Best explanation for Weimar Republic Inflation I ever read....

Discussion in 'Economics & Trade' started by DennisTate, Apr 12, 2017.

  1. DennisTate

    DennisTate Well-Known Member Past Donor

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    I have to draw your attention to this astonishingly good explanation for exactly what
    went wrong during the time of the Weimar Republic of Germany.


    http://www.politicalforum.com/index...s-a-good-thing.499686/page-11#post-1067298520

    Trump's desire to reduce the deficit. Can someone explain to me how this is a good thing?



    If we look at other cases where hyper-inflation occurred you will see that
    the creation and distribution of money..... was not linked to the increase in real wealth
    that people want to purchase.

    For example...... in Zimbabwe....... when people obtained political power who
    did not understand economics...... .they printed up lots and lots of money... and paid it out to family and friends and government officials that they wanted to curry favour with..........

    Money was increased..... but quality products and services WERE NOT... .that is why the
    Zimbabwe Dollar was so devalued.
     
  2. DennisTate

    DennisTate Well-Known Member Past Donor

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    In the time of President Lincoln.....
    money was printed up to finance the war.......
    the soldiers were paid to shoot cannons and muskets at each other..........

    but they had been taken off the farms and whatever industries existed at that time.......

    So your most skilled most productive workers......
    are now being paid.......... but they are not producing goods and services... .so during the
    Lincoln Greenback Monetary Policy experiment there was a lot of inflation..........

    But the Greenback Monetary Policy Experiment is still a part of USA history that
    all of us should look at more carefully before we dismiss it as being of no value to us
    at this time.


    President Lincoln saved taxpayers four billion dollars...how can we do this in 2013?
    ....

     
    Last edited: Apr 12, 2017
  3. Econ4Every1

    Econ4Every1 Well-Known Member

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    As part of the "handing out", Mugabe took land away from European farmers were had agreements with the government to farm and gave it to the same people he gave money to (could have been political favors or to repay debt, I'm not sure). The way I understand it is that factions of the military were demanding money and/ or land Mugabe caved. However, the Europeans were adding to the economy of Zimbabwe to the tune of 1/3 of their total economic output. When the land was taken from the Europeans and given to citizens who were much, much less productive. They lacked the machinery, techniques, and knowledge of the Europeans in farming and as a result, agricultural productivity plummeted. Now, that's not even where this ends. European banks who were screwed because the European farmers that Mugabe screwed could no longer pay their debts to European banks. The banks blamed Mugabe and called in the loans that were taken from European banks by the Zimbabwe government. With the nation's GDP in the toilet the government simply began "printing" to make payments on their debt and as a result, 100% of the money created to make those payments was inflationary (in that, the money created didn't end up in hands consumers or producers of Zimbabwe).

    So while creating dollars and paying them to your friends might cause an uptick in inflation, it would not be enough by itself to cause hyperinflation, especially since the kinds of things that people would have purchased with those dollars would have been imported, that is, the extra money created would have put pressure on inventories, not on production because the kinds of things that money would have been spent on would have been made outside the country. Remember that inflation happens when demand exceeds supply. Most of the nation's productivity were centered around agriculture. Paying people more money probably wouldn't have put a lot of pressure on agricultural production (how much more can you eat?). It would have been the imported items that would have risen in demand and I'd suspect that most would have come from Europe or China....So only inventories would be affected, not production. The solution, if the problem was just the creation of money as you claim, would have been to increase inventory which already existed outside Zim, does that make sense?
     
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  4. Econ4Every1

    Econ4Every1 Well-Known Member

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    There is another way to think about this. While $4 billion dollars in interest would have been excessive for the time it also would have added money to an economy that had been suffering a dire lack of liquidity since Jackson. That is, the reason Lincon had to print money was because there wasn't enough in circulation already. So failure to pay interest on the $449 million Lincon created denied the economy the extra dollars it needed to have adequate liquidity assuming the money borrowed was from banks in the US and the money earned by the banks would have been spent mostly in the US.

