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Weimar Greece - The Effects Of A Currency Collapse
Submitted by Jeff Thomas via InternationalMan.com,
Cash is a scarce commodity in Greece.
In June, Greek banks declared a surprise limitation on how much could be withdrawn from an account. At present, the government still limits the cash withdrawals of Greeks.
And, of course, this is just the most recent in a series of events that make up the cash squeeze. In response, Greeks have done what all people do when they cannot get enough currency - they improvise.
Several alternate systems for payment of goods and services have cropped up in Greece since 2010. One is TEM, which allows people to gain monetary credit on an internet site, which may then be used to pay others. Another system is the Athens Time Bank, which logs time units, allowing individuals to pay each other with their time. The services provided can be anything from language lessons to medical consultation. Other systems are popping up, as Greeks seek out any method of payment other than the euro, since they’re closed off from their own savings at the banks. As can be expected, barter is becoming more commonplace.
Greece is right where Weimar Germany was in late 1922. The 1919 Treaty of Versailles required Germany to pay reparations for WWI. At the time, Germany, having lost the war, was already on the ropes economically. The conditions of the treaty amounted to an unpayable level of debt. As it became apparent that it was impossible to pay, the allies squeezed harder. Economic conditions in Germany worsened dramatically, not unlike Greece today, and for the same reason.
Germans did their best to sidestep the economic squeeze. As the cost of goods and services was rapidly rising (on a daily basis), Germans learned that it was best to spend Reichsmarks as quickly as possible on virtually anything that was holding its value better than banknotes.
Interestingly, in 1922, virtually no one felt that currency was the problem. German politicians blamed the allies, particularly the French, for demanding that Germany live up to the treaty they had signed. Bankers often blamed foreign currencies for rising against the mark. And the people of Germany generally placed the blame on the most immediate symptom - that costs were rising more quickly than wages. Although they were pleased when their own wages went up, they wanted the prices of commodities to remain the same. They therefore blamed the merchants (particularly the many Jewish merchants) for raising the prices of their goods every time wages increased. They blamed this on Jewish greed, failing to understand that, every time wages increased, the cost of production increased and that increase was passed to the merchants.
In 1922, as in 2015, virtually everyone failed to recognise that monetary movement is circular in nature, not linear. All payments, for all goods and services, impact each other, in a domino effect.
The provision of goods and services is the lifeblood of any economy. Those who offer them and those who pay for them create wealth by doing so. This is the natural order of economics. However, if currency is artificially pumped into an economic system, either through the printing of bank notes, as in Germany in 1922, or the provision of bailouts, as in Greece in 2015, no goods have been created, no services have been performed. The injection of currency fails to improve the economy; it makes the situation worse. At some point, the money tap must be shut off, and, when it is, a crash takes place. The severity of the crash is directly proportional to the degree of currency injection.
So, as long as we’re comparing parallel events, what else happened back then? Well, one interesting development was that, although most everyone in Germany was experiencing a steady decrease in their standard of living, farmers seemed to be holding their own. This, of course, was because they remained productive. They created essential goods for sale to others, so they maintained their living standards. In the autumn of 1922, most Bavarians could not afford to attend Oktoberfest, but the beer halls did an acceptable business with the farmers who came to town for the celebration. They were deeply resented by city dwellers for being able to afford beer that they themselves could not afford.
Such was the resentment that the prime minister of Bavaria submitted a bill to the Reichsrat to make gluttony a public offense.
In 1923, as the Weimar inflation grew to the point that city dwellers were starving, many of them went out to the country to steal the produce the farmers had worked to grow. Resentment was so high against the farmers that many raiders killed the farmers out of hatred. Further, since they couldn’t take the farmers’ cattle back to the city with them, they slaughtered them in the fields, out of spite. Of course, by destroying the source of the food, they assured that they would receive even less in future. Many starved.
As stated by British Author Adam Fergusson in When Money Dies:
It brought out the worst in everybody… It caused fear and insecurity among those who had already known too much of both. It fostered xenophobia. It promoted contempt for government and the subversion of law and order.
As stated at the time by Sir Basil Blackett, controller of finance of the British Treasury, “Each class in Germany thinks that the burden of taxation should fall on some other class.” (Does any of this sound familiar?)
If Greece in 2015 mirrors Germany in 1922, then we might expect Greece in 2016 to come to resemble Germany in 1923.
