The World’s Most Famous Case Of Hyperinflation (Part 1)
The Great War ended on the 11th hour of November 11th, 1918, when the signed armistice came into effect.
Though this peace would signal the end of the war, it would also help lead to a series of further destruction: this time the destruction of wealth and savings.
The world’s most famous hyperinflation event, which took place in Germany from 1921 and 1924, was a financial calamity that led millions of people to have their savings erased.
Courtesy of: The Money Project
The Treaty of Versailles
Five years after the assassination of Archduke Franz Ferdinand, the Treaty of Versailles was signed, officially ending the state of war between Germany and the Allies.
The terms of the agreement, which were essentially forced upon Germany, made the country:
- Accept blame for the war
- Agree to pay £6.6 billion in reparations (equal to $442 billion in USD today)
- Forfeit territory in Europe as well as its colonies
- Forbid Germany to have submarines or an air force, as well as a limited army and navy
- Accept the Rhineland, a strategic area bordering France and other countries, to be fully demilitarized.
“I believe that the campaign for securing out of Germany the general costs of the war was one of the most serious acts of political unwisdom for which our statesmen have ever been responsible.”
– John Maynard Keynes, representative of the British Treasury
Keynes believed the sums being asked of Germany in reparations were many times more than it was possible for Germany to pay. He thought that this could create large amounts of instability with the global financial system.
The Catalysts
1. Germany had suspended the Mark’s convertibility into gold at the beginning of war.
This created two separate versions of the same currency:
Goldmark: The Goldmark refers to the version on the gold standard, with 2790 Mark equal to 1 kg of pure gold. This meant: 1 USD = 4 Goldmarks, £1 = 20.43 Goldmarks
Papiermark: The Papiermark refers to the version printed on paper. These were used to finance the war.
In fear that Germany would run the printing presses, the Allies specified that reparations must be paid in the Goldmarks and raw materials of equivalent value.
2. Heavy Debt
Even before reparations, Germany was already in significant debt. The country had borrowed heavily during the war with expectations that it would be won, leaving the losers repay the loans.
Adding together previous debts with the reparations, debt exceeded Germany’s GDP.
3. Inability to Pay
The burden of payments was high. The country’s economy had been damaged by the war, and the loss of Germany’s richest farmland (West Prussia) and the Saar coalfields did not help either.
Foreign speculators began to lose confidence in Germany’s ability to pay, and started betting against the Mark.
Foreign banks and businesses expected increasingly large amounts of German money in exchange for their own currency. It became very expensive for Germany to buy food and raw materials from other countries.
Germany began mass printing bank notes to buy foreign currency, which was in turn used to pay reparations.
4. Invasion of The Ruhr
After multiple defaults on payments of coal and timber, the Reparation Commission voted to occupy Germany’s most important industrial lands (The Ruhr) to enforce the payment of reparations.
French and Belgian troops invaded in January 1923 and began The Occupation of The Ruhr.
German authorities promoted the spirit of passive resistance, and told workers to “do nothing” to help the invaders. In other words, The Ruhr was in a general strike, and income from one of Germany’s most important industrial areas was gone.
On top of that, more and more banknotes had to be printed to pay striking workers.
Hyperinflation
Just two calendar years after the end of the war, the Papiermark was worth 10% of its original value. By the end of 1923, it took 1 trillion Papiermarks to buy a single Goldmark.
All cash savings had lost their value, and the prudent German middleclass savers were inexplicably punished.
Learn about the effects of German hyperinflation, how it was curtailed, and about other famous hyperinflations in Part 2 (released sometime the week of Jan 18-22, 2016).
Source: The Money Project via VisualCapitalist.com
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"Germany had suspended the Mark’s convertibility into gold "
Anyone have a chart of the price of OIL in papiermarks from 1920 through 1924 ?
I'm willling to bet that there are some similarities with the 'oil price shock' following the ceasation of convertibility in the US.
The US Dollar would probably have hyperinflated too if the Axis had won the war, no US Bankers were being repaid for loans to either side, Germany was occupying the manufacturing belt/Pennsylvania/New Jersey, and the US just resorted to the printing presses to pay nominal domestic bills & bennies...
Coal was really the name of the game in the 20s.
And were those that made a substantial amounts of money off of each war.
The countries could have forgave Germany's debts and perhaps circumvented Adolph Hitler.
Look at all the countries that were indebted to the banksters and how long it took
WW one:
Great Britain
Earlier in the week of Nov1,2014 , the UK announced it will repay £218 million ($349 million) from the £2 billion of debt that it incurred during the war.