    As far as debt, we've been through this before, but taxes are a debt imposed on citizens and the dollars used to pay taxes are an asset citizens can earn through work or military services. In turn, those dollars are a debt to the government, even Greenbacks, because even Greenbacks could be used to pay taxes, which ironically increased massively because of the war they were printed to fund. If the government had paid interest on Greenbacks, more money would have ended up in circulation, money that could have been used to buy houses, create equipment, trains, ships, whatever. The real limit would have been resources and the people to use them.
     
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  5. DennisTate

    DennisTate Well-Known Member Past Donor

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    Phenomenal answer.... as always..........

    Wow!

    May I begin to actively promote you for high public office?

    I am not the best at that kind of thing........ but I am not the worst either.

    Econ4Every1................. you are an astonishingly good writer on the subject of
    economic theory.


    http://www.michaeljournal.org/artic...story-of-banking-control-in-the-united-states

    The History of Banking Control in the United States

    Written by Alain Pilote on Sunday, 01 September 1985.


    ....
    The class of people who tended to end up running banks back in those days had some terrible ideas on economics.
     
  6. Econ4Every1

    Econ4Every1 Well-Known Member

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    Last edited: Apr 12, 2017
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  7. DennisTate

    DennisTate Well-Known Member Past Donor

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    Yes..... it sure is!

    If some of us at this forum were able to get you a fair amount of fame........
    and if you were willing to publicly enter the race for Democratic Party Leadership....
    there is a possibility that President Trump himself would begin to talk to you
    publicly..... partly because your ideas could help him to accomplish some of what he
    wants to do for America.

    Your politeness...... combined with the caliber of your ideas.......
    is a pretty amazing combination.
     
  8. Econ4Every1

    Econ4Every1 Well-Known Member

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    Thank you Denis, you are very kind. I'd settle for filling an occasional room with people willing to learn and have the opportunity to share what I know.
     
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  9. DennisTate

    DennisTate Well-Known Member Past Donor

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    I suspect that you will have far, far, far more than that very soon as your explanation as to why my theory is either close to the truth........ or probably way, way, way off......
    starts to get around.

    http://www.politicalforum.com/index...s-early-as-2016.397835/page-8#post-1067354686

    Should AboveAlpha allow us to set him up for the office of POTUS as early as 2016?


    After reading this you will want to take a look at:

    http://www.politicalforum.com/index...e-production-of.423385/page-5#post-1067354701

    .....
    If I have any influence over the process it could end up being 1 USA Dollar = I Canadian Dollar = 1 Israeli Shekel......
    that would be the direction that I would like to see this go in.......... if that doom and gloom prediction turns out to be valid.........

    Neither Israel nor Canada can allow the USA Dollar to go into free fall.........
     
    Last edited: Apr 18, 2017
  10. AGWisFAKEsillyBABYKILLERS

    AGWisFAKEsillyBABYKILLERS Well-Known Member

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    All of these currencies mentioned are fiat which basically means that they are controlled by elites.. They can choose to do whatever they want with them at any time for their own best interest, inflate, deflate, raise interest or lower, whatever.. This currency only has value because people percieve it to have value and they trust those who control it..

    All USD is issued as debt.. Every $1 put into circulation is owed back plus in interest, therefor their is more debt than currency..
    If this debt was to be recalled it would be absolutely impossible to pay back because their simply is more owed than dollars period.. This would be like agreeing to pay more gold than exists in the universe, it is just not possible..

    I have said bafore, holding fiat currency as a longterm store of value is a terrible idea..
    For one the elites keep it constantly inflating so their is incentive to spend it rather than hold it, because spending is what makes the economy move.. If currency were to stay the same value or deflate people would be incentivised to hold it rather than spend it and that would not be good for their consumerism economy..
    Also, fiat currency is dependent on the stability and good decisions of those who control it.. At any time the underlying system could be destabilized by outside influence or bad economical decisions be made..