But how about the rest of us? We’re not in the state that Greece is in - at least not yet. But the EU as a whole, and the U.S., Canada, and many other “First World” countries, are following the same destructive economic path. (They just aren’t quite as far along as Weimar Germany, 1923.)
So, we might be interested to know what came next in Germany.
- Demands increased by the public for a mandatory redistribution of wealth.
This has become a common cry, particularly in the U.S., where a presidential election will take place in a year and some candidates are fanning the flames on this issue.
- Movement of currency had to notified, then authorised.
Currency controls are being implemented, one after the other, to limit the people’s ability to move their own money. Most threatening is a plan to eliminate cash, so that money cannot be transferred without the permission of the banks.
- Importation was regulated.
Politicians in the EU and U.S. are speaking increasingly of the need for protective tariffs.
Political leaders have, for decades been squeezing the economy for all they can get and, as they’ve reached the point of diminishing returns, they’ve done what politicians always do, increase debt in order to prolong and increase their intake of wealth.
This can be likened to a farmer who, wanting more milk than a cow can produce, milks it dry, then, refusing to admit his folly, starts draining the cow of its blood. He may say to both himself and others that the increasing need may be satisfied by increasing the removal of blood and, on a temporary basis, this will allow him to continue making use of the cow. However, once he has done so, it is a certainty that, at some point very soon, the cow will collapse.
This was the case in Germany in 1923...and is the case in much of the world now.
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Clear, succinct, informative; very good article.
Long wheelbarrows.
Sooner or later they will want a real economy...later. Still fun to get a check.
"...In 1922, as in 2015, virtually everyone failed to recognise that monetary movement is circular in nature, not linear. All payments, for all goods and services, impact each other, in a domino effect..."
Yes, yes... I love it. It was the stupid little people German's fault for misunderstanding economics and money flow. It had nothing to do with corrupt, inept, yet profanely wealthy politicians, businessmen and bankers (who kept the bulk of their money 'elsewhere'). They didn't cause the problem - they were merely victims, too. it was those damn peons looking for cheap beer AFTER they got hefty pay raises. It was the greed of the little people that brought Germany down. If they only would have understood economics and had done their part, none of this would have happened.
Same thing in the U.S. - it's going to be the little people's fault for not accepting higher prices at Wal*Mart when the minimum wage at Wal*Mart is raised. Are those greedy blue-vest-wearing bastards that stupid?? They're going to destroy the WHOLE FUCKING U.S. ECONOMY!
Austerity, damn it! Unless you're rich. When the fuck will the little people ever learn, Mr. Thomas?
Bet they all wish they had a small hoard of "junk silver" !!
I pretty sure the article is not blaming the "little people". It is blaming the printing of money. The "little people's" response is just that, a response, albeit a predictable one.
Perfectly said, and predicted.
how many blacks do we have to shoot to get them to start burning down wal-marts?
Why is it going to be the little people's fault for not accepting higher prices at Walmart when the minimum wage at Walmart is raised while company executives receive generous performance pay?
Consumers can always reject higher prices imposed at Walmart by shopping somewhere else or by refusing to buy.
On the other hand, higher taxes and fees imposed by government bureaucrats are harder to escape by taxpayers unless they join the underground economy or flee the country.
The savings and purchasing power of the elderly and the "little people" are hurt most when central banks print money in cahoots with corrupt politicians.
Long snorkle gear.
Totally off topic.
Enjoy.
http://www.adultswim.com/videos/rick-and-morty/get-schwifty/
"Long wheelbarrows."
Every Weimar currency crises is a Bankster-made currency crises. Thus...
1. Long Bankster well-being, short Sheeple well-being
2. When there are no Babylonian Magik Money1 tricks left, you have to Restart the Game. This is typically done with a... [drumroll]... W A R.
Suggest you plan and act accordingly. Else... enjoy the music, dance, mingle, and relax in one of the nicely arranged Deck chairs. All is swell2.
[1] Where the Magik Money concept were created and crafted
[2] Did you get the nautical pun? Cool.
Add to that long shovels and long metal detectors and we may have something here...
Currency Collapse?
Would like to understand WHY AND HOW currency —your lifestyle— collapse?
https://www.youtube.com/watch?v=lT4VXF1XJYk
Good points mostly, except on tariffs. We need protective tariffs, not to protect specific industries, but to prevent excessive trade deficits.