Germany
On Oct. 3, 2010, Germany finally paid off all its debt from World War One.
but what was the interest rate? and what did the chart look like?
I believe Keynes was activly involved in determining what countries received what reparations so not unlike all eCONomist he was only willing to admit the mistake long after the damage had been done. Sound familiar?
Sorry, no. Keynes was a British Treasury representative at the Treaty. Smart man that he was, he realized what a colossal mistake the treaty was and did everything in his power to get the British delegation to reconsider.
Unable to make his views felt as a junior member of the delegation, he resigned and went back to Britain, where he immediately wrote a book entitled "The Economic Consequences of the Peace".
All wars are Bakster wars.
Having said that I hope the Dollar suffers this fate, D.C. and Wall Street are so corrupt it is the only thing that will root out the corruption. Hang 'em high!
History, in a way does repeat itself but it certainly does not Rhyme.
Max
Certainly wish the United States of America could compare itself to Weimar Republic Germany but this simply will never be an accurate or fair comaprison.
Germany was under the brutal yoke of a war reparation through the Franco/Anglo-American powers of which the U.S. was a partner to the hostile blood letting... Post-1945 "rinse and repeat" only with far greater consequences and casualties for Germany again as the loser.
We will never know how Germany might have prospered had the Rothschild/Rockefeller and other Anglo-American industrialists been unsuccessful in drawing Germany into Russia's "Eastern Front". But if German engineering and commerce between those two periods are any indication they would have taken the U.K. France and the U.S. to the cleaners on the technology front. All you have to do is visit the Air and Space Museum in Washington D.C. to witness first hand what the allies took away in aviaition and everything else from the German war machine learning everything about it they could post-war to build the 2nd 3rd and 4th generation aircraft and space technology that Germany would have dominated the World with had it not squared off with the Soviet Union after 1939?... Could conceivably argue what might have also been had Japan refrained from it's attack at Pearl Harbor and found alternate sources for oil and had they no been so vigorously blockaded by the British and Americans which were the prelude to that event.
No. The United States is at the opposite end of this discussion and only benefited from it's 100 year history of war in Europe, Asia and the Middle East after it cemented itself firmly in place after 1913 and unfortunately never looked back as it had many opportunities to do so.
The U.S.A. is nothing more nothing less that a malignant Fascist State post WWI and WWII "metastasizing" and never seeing comparable losses of it's own to the 80 million deaths suffered in both wars and has had many opportunities with the institutions it allegedly helped to create like the United Nations which are nothing more than a facade of requsitie subordinate states to the U.S. Empire that do it's bidding wherever and whenever they are told.
Bretton Woods 1971. The end of the Cold War in 1989 (which should have been the end but of course wasn't). The expansion of NATO and the subsequent violation(s) to the treaties post Soviet Russia into the 1990s were really the beginning of the end to the U.S. Empire.
Had the the U.S. taken a different course post-Cold War with Russia to downsize it's military footprint in Europe after the Fall of the Berlin Wall and around the World for that matter and focused it's innovative echnologies to alternative sources of energy and decided to relinquish it's predominance on controlling foreign oil by eliminating the USD as a "reserve currency" along with the European Union being scrapped their is no reason to believe that it could not have achieved continued financial and economic prosperity and "yes" dominance in key sectors such as information systems and electric and solar energy.
9/11 was the grave plot and the banker bailouts were the coffin and nails!
THE END!
TL;DNR
Maybe ZH isn't for you.
Stick to comics and internet porn.
Exactly, WWWII Germany had, by far, the strongest military in world history. It's no contest
Sorry, no. The Wehrmacht peaked at 9 million in 1943. The United States Army, Army Air Force, Navy, Marine Corps, and Coast Guard peaked at 16 million in 1945. Not to mention Fat Man and Little Boy.
Sorry, no. False Comparison. You can not compare one sides military strength at the height of the war to the victor's army at the end of the war! That's like comparing fresh apples to month old oranges
If we do a fair comparison in 1943, those combined militarily branch numbers for the US were also 9 million! Let's not forget that the Germans were also much better trained, better equipped, and had more fighting experience. So yeah, the Germans did have the strongest military. Unfortunately for them, they were also fighting the 2nd , 3rd, and 4th place runner ups simultaneously.
Sorr, no. The US war machine wasn't really going full blast until 1943. If the Germans, Japanese and Italians new what the US could produce, they wouldn't have even tried.
I was doing Germany the service of comparing her at the apogee of her military power.