    Then you can talk about gold/silver/bitcoin..
    Gold and silver through history have always held quite a steady value through the many many many crashes of fiat currencies.. If you look into the history of fiat currencies they have all eventually crashed and became worthless but the precious metals have held their own..
    But, gold and silver markets are heavily manipulated AND governments have quite the history of confiscating gold.. So their are also downsides to them too..
    If you are going to hedge your savings in metals I would very much suggest physical holdings.. OWN your metals in your hand, not on paper..

    Bitcoin.. Is a crazy thing.. I don't want to get into completely explaining it nor can I say I am capable of completely explaining it because it is very complex..
    Pretty much instead of some elites having control of it, its eternal control is set NOW written in stone in the code.. We know exactly how much it will inflate for the rest of time because it is decided and cannot be changed.. Their is a semi-complex schedule of new issuance of bitcoins that decreases over time and is set.. It has already been cut in half twice just as the code suggests..
    Bitcoins can also be held on paper much like gold or in your hand in the form of secret codes.. It looks like this... L1XsWfxinF7wZCC4HncZePZMwH3Xseoo1hMughc3W6RdE6rQGo37
    Differing from gold you can say only put so much value in your pocket with gold, because too much of it you won't be able to walk, or even haul it in your truck..
    Bitcoin you can put an unlimited amount of value on L1XsWfxinF7wZCC4HncZePZMwH3Xseoo1hMughc3W6RdE6rQGo37 and take it with you anywhere..
    You do not even need to physically hold it either as you can do the same with a string of words like this... ""survive month indeed guitar feet heart square pass quite talent dad peer""
    Then you can just memorize that string of words and take your value with you wherever you go without it being written down anywhere, or on any computer period..
    This also makes it completely impossible to confiscate because their is nothing to find no matter how hard anyone searches, the only way they can take it from you is if you let them.. They can torture you to get it from you but if you never say it they cannot get it..
    It is also entirely possible to make it impossible to be known that you own it in the first place, hold as much as you want with no one knowing, send it to anyone you want with no one knowing also..
    Also with gold to send value you would have to physically ship it or leave it up to trust in a 3rd party as paper on a ledger, bitcoin you can send anywhere anytime yourself with no help from anyone you need to trust..

    I could go on and on and on.. If you want to know ask.. It is truly the currency of liberty..

    Anyway yeah, any fiat can become worthless at any time, but I suppose it is possible that bitcoin could too for other reasons and they could confiscate your gold etc..
    Place your bets..
     
    Last edited: Apr 18, 2017
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  11. DennisTate

    DennisTate Well-Known Member Past Donor

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    Thank you for this fascinating answer to this topic!

    I do believe that there could be an even better investment than silver or gold.

    I suspect that silver may rise in price even faster than gold over the coming months and years but.....
    better yet:


    Could a real estate boom plus better Fed policy pay off USA national debt?

    .....

    I am so glad to have another poster here on the forum who understands the drawbacks to
    fiat currencies.

    www.BankingSystemFlaws.blogspot.ca/
     
  12. AGWisFAKEsillyBABYKILLERS

    AGWisFAKEsillyBABYKILLERS Well-Known Member

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    Real estate is a great investment but it has its problems too...

    1 it could decrease in value.. Like if your grandparents invested into Detroit property to leave to their children/grandchildren it would have been a terrible investment.
    2 taxes, you have to pay taxes on real estate and like fiat currencies the elites could change the tax rate at any time and leave you unable to afford to keep your investment or lose it to taxes.. If the real estate does not appreciate faster than the cost of taxes drains you then it is a losing investment..

    Their is no perfect answer..
     
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  13. Strasser

    Strasser Banned

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    The Americans insisted that the Reich Bank be 'privatized' after WW I, with the result that the bankers deliberately inflated the currency and speculated in paperReichmarks on the European exchanges in the hopes of paying off the indemnities in a crappy currency; it didn't work, the Allies insisted on gold payments. The German aristocrats had taken on a lot war debt themselves, so they also gained from the inflation, paying their debts back in worthless currencies like Goering's family, for instance; he spent the Wiemar years partying in Sweden and the then equivalent of jet setting while leaving the average German to suffer horribly.

