The Beginning Of The End
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Quantitative Easing Did Not Work For The Weimar Republic Either

Did printing vast quantities of money work for the Weimar Republic?  Nope.  And it won't work for us either.  If printing money was the secret to economic success, we could just print up a trillion dollars for every American and be done with it.  The truth is that making everyone in America a trillionaire would not mean that we would all suddenly be wealthy.  There would be the same amount of "real wealth" in our economy as before.  But what it would do is render our currency meaningless and totally destroy faith in our financial system.  Sadly, we have not learned the lessons that history has tried to teach us.  Back in April 1919, it took 12 German marks to get 1 U.S. dollar.  By December 1923, it took approximately 4 trillion German marks to get 1 U.S. dollar.  So was the Weimar Republic better off after all of the "quantitative easing" that they did or worse off?  Of course they were worse off.  They destroyed their currency and wrecked all confidence in their financial system.  There was an old joke that if you left a wheelbarrow full of money sitting around in the Weimar Republic that thieves would take the wheelbarrow and they would leave the money behind.  Will things eventually get that bad in the United States someday?

Of course we are not going to see hyperinflation in the U.S. this week or this month.

But don't think that it will never happen.

The people of Germany never thought that it would happen to them, but it did.

The following is an excerpt from a Wikipedia article about the Weimar Republic.  Take note of the similarities between what the Weimar Republic experienced and what we are going through today....

The cause of the immense acceleration of prices that occurred during the German hyperinflation of 1922–23 seemed unclear and unpredictable to those who lived through it, but in retrospect was relatively simple. The Treaty of Versailles imposed a huge debt on Germany that could be paid only in gold or foreign currency. With its gold depleted, the German government attempted to buy foreign currency with German currency, but this caused the German Mark to fall rapidly in value, which greatly increased the number of Marks needed to buy more foreign currency. This caused German prices of goods to rise rapidly which increase the cost of operating the German government which could not be financed by raising taxes. The resulting budget deficit increased rapidly and was financed by the central bank creating more money. When the German people realized that their money was rapidly losing value, they tried to spend it quickly. This increase in monetary velocity caused still more rapid increase in prices which created a vicious cycle. This placed the government and banks between two unacceptable alternatives: if they stopped the inflation this would cause immediate bankruptcies, unemployment, strikes, hunger, violence, collapse of civil order, insurrection, and revolution. If they continued the inflation they would default on their foreign debt. The attempts to avoid both unemployment and insolvency ultimately failed when Germany had both.

When the Weimar Republic first started rapidly printing money everything seemed fine at first.  Economic activity was buzzing and unemployment was very low.

But as the following chart shows, when hyperinflation kicks in, it can happen very quickly.  By late 1922, the effects of all of the money printing were really starting to hit the German economy....

Once you start printing money it is really, really hard to stop.

By late 1922, inflation was officially out of control.  An article in The Economist described what happened next....

Prices roared up. So did unemployment, modest as 1923 began. As October ended, 19% of metal-workers were officially out of work, and half of those left were on short time. Feeble attempts had been made to stabilise prices. Some German states had issued their own would-be stable currency: Baden's was secured on the revenue of state forests, Hanover's convertible into a given quantity of rye. The central authorities issued what became known as “gold loan” notes, payable in 1935. Then, on November 15th, came the Rentenmark, worth 1,000 billion paper marks, or just under 24 American cents, like the gold mark of 1914.

Hyperinflation hurts the poor, the elderly and those on fixed incomes the worst.  The following is an excerpt from a work by Adam Fergusson....

The rentier classes who depended on savings or pensions, and anyone on a fixed income, were soon in penury, their possessions sold. Barter often took over from purchase. By law rents could not be raised, which allowed employers to pay low wages and impoverished landlords in a country where renting was the norm. The professional classes -- lawyers, doctors, scientists, professors -- found little demand for their services. In due course, the trade unions, no longer able to strike for higher wages (often uncertain what to ask for, so fast became the mark's fall from day to day), went to the wall, too.