The original assertion was that she was the strongest military power on earth EVER (as in at any time). This is clearly not correct. Nazi Germany was a very strong power and had a highly-effective command and junior leadership cadre, but it should also be remembered that about 90% of the German Army in WWII was using horse power to move its supplies and weapons while the American Army was fully motorized to a degree of wasteful abundance. And had so much excess motor capacity that it also supplied much of the British Army and at least 50% of the motor vehicles of the Soviet Army on top of that. All while fighting another Great Power halfway across the world with its other hand.
Nor can you compare her very powerful, albeit increasingly poorly-equipped, land armies as an isolated factor representative of complete military power. Germany had nothing to match the two-ocean US Navy or the sky blackening air power that came out of Willow Run. The United States had to fight at a distance of several thousands of miles across the ocean away from its industrial base while Germany had convenient rail connections to all of its geographically contiguous fronts.
The German Army was world standard in 1940-41 but by 1943 was increasingly inferior both in tables of organization as well as in overall quality of equipment with the exception of certain marquee items such as the Panther and Tiger tanks.
Nor should Clausewitz's maxim about war being an extension of policy by other means be forgotten. Ultimately, the Wehrmacht was a policy instrument that was used to bring Germany to a state of complete destruction and full-scale dismemberment at the hands of the man who was commander-in-chief. In that regard, it is one of the least successful armies that ever roamed the Earth.
The US refused to ratify the Treaty of Versailles and extracted no reparations from Germany, so far as I can recall offhand. Nor was it ever an official member of the "Allies".
"The Kings Depart" is a fabulous retelling of the end of the war, the Treaty of Versailles, and the German Revolution which followed. One of the best history books I have ever read.
Add to it a few references on how Wall Street money financed bolshevik revolution in Russia and nazi rise to power in Germany and you would get a good idea in whose one name most of the blood was spilled in the 20th century.
I sure would like to read "Part 2" before I go to bed...You, MY MAIN MAN!
be waiting
But how cool to pay off your mortgage with an hour's wages.
Or get BJ's for like a dime. I would show up with a shit load on nickels.
Head over to Greece, I hear you can get a hooker for a sandwich
So countries which owe a debt which they can't pay back purposely trash the value of their currency so they can pay it back in worthless dollars. We don't need no stinking war, that's just business as usual for the US. But then victors are spoiled.
Germany's problem was similar to Argentina and Hungary today - the debt was denominated in foreign currency. This created the need print ever increasing amounts of your own currency in order to buy foreign currency. If your debt is in your own currency (like Japan and the United States), then money printing in your own currency in order to pay off your debt actually reduces your debt (or at least postpones it until Judgement Day).
Hemingway,writing for the Toronto Star,stated that he could cross the river and
buy up the entire contents of a German Sporting goods store for $5.
There is another solution not mentioned much in the MSM. ICELAND.
Just Default and start over.Bailing out the 1% just pisses off the other 99%....
Fiat becomes a problem when there is no anchor (like gold) and no limit on printing.
I find it strange that this wonderful info-graph has no mention of the Weimar Republic which is what this time period is generally referred to as in Germany economic history?
when do we make USA pay for their crimes..... it would be in the quadrillions...
One primary difference is that most currency today is electronic, rather than physical.
Most people I know are indebted by electronic currency rather than having wheelbarrows full of cash. Cash is a white whale so to speak.
What will hyperinflation look like without excess physical currency?
What will the interest be on the debt pepople use to purchase basic items.
Truly I do not know. I don't have a crystal ball.
I would imagine that a million dollar bill or that type of nosense won't translate to an increase in your credit limit.
So many people that rely of debt for purschases wont be able to buy things.
I think the only solution to hyperinflation is lower interest rates, possibly negative, lower minimum payments, and longer term loans.
Otherwise we are in deep shit.
One primary difference is that most currency today is electronic, rather than physical.
Most people I know are indebted by electronic currency rather than having wheelbarrows full of cash. Cash is a white whale so to speak.
What will hyperinflation look like without excess physical currency?
What will the interest be on the debt pepople use to purchase basic items.
Truly I do not know. I don't have a crystal ball.
I would imagine that a million dollar bill or that type of nosense won't translate to an increase in your credit limit.
So many people that rely of debt for purschases wont be able to buy things.
I think the only solution to hyperinflation is lower interest rates, possibly negative, lower minimum payments, and longer term loans.
Otherwise we are in deep shit.
Some people have the illusion that they will be able to work for an hour, and pay off all their mortgage in a hyper inflation situation.
Perhaps some may, but perhaps your entire week's wage will go to buying 3 days worth of groceries. Do you pay your mortgage or buy food for your kids or grandkids?