Yea like Herbert Hoover.
We don't need protective Tariffs. We don't even need government.
Tariffs are just more power to governments. The problem is that power has a built-in positive feedback, it ratches quickly. Lincoln used tariffs to destroy the US as a Federation of States, a loss of freedom we have never recovered.
And don't give me the slavery argument, that is crap. No other country equired warfare to end their slavery. Slaves suffered much worse as a result of the Civil War than they would have no matter how protracted any settlement/buyout discussions. And that cerainly would have been cheaper.
Smoot-Hawley for the win!
I've just pulled out my Monopoly game and I'm looking at the 5's, 10's, 20's, 100's, etc. and I'm thinking: you know...there's got to be fewer of these bills in circulation than actual, US equivalents.
Should we switch over to Monopoly money right now? I mean, we all have one Monopoly game, so we'd all start at the same place, right?
It's already all Monopoly money.
One big difference. Government collects taxes in dollars. Pay or you go to prison.
Funny you should mention that. I just checked my Monopoly board and both of the "Get Out Of Jail Free" cards are missing.
But I did find a nice "thank you" note from someone who signed it as HRC17, whoever that might be.
by the time it gets to this point the government won't be able to count the millions of guns pointed at them
I've thought about this too. They are both backed by absolutely nothing so why the hell not?
Best part: there's a wheelbarrow game piece. Weimar is already built in!
With Cantillon in mind....I get to roll first.
And currency debasements and collapses will continue to happen until the people stop the political parasites and their evil ways.
In the Depression people survived by going back to their Families farm. How many people have a Family farm Now adays ?
and if you think Farmer's market prices are going to stay low, when there are 10 times as many customers as the farmer has produce, you're delusional.
During a visit to Bali Indonesia I had a conversation with my driver which centered around the period after the Bali Bombings. Due to the reduction in the number of tourists he had no work and was economically forced to return to the family farm. In Bali they manage three rice crops a year from a single field, added to that, most available space has a productive tree or shrub. He survived on hard work and community effort. I live in an area with a 6 to 8 month productive season, many countries have less. All the surbanites I know would last a month or two max.
Greece: The battered housewife of the EU
The battered housewife who maxes out her credit cards just to default on paying them then demands more credit cards - and gets them! Repeat every couple of decades. She's fat, lazy, and refuses to work for a living as well.
The parallels are uncanny. Very very uncomfortable.
Aint nothing wrong with trade its the coin thats busted. An energy backed coin controled by producers would be a better system.
Tyler clearly read and summarized Furgusson's book "When Money Dies." All quotes can be attributed to the book, even 3rd reference. What Tyler missed is that Furgusson argues the Versailes Treaty did not cause the Weimark failure. The war reperations may have contributed slightly, but is was the arrogance of German's economic finance to dilute fiat.
German employement rate was high compared to US and England. Until the end.
Tyler didn't write this.
tyler didnt write the bit..........
The debt was impossible to repay because the country was exhausted. The German government had increasingly more difficulty making payments. They decided to print extra money to meet the debt payments. Eventually the extra currency returned to Germany increasing the money supply driving up prices slowly. The international investors that had invested in Germany after WWI saw the currency loosing its value they began pulling out their investments causing more debasement of the currency. Eventually the inflation rate took on the hockey stick graph.
The Fed has been absorbing the returning US debt currency so far. In the next couple of years this could become a flood as countries pare down their US reserves no longer needed for international trade. The return of external US debt holdings could also accelerate if we anger many more countries making a useful weapon of our own debt.
What really did Germany in at the time was the crisis of 1929.
Disagree. The repair payments requested from Germany were unsurmountable and the "way out" - conceived by the Reichsbank - was to create inflation through money printing. And it went out of control ..... like the US$/Euro/GBP/Yen/Renminbi debasing eventually also will go out of control - for other reasons though. The problem today is no longer repair payments ( for which the BIS was created ) but unaffordable debt levels caused to a great extent by the various governments who did tax the productive part of the population to death - especially in neo-communist Europe. Cumulative debt is rising exponentially and the property of exponential growth is that it starts slowly but accelerates constantly giving rise to a very fast increase in the end stage. And that's where we are - in the end stage. Worldwide. More and more governments need more than 50% of the GNP of their country just to "operate" - how can the less than 50% "real economy" fund all this? Obviously, it cannot, hence the rising debt levels and since democratic governments get elected by the majority of the voters who depend on government dole, governments will never downsize until the cow drops dead. At that point, the shit will hit the fan and you better be prepared.