Workers regularly got wage increases during this time, but they never seemed to keep up with the horrible inflation that was raging all around them.  So they steadily became poorer even though the amount of money they were bringing home was steadily increasing.

People started to lose all faith in the currency and in the financial system.  This had an absolutely devastating effect on the German population.  American author Pearl Buck was living in Germany at the time and the following is what she wrote about what she saw....

"The cities were still there, the houses not yet bombed and in ruins, but the victims were millions of people. They had lost their fortunes, their savings; they were dazed and inflation-shocked and did not understand how it had happened to them and who the foe was who had defeated them. Yet they had lost their self-assurance, their feeling that they themselves could be the masters of their own lives if only they worked hard enough; and lost, too, were the old values of morals, of ethics, of decency."

Of course not everyone in Germany was opposed to the rampant inflation that was happening.  There were some business people that became very wealthy during this time.  The hyperinflation rendered their past debts meaningless, and by investing paper money (that would soon be worthless) into assets that would greatly appreciate thanks to inflation, many of them made out like bandits.

The key was to take your paper money and spend it on something that would hold value (or even increase in value) as rapidly as possible.

The introduction of the Rentenmark brought an end to hyperinflation, but the damage to the stability of the German economy had been done.  The German economy went through several wild swings which ultimately resulted in the rise of the Nazis.  The following description of this time period is from an article by Alex Kurtagic....

The post-hyperinflationary credit crunch was, not surprisingly followed by a credit boom: starved of money and basic necessities for so long (do not forget the hyperinflation had come directly after defeat in The Great War), many funded lavish lifestyles through borrowing during the second half of the 1920s. We know how that ended, of course: in The Great Depression, which eventually saw the end of the Weimar Republic and the beginning of the National Socialist era.

By the end of the decade unemployment really started to take hold in Germany as the following statistics reveal....

September 1928 - 650,000 unemployed

September 1929 - 1,320,000 unemployed

September 1930 - 3,000,000 unemployed

September 1931 - 4,350,000 unemployed

September 1932 - 5,102,000 unemployed

January 1933 - 6,100,000 unemployed

By the end of 1932, over 30 percent of all German workers were unemployed.  This created an environment where people were hungry for "change".

On January 30th, 1933 Hitler was sworn in as chancellor, and the rest is history.

So where will all of this money printing take America?

As I wrote about in a previous article, the amount of excess reserves that banks have stashed with the Federal Reserve has risen from about 9 billion dollars on September 10th, 2008 to about 1.5 trillion dollars today....

What is going to happen to inflation when all of those excess reserves start flowing out into the regular economy?

It won't be pretty.

Just consider the ominous words that Philadelphia Fed President Charles Plosser used earlier this week....

"Inflation is going to occur when excess reserves of this huge balance sheet begin to flow outside into the real economy.  I can't tell you when that's going to happen."

"When that does begin if we don't engage in a fairly aggressive and effective policy of preventing that from happening, there's no question in my mind that that will lead to lots of inflation."

Oh great.

And so what is Bernanke doing?

He is printing up lots more money.

But isn't this supposed to help the economy?

I wouldn't count on it.

According to USA Today, the following is what Plosser says about the effect that QE3 is likely to have on our economy....

"We are unlikely to see much benefit to growth or to employment from further asset purchases."

But we will get more inflation, so our monthly budgets will not go as far as they did before.

The other day I was going to the supermarket, and my wife told me that she wanted some croissants.  When I got to the bakery section I discovered that it was $4.49 for just four croissants.

If it had just been for me, I would have never gotten them.  I am the kind of shopper that doesn't even want to look at something unless there is a sale tag on it.

But I did get the croissants for my wife.

Unfortunately, thanks to Federal Reserve Chairman Ben Bernanke soon none of us may be able to afford to buy croissants.