If you have a job...perhaps your boss shuts his doors?
A dollar may be worthless, but if you owe one dollar on your mortgage, and do not have that one dollar the banks can take your property. Remember this...The owners of the banks plan to take real estate when fiat is worthless...not let you pay them back with an hour's wage.
Point?...Get out of secured debt.
This is what the people cannot allow. The CROOKS cant steal everything just because they set it up that way? Its going to take some doing to take property in the situation you describe, the problem is the "plan" wont go anything like the script that has been written because the people are not informed yet.
We went through the same thing in 2008 there will be Civil War and Who knows what will come out of it? My guess is just as the elite are making plans, Americans will have plans of their own. I think just enough people have seen what is going on to understand. The banks will only have that power if we give it to them. If I have my wealth in another form?
IF the POWERS that be think they can scam AMERICA like what you say, they have got something coming. Who ever signed the Bill that would make these actions legal should be HUNG!
When you even speak those words it makes my BLOOD BOIL! A dollar is a dollar they have no right to take property, this is going to be a bloody mess because of one thing GREED! Its been set up this way. GET THE FUCKING BANKERS BEFORE THEY GET YOU!
OUR Government NEEDS TO GO! I agreed to pay in worthless dollars?
in your fucking dreams laddy....when people sign a mrtgage there are rules. If you don't pay the mortgae you're out on the street.
There is a reason they have witnesses watch you sign a mortgage...the only way to prevent that is to not have your signature on a mortgage.
YOUR THE PROBLEM!
Yes but if I am capable of paying? Which I will be because I hold most of my money outside the system? Ive never missed a payment in 21 years Buddy? If i can pay in dollars? or convert gold? or silver? I should have the right. The powers that be continue on, but when the population wakes up? People are not going to be happy! Its way more people than they "think" they can control. Who would they sell all that property to? and who could control it? those are some big if's
You seem confused by my comments.I didn't write this about your personal situation...are you paranoid?
I wrote this about people who don't have a job because of future hyperinflation, nor do they have money to pay their mortgage.
Whooly frig man, it's not all about you.
Yes I was a bit. I take this shit seriously. Above i was having a conversation with someone who said it wouldnt matter? No its about all of us? and not accepting what they are force feeding us?
Your Quote: "Remember this...The owners of the banks plan to take real estate when fiat is worthless...not let you pay them back with an hour's wage.
Point?...Get out of secured debt."
I totally understand your point here, but...
What if there is no way for them to communicate with me because of infrastructure issues are they allowed to take my property because I owe 50,000.00? There will be lots of blood friend, wait until the productive people start to understand these "RULES"
Hey man, I hate the banks too...we all do.
I sat in a banker's offices in 1982 getting a mortgage. Some pimply faced kid behind the desk was trying to make a portfolio for himself and move up the chain of power. Those little bastrds will sell their mother off for a promotion. They'll foreclose on a guy anyway they can if he is late. The top banksters may be gangsters, but the bottom emplyees are the pricks you have to look out for.
The only way to for a mortgagor to protect themself is to get the mortgage paid off and released. Until that happens, anything can happen in an economic crash.
I understand and I have been hearing this point over and over, but if I pay everything off right now, I have little cash left? So is it right to let banks corner people and take the golden parachute route out? I dont think so. We cant let them own us? I use my own situation so I can visualize how things are applicable to me? How will they survive if they try to screw everyone? The odds of survival for the banks is going to be slim to none. They will get the blame, the government will make sure of it. In reality its both the Government and the Banks. They act so offended.
What if I pay it off and we have a war and my house gets hit by artillery? Now I have no house and no money?
Think of how corrupt our government must be to have crafted these laws? Think about having this conversation seriously? How far gone do you think we are?
Per When Money Dies, mortgages that were paid in hyperinflation were resurrected and reinforced in the new currency.
Bankers write the laws.
Bankers Write SHIT! Not unless we change them. We should make them in our favour, are you a follower? Thier laws cant be valid seeing that they are bought? I refuse to accept our law at this point because its so far gone?
THE US GOVERNMENT IS DIARRHOEA! ITS TIME FOR AMERICANS TO DUMP THIS SYSTEM FOR A GOOD ONE!
Irwin Schiff
Are you proud of what happened to Irwin? Is it a threat? Irwin is a hero that no one knows about, before his time. The unjustness wont last much longer. The powers that be are far too optimistic. If the government doesnt protect the people anymore, why do I need a government.
I think "Truth" will be back in style soon? Im going to remember you. You only remind me of just how bad its gotten.