Great comment!
Glad I am not a bureaucrat or public "servant" who believes that the Government cow will continue to be milkable for my pension.
To me the big question is : which country's cow drops first? It may prove to be very instructive in a NIRPy world.
I used to think the same as you, until I read Fugersons book (the book this article is based on). Its very easy to correlate WW1-Treaty Versailes-Wiemark-Hitler-WWII without diving in.
But that is simplistic bullshit.
Many lessons can be learned from Wiemark however. Number one, for me at least, is that Germans inflation could have continued much longer had they access to digital/electronic fiat. Physicially printing money that was trash 1 week later became insurmountable. Our technology will allow for deeper dilution. People are stupid.
Eliminate cash and continue
bull fucking shit. it isn't the productive farmers who are making out like bandits in this eCONoME it is the parasitic maggot mother fuckers. they shouldn't be taxed, they should be strung up as a service to humanity. nobody will miss them and everyone will be better off. a win-win.
"In 1922, as in 2015, virtually everyone failed to recognise that monetary movement is circular in nature, not linear. All payments, for all goods and services, impact each other, in a domino effect"
If only the terds that think McDonald's is supposed to be a career could get a grasp on that...
Looks like late 2000, early 2001 all over again...
Have any of these Greeks ever heard of Bitcoin? Or dollars? Or Yuan for heaven's sake? Oh, that's right, these communist don't have anything that enyone with any hard currency is willing to buy. Good luck!
Says depositors are denied access to their deposits. They were robbed by fractional banking. The essence of negative interest. Coming to your savings soon.
And it's even worse than that. Those banks have absolute crap on their balance sheets.
The Goldman-Sachs took $20 billion in bonuses on top of all of collateral they called in 2008. I distinctly remember the collateral calls to AIGThey straight up took everything. Then got the fed to capture the board of director's chair at AIG and voted to pay GS par on cds. The initial phase was $14 trillion in taxpayer equity. They got away with it too and that just whetted their appetite and we have been getting constantly rolled by the that island.
Two words: Capital controls.
So tell us. HOW do you BUY bitcoins if you have no hard currency and nobody else has hard currency either?
Can you stuff your rubber chicken into the ATM or maybe stuff the junk you have lying around the house into the disk drive on your computer and "buy" bitcoins with that?
Rather simple really - you trade goods or services that someone with Bitcoin wants to buy. AKA - free market. (use social networking site(s) and/or specialized Bitcoin services sites like XBTFreelancer to arrange trades)
If you do not produce something that is wanted, you do not get any Bitcoins.
That alone, means Bitcoin is not helpful to many people around the world who do not know how to produce anything that is genuinely needed.
Hard money - and it's consequences.
You cannot trade in Bitcoins without computer access so that won't always work.
I don't see how much longer this can go on. With all of the draconian laws being passed in the US and Europe it seems things are speeding up. If hyperinflation comes to town you are definitely going to want to be as close to necessary commodities as possible though.
The poor (lit. and fig.) Greeks are taking it up the Rear End (fig. or lit.), again.
Some are taking it for 4 EUR/hr, I read.
Rhet. Q: Is there a Christian (Greek Orthodox) equivalent of Sharia Law? I'd guess it would be Spartan Law, where they "kick the dirty invader down the well".
Lest we get too hard on Greeks, let's realize that the US population -- be it simple country people, or well-educated clerics -- are just as prone to getting conned. Case in point... Here are a couple of YT clips to underscore that point.
1. Ali G debating Religion (with a Rabbi, Priest, Atheist): https://www.youtube.com/watch?v=CPX2Vfqards
2. Borat - Throw the Jew down the well! - https://www.youtube.com/watch?v=Vb3IMTJjzfo
Note that the same actor is playing these roles (Sacha Baron Cohen; Jewish, from London), whom you may also know as the voice of endearing King Julian in the animation Madagascar. "I like to move it": https://www.youtube.com/watch?v=1okAt2sOmNg. Love him or hate him, you have to admit that he pushes the boundaries of public discourse on Taboo topics, and is not afraid to tackle 'inappropriate' topics.