I still remember the days when I could fill up my entire shopping cart for 20 bucks.

And it was not that long ago - I am talking about the late 90s.

But paying more for food is not the greatest danger we are facing.  Bernanke is destroying the credibility of our currency and he is destroying faith in our financial system.

Bernanke may believe that he is preventing the next great collapse from happening, but the truth is that what he is doing is going to make the eventual collapse far worse.

Better get your wheelbarrows ready.

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  • dmitry

    I was looking for my wheelbarrow, but I couldn’t find it. I’ll use a small cart instead ;=).


    Thanks for sharing the Financial German history. I never heard it since my school days.

  • Gary2

    Michael–we can Never be like weimer germany. To even suggest this is a stunning degree of ignorance.

    The USA is and never can be like that and to suggest this is not reality.

    I know it makes the right wing nuts giddy when you throw them this red meat but it is in no way reality

    • Alvin

      and just what the hell do you base that on.
      The average 1930′s German was educated and hard working for that time frame and a hell of a lot more moral. The typical Democrap has no problem in killing 50 million babies because they don’t want to be responsible for their actions. The typical democrap in the past 4 years has run up trillions of dollars in debts because they are either too lazy or stupid to go out and work, leaving the rest of us to clean up the mess. I have no doubt that a society that is willing to kill 50 millions babies will now start killing older adults by declining to give them healthcare. It time that people like you get up out of the wagon and start helping to pull the wagon.

      • Paul

        Wow, all that QE that started under Bush. Gone! Never happened. I’m glad though that you are concerned for (American) babies. Maybe you might spare a thought for all the babies and children killed in America’s depredations in other countries. You may even find this infanticide was something of a bipartisan affair politically.

      • Gary2

        I base this on the fact that I have a brain and am capable of critical thinking something that is sorely lacking on this site by many posters including Michael at times.

        all you need to do it think about why we can never be like the 1920′s Germany and you will figure it out on your own.

        • HecatesMoon

          Gary2, so, you think we will pull out of this o.k.? I know things aren’t exactly the same, but could we not end up in a similar situation? Or like Greece or Spain?

          • HecatesMoon

            They are putting locks on garbage cans in at least one Spanish city now to keep people from raiding trash cans for food. Ugh…how awful. They say it is a health concern.
            I can only believe it would truly be one of two things. Outright greed– you can’t have what you didn’t pay for! Or true, utter stupidity. Those making the rule have never truly been hungry.
            No decent heart would deny these people if they are so reduced. They would let them survive and feed themselves by whatever means so long as no crime were involved.
            So sad…
            I thought this was a good point to rant about it…

        • John Tlag

          Gary2, if you have an opinion to contribute, back it up. Telling someone “the answer should be obvious if they think about it” is bad form. The idea here is to exchange ideas. Support your assertion with some facts.

      • frannie fargo

        yes, romney wants to end the “entitlements” to older americans (social security, medicare, etc.) so yes, once they are in they will not only be killing babies but starving and maiming old people too.

    • 007

      Amazing counter argument.” This won’t happen to us. You are just ignorant, evil or stupid to suggest it”. Spoken like a true radical left wing socialist. Grow up.

    • 98Bravo

      Gary2, Please explain why this will never happen? Why and how are we immune from the rules of economics and mathematics? Please give us the reason behind your thinking.

  • JustanOguy

    I remember being a kid when my parents bought some antique furniture in Germany. Stashed away in some hidden compartments (very common for furniture made in that era to have hidden compartments) was a couple of hundred billion in these Deutsche Marks… I thought we had struck it rich. Lol.. I have one of the $5 Biilion Deutsche Marks framed above my desk.

    Reading that excerpt from Paper Money by Adam Smith (George Goodman) through the Pearl Goodman link you provided was pretty enlightening on German Life while it was happening… and all of the very similar things taking place today if you just look around.

    Copper thefts, gas siphoning thefts, people complaining about not making enough to live, etc, etc.