Reading that reminded me of a story I was told by my grandfather.
Apparently a local farm family was going to be foreclosed on, this was back in the depression days, and the father had been ill or died and the family attempted to renegotiate to pay after the harvest had come in to settle the debts.
Well, the bank declined to work with them, and as the bankers and the county sheriff began driving out to the farm to evict the family, they kept passing abandoned threshing machines in the middle of the harvest season.
For 20 miles they passed one abandoned thresher after another until they got to the driveway of the farm. They saw a couple hundred other farmers with shotguns and rifles and pitchforks waiting for them to try and evict the family.
The sheriff promptly turned the car around and never came back...the family settled up and that was the end of it.
Problem is now,,there's no community like that, not anymore... Its all one against the bank, and the bank always wins.
Protestant historian Erich Jon Phelps describes the period between 1914 thru 1945 as a great genocide of American, English and German Protestants and Russian Orthodox by the Black nobility
using their Masonic, Zionist and Jesuit agents to kill off disloyal heretic and independent populations not loyal to the Pope.
The devastating Versaille Treaty was a deliberate plan to destroy the German economy in order to set the stage for the rise of Hitler, using American stolen gold for the next great genocide of groups disloyal to Rome.
The ruling blood lines of the Black Nobility having become accustomed to secrecy and deception all these years, continue to control the world but are now challenged by the light of the internet exposing their plots and scams.
They expect to recover their power over us after this final collapse of their current counterfeited currency - the dollar, but they are being exposed by the internet which may be their final Waterloo.
... go and play this dollar waterloo shorting all FED's darlings and your fortune will explode. There will be no escape for financial traditionalists ... and once the shorts are run out, go to percious metals and bring your notes to the bathroom...
The word WAR is a nondescript and short term that needs to be turned into something like - "Episode of extreme insanity and viciousness" - there, fixed IT!....
Foreign speculators began to lose confidence in Germany’s ability to pay, and started betting against the Mark.
I think that statement is key to the situation in the USSA. Once bondholders lose confidence in Washington's ability to pay, that will set off a mass exodus out of the dollar. As things look now, the dollar won't fall until all the rest have fallen. That's when you want to have gold and silver in your possession.
Yeah but the 10 year is at 2% and the 30 year is 2.8%. Those are great rates.
Dig out your copies of"The Creature From Jekyll Island" and open your hymnals to Chapter 2, pages 27-32.
The debt is restructured and extended ad infinitum. It's never defaulted.
Hyperinflation repayment must not happen, so the Bankers kill till the interest payments resume.
This gave me a whole new perspective on Greece, and it was scary.
I opted out of the system 8 years ago by selling my house in an over-priced, over-taxed suburb and bought a small farm in the mountains of a remote area of the northern appalachians. I used about 1/3 the money I got for the house to pay for 80 acres of pasture, hay field, and woods. Place had a small but well-built cabin around 1,000 sq ft. Taxes went from 7k in the suburb to 2,600 for the farm.
I bought a cow, started a large garden, and got a large woodstove to replace the old electric baseboard. Had the cow artificially inseminated for $30. Next year I had 2 cows. Inseminated them both for $60, and this continued. Male calves get banded (fixed) and raised to size then sold for about 1,500 ( market depending). I now have 5 pregnant cows due to calve in spring. I found that one of my biggest expenses was hay in winter, so I bought some old ( but well cared for ) haying equipment for 12k. I started haying my fields and found that I had way more hay than I could use. Last year i sold 2,000 bales for 3.50 each.
So...my freezers are full of organic, home grown veggies, beef, and chicken. The farm pays it's own expenses and a little left over for taxes and utilities. Cabin is easily heated by about 5 cords of wood per year which takes about 3 weeks to cut and stack. We drink good mountain water, some of the freshest and best I've ever had.
I recommend this to anybody who wants to get the fuck out of the shitty work-a-day system that so many of us get stuck in. I had absolutely no experience what-so-ever in farming or outdoor life. I was a salesman, a broker, and then a print shop manager. If you are able bodied and have at least SOME assets, get the fuck out now theres a better life possible. I read ZH and other financial news for fun, not as a nail biting participant.
Congratulations for making it! Having less assets to begin with, I have only 4 acres and will have to make do with goats, chickens, and rabbits. Being a rather small person, cows would be a bit large for me to shove around anyway. But I am concentrating on establishing a perimeter of fruit and nut trees first. Trees take a little while to grow up and start producing. Still, I expect to be feeding myself and my cats within five years with a sustainable food forest and the critters who come to raid it ;-).