They should have gone back to the drachma.
They will.
yes
I was shocked at the fact that most Greeks had left there money in the bank, when then should have seen the capital controls on the way...
Are the people of the world starting to see how gold and silver will become the peoples money once again.
This article reminds me, I need to stock up on my bulk garden seeds now for next spring. Every year I plant enough to feed dozens of families and most of it goes to waste. I don't drag my produce to any of the local farmers markets as the process is largely a pain in the ass but who knows..maybe the day will come that it will be worth it. If that time comes then it may also require armed guarding. Come to think, maybe that's why they call it guardening?
Shouldn't you learn canning/preserving?
Do they have pawnshops in Greece? That could be the start of an organic barter center.
99 out of 100 high school kids have never heard of Kredit-Anstalt,but that was what
started the ball rolling.Three banks,One Austrian,two German.Kredit-Anstalt (Austr.)
,and Nord-Rhein Wolle,and Dresdener (Germ.).But hey,all the kids know important
stuff like the size of Kimmies arse.
We are so fooked......Speaking of which,a province of Austria is about to do a
Puerto Rico. Carinthia,a farming district,very pretty.Now holding the stinky bag.
Why don't they go Iceland and chuck the bankers in the hoosegow?
Kredit-Anstalt was an old Rothschild bank
The TPTB are pushing for the next government to be the nationalist right party.
This is happening in France to,we are living the same history again,pre WW3.
I read "When Money Dies" last year. Heck of a ride.
In 2008 I was in a fancy 1 bdr condo in foggy bottom DC. I had no idea why my ira and 401k and lake house value took big hits.
In 2009 I learned why.
Now I'm on a farm in South Carolina, hoping the accelerated mortgage repayment plan gets finished before tshtf.
my former playmates mock me and point out I bugged out 5 years ago and the collapse still hasn't happened. I reply that organized crime is really well organized and they change laws and rules at whim, and suggest we check the zombie economy periodically.
Quite a horse race.
A piece of this article is giving a heart burn to many Jew haters around here. Dismantling Jewish merchant conspiracy theories?! Some of these Jew haters around here will have to be treated by Obamacare if any more articles like this appear.
We can loathe the Zionist Banksters and love our Jewish friends & neighbors.
Just like we can prosecute the mafia and still love our Italian brethren.
Not Jew hate. Zionists.
You can have your wheelbarrow full of paper promises.
I'll stick with my wheelbarrow full of canned herring and nitrogen bagged rice.
There is another country, just 1,300 miles from Miami, which has been living with currency collapse for much of the past 15 years. In fact, it's currency no longer has ANY exchange value beyond their borders. That country is Venezuela. In the early 1970's, their dollar, the Bolivar, was trading nearly even with the US dollar. Their country boasted a high standard of living, and a large and growing middle class. Today, the average wage works out to $9 US dollars. That's per month. Needless to say, their nearly 30 million citizens are desperate. People wait in lines all day to buy the few subsidized goods they can still afford, and national importation of virtually all food, medicines, and raw materials has stopped. As a major oil producer, the plunge in crude prices has made a bad situation untenable. Most people are out of work, and those still lucky enough to have a job can't survive on their non inflation-adjusted wages. Violent crime has skyrocketed. People are being murdered for their cell phones. Not robbed at gunpoint, but simply shot in the back of the head and picked clean. One would think such atrocities would merit an occasional news blurb in the mainstream (or even alternative) press, but Venezuela's plight is largely ignored. When a story does happen to feature the ongoing crisis, there is no mention of their worthless currency (for example, locals now use the lower denomination bills for napkins, because they are cheaper than napkins!). Web sites will claim the current exchange rate from the dollar to the bolivar is around 6 to 1, but that's a fantasy figure only available to the elite and well-connected. For everyone else, the street or "dollar paralelo" rate is 900 bolivars to one US dollar. As bad as the Greek situation is, at least their population earns in euros. Imagine earning the equivalent of a handful of napkins per month! I suspect the reason their worthless bolivar is never mentioned, is because their money is little different than the euro, dollar, or any other fiat currency printed from thin air and backed by nothing. Comparing the Venezuelan situation to the US, imagine how easy it would be to control the American population when fully 95% of the US dollars "in circulation" exist only as digital entries, and are never printed at all. Think about that the next time you check your balance online.