    I’ll have to get that book and read it. Many of us know about the Weimar Republic but most of us don’t know about the daily life as it actually took place.

    Just wanted to say Thanks for the entertaining read. I just returned from the grocery store to pick up some milk and some other miscellaneous items that were on sale so the timing was perfect. Spent $20 for enough to last a day or two..

    And that was with the majority of the items being on sale.

    Passed on the slice of German Chocolate Cake for $2.99 a slice.. and I was craving it. But I used to be able to get it for $1 a slice about a year or two ago so $2.99 is a little hard to accept.

    Thanks Again..

  • Old Man

    Will QE3 work? Of course it will. It will work “100%”.

    Consider the benefits:
    1) The amount issued is tiny compared to everything. It will be easily absorbed without being noticed. Indeed, the more QE3 money is issued, the less it will be noticed.

    2) Every QE3 dollar issued is one less dollar debt to be repaid. Isn’t that wonderful? Hell, even Social Security will have its future restored.

    3) By the time the next president is sworn into office, lots of new money will be available for pork. Just in time for stimulus. As to stimulating who, that depends on who is the president. But that’s just details. The politicians will be stimulated for sure.

    4) All that new bucks will get circulated in the world, and used by foreigners. Who will get suckered again. And if they play hard ball, the Marines are ready for action! They are well trained in fighting foreign wars.

    5) What about inflation? There will be minor inflation, which is good. See, such controlled amount of inflation, superbly managed by the Fed, will make US labor more attractive because labor cost will be lower. Outsourced jobs will return. Chinese companies might even outsource some work to USA. For example, they just might send their brand new aircraft carrier to the US for outfitting with the latest goodies such as F-18 Super Hornet. Even a nice paint job. This is all due to QE3.

    6) Finally and most importantly, QE3 is critical to the Fed’s very survival. See, it was the Fed amazing policies that caused a bit of a hiccup in the US economy. They need to fix this, restore faith. And prove Einstein’s quote utterly wrong. What quote? He said some nonsense about those who created problems cannot be the one who fix them.

    But what about the big fear of a Wiemar Republic style inflation? Have no fear my friend. See America is not post-WW1 Germany. The folks in charge here are much smarter, and America actually won 2 wars recently. Wiemar lost a big war and the winners all ganged up on it. Screwed the poor country to the max. Nobody dares to gang up on America I can tell you that. Which is why the wise people at the Fed dares to QE this and QE that. Whatever country dares to abandon the dollar will get the Exceptional treatment.

    • Bill

      Old Man,

      I understand you’re being sarcastically witty, but I’d like to add to your “benefits” with my own observations.

      Consider the misconceptions -

      1) The amount issued will barely be felt by the average American because it’ll go directly into the balance sheets of the top 1%. By purchasing Agency MBS’s, it’ll lower their interest rates and increase market values. The increase in values will make them gitty!
      2) I’m not understanding your calculus here. By increasing the Fed’s balance sheet, how will that lower the debt? What it will do is make it easier to pay down the debt using deflated dollars, but that’s what the Weimar did and we all know how THAT turned out.
      3) Yes, all that money will be available for another round of stimulus. All those deflated dollars flooding the economy…
      4) Perhaps foreigners will get suckered again or perhaps they’ll flip the bird at the dollar and form their own currency. When what do we do? Send in the Marines to force them to use our worthless currency?
      5) Hyperinflation is already here, it’s just stuck right now in the balance sheets of the mega banks. All that fiat money is building up the stock and bond markets while interest rates keep their present values at near zero. As banks start looking elsewhere for “alpha” in their portfolios, they’ll start pushing some of that money into the real economy, and then watch out!
      6) The Fed is already beyond survival. Emperor Ben is doing all he can to convince us otherwise but it’s already too late.