    In the end the U.S. ended up -refinancing and paying Germany's war indemnities itself, and then Hitler came along and repudiated them. It had absolutely nothing to do with 'not knowing what they were doing', just the opposite, it had to do with American stupidity and it's ridiculous dedication to the 'laissez faire' idiocy. Right wingers caused most of the problems with the paper Reichmark inflation. The German bankers and their Junker supporters made idiots out of them. Of course the American tax payers ended up paying for it, not the 'laissez faire' fraudsters; they run away from paying for any of their mistakes all the time, and still do. Right wing ideologues are just as worthless as left wing ideologues, and just as enthusiastic about 'globalism' and ruining America as your average left wing fifth columnist. It's just another region to plunder and abandon to them.
     
    Last edited: Apr 20, 2017
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  14. DennisTate

    DennisTate Well-Known Member Past Donor

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    I lived in Quito, Ecuador from January 12, 2001 to August of 2002.

    Ecuador is facing serious problems right now that can be turned around in a
    way that is win - win - win - win for 99.9 percent of Americans and Ecuadorians.

    Potentially one of the most effective tools to boost the USA and world economy are
    reality and semi- reality science fiction film projects that are almost certain to have significant
    historical value within five to ten decades.

    http://www.politicalforum.com/index.php?threads/ecuador-could-become-another-venezuela.497280/

    Ecuador could become another Venezuela.....

     
  15. DennisTate

    DennisTate Well-Known Member Past Donor

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    Some extremely well informed people are genuinely worried about somewhere between
    one to 4.3 trillion dollars USA hitting the market rather rapidly.....
    in the not too distant future........ so.............
    one alternative is to unite the majority of humans around a goal that
    most people could agree is a basically good idea.

    I am thinking that the net cost of large scale desalination of ocean water to
    turn deserts green could be much less costly than building sea walls and dikes
    to protect coastal communities from the probable eventual collapse of the West
    Antarctic Ice Sheet and the land based Greenland Ice Pack.

    Jamie Baillie, Nova Scotia, Israel and Jordan.


     
  16. james M

    james M Banned

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    want to try again? and this time tell us who is worried and why it would hit market rapidly??????????
     
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  17. james M

    james M Banned

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    there are no drawbacks to speak of. This is BS that made some sense in the 1930's before monetary policy was understood. China has had 40 years of 7% growth to prove fiat monetary policy is now well understood. Welcome to the 21% Century.
     
    Last edited: Jun 14, 2017
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  18. DennisTate

    DennisTate Well-Known Member Past Donor

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    One of the most astonishing intellects that I have ever
    ran into online is worried about the number being 4.3 trillion...........

    This is from a personal message to me. ......so you will not be able to go back to the
    original post.....


    If I remember correctly ... AboveAlpha has already put almost all of this
    out there in the public forum anyway........

    Note.... AA was the last guy to get on the helicopter...... implications is that
    AboveAlpha places very high value on the lives of his team!

    I personally cannot argue with AboveAlpha on hardly any subject......
    the calibre of the information that he gives both publicly as well as in personal messages is
    the best that I have found anywhere.........


    I still feel that AboveAlpha is Presidential material and I am hoping that President Trump talks him
    into being G.O.P. nominee ......by 2022 or 2023........
     
    Last edited: Jun 15, 2017
  19. DennisTate

    DennisTate Well-Known Member Past Donor

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    There are advantages to fiat currencies yes........
    and the Federal Reserve deserves a lot of credit for
    keeping the world economy stable over these last decades........ .but........
    the situation could be changing if George Soros and others
    do make an all out effort to force the devaluation of the dollar........

    They actually have publicly stated that they want to destroy the USA Dollar.

    They will fail......
    but we need to be prepared to direct all that money in
    several productive and important directions...... one of which will be
    an increase in the land and real estate prices of the people who voted for
    President TRump.........

     
    Last edited: Jun 15, 2017
  20. DennisTate

    DennisTate Well-Known Member Past Donor

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    Yes.... I am so glad you clarified this........

    I have got to send this off to my friend from Nigeria who wrote:


    http://kolaolaniyi.blogspot.ca/

     
    Last edited: Jun 16, 2017

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