragon of financial prudence, its banks lent in foreign currency until the cows came home. When borrowers defaulted, the Irish government took on all the foreign currency debt—quite imprudent!)
Further, it is not true that floating rate standards invariably lead to hyperinflations. If that were true, we’d have hyperinflation all the time.
http://www.economonitor.com/lrwray/2011/08/24/zimbabwe-weimer-republic-how-modern-money-theory-replies-to-hyperinflation-hyperventilators-part-1/
What country is next?
All of them- except Switzerland so far.
Krugman, if he is lucky, will die of old age. If he is unlucky, a very, very unhappy crowd of people will one day haul his sorry ass out of his apartment and hang him from a lamppost.
The dumb black $18T muslim
There is no mystery in Venezuela's zero 1 % psychopaths (in league with Merca's zero 1 % psychopaths) witholding their wealth by not resupplying the markets that they own and control in order that the masses falsely conclude that the economy has collapsed due to government incompetence. It is a well organized neocohen project in destroying just another enemy of Washing town; "socialism" has nothing to do with it.
Merca has China's Wall Mart and the foodstamp dollah to keep the illusion of a free market economy going and its unwashed sub-working class masses subdued at the trough...Venezuela needs only to copy the same "socialist" system by coopting the retail barons to feed the sheeple before they become wolves. What works in armed madhouse USSA would surely work in Venezuela, if the government were as evil and the zero 1 %'s presstitutes on board.
“No, the 1923 hyperinflation didn’t bring Hitler to power; it was the Brüning deflation and depression."
More Krugman shaman bankster red herring crap
The real bankster conspiracy and the Mercan anglozionazi thugs that gave humanity the gift of Uncle Adolf will never be uttered by Krugman and his conspiring ilk.
https://www.youtube.com/watch?v=U1Qt6a-vaNM
Hitler plagiarizes Spooner. Take the Intellectual property rights to court in the lowest tax country (aka double Dutch with Irish Twist).
Go Iceland Go Greece
"The Rothschilds, and that class of money-lenders of whom they are the representatives and agents -- men who never think of lending a shilling to their next-door neighbors, for purposes of honest industry, unless upon the most ample security, and at the highest rate of interest -- stand ready, at all times, to lend money in unlimited amounts to those robbers and murderers, who call themselves governments, to be expended in shooting down those who do not submit quietly to being robbed and enslaved." by: Lysander Spooner(1808-1887) Political theorist, activist, abolitionist Source: "No Treason #6" (1870)