      We’re not smarter and the last four conflicts we were involved in were either stalemates or outright losses. The rest of the world will be more than willing to gang up on America once they think we’re too weak to defend ourselves. Just look at what happens to the schoolyard bully once he’s unable to torment the weaker kids on the playground.

  • WarrenBuffet

    Germany just didn’t want to pay off its WWI reparations, thats why it printed all that money- to crush the can.
    Unless theres a black swan, US can still kick the can for years.

  • Mohammed Sobhan

    What we can do about it ? What do you suggest for the US citizens. We should try to live better as the all golden days are gone. Our objective should be to live in peace in mind with almost everything. Does anyone believe that as per the holy Quran the day of judgement is near. We see sign of the end of the Universe and we must prepare for the last day in this universe.

    Please suggest what can we do now .


  • Pastor Glenn

    Frankly, I’ve been expecting this to happen since 1980, when I became a Libertarian (later I moved on to the US Taxpayer Party, which is much more Christ-oriented but otherwise broadly similar). The US Taxpayer Party is now known as the Constitution Party.

    Anyway, when Reagan stole the Libertarian’s thunder in the Presidential election and claimed he’d cut the deficit, I was suspicious. Unfortunately, I was right – and Reagan doubled our $1 trillion deficit in about 4 years. It’d taken 204 years to get $1 trillion into debt, as a nation; and four more to double it. I was disgusted.

    Now we are adding over a trillion per year on a $16 trillion debt, and the Con-gress hasn’t passed a budget (as legally required) in years. Plus the Fed (which we all know actually ‘owns’ the vast majority of the governments of the world, and especially the US ‘government by and for the people’ – NOT) hasn’t published M3 numbers in years.

    This video will tell you everything you need to know in 30 seconds. Watch the face of the man on the right.

    The gentleman on the right is Austan Goolsbee and he was on Obama’s team, until he left in 2011. You have to wonder if the scales started to fall off his eyes when he sat next to the ex-Fed Reserve Chairman Alan Greenspan in this interview.

    • Tim

      I was interested in the Constitution Party years ago. I even met their candidate for the 2004 presidential election–a very charismatic and bright man and a gifted speaker. I even visited the church he and his family attended (in Maryland). Sadly, he didn’t have his home in order. His sons were miserable and couldn’t wait for the church service to be over. They were also rude. A few years later, the man’s wife divorced him. And it’s not hard to see why. He was a little too friendly with other women, including one of my own family members. I’ll just leave it at that.

    • Craig Nim

      While Reagan did increase the debt, remember he was at war with the Soviet Union … and won. War is costly. Always.

  • blueridgeviews

    The Wiemar Republic was printing money when no one else was.

    Today is very different. All of the world’s central banks are printing money.

    Is this the prelude to a long envisioned (central bankers dream) one world currency? Government?

    • Paul

      I suspect this has been the intention all along.

  • bobbobbob

    more lies more stupidd talkk
    REMEMBER the elderly r racists but they r not stupid. that jerkromnney wants to voucherizee medicare. thecubanos in fla. r against that. u loose theywill vote4the president. learn how to think if u can

    • GSOB

      learn how to write first

  • Panto


  • El Pollo de Oro

    When the American dollar goes into cardiac arrest and inflation soars, millions of Americans who are already struggling will find their lives going from bad to worse. All that misery will bring with it considerable violence and unrest. And speak of unrest…….

    Mas disturbios y mas violencia en España:

    Take a good look at these videos of the unrest in Madrid because that’s what The Banana Republic of America will look like soon. It won’t be pretty.

    In the words of Gerald Celente, when people lose everything and have nothing left to lose, they lose it. And when the money stops flowing down to the man on the street, the blood begins flowing in the streets.

  • pabba

    The US government doesn’t control paper currency but they could mint a few trillion dollar coins, hand them to the feds and take back control of the money supply. Problem solved.
    It could happen, we just need to give the bankers the same social stigma as smokers – everyone will vote against them out of disgust. That and quit watching television.

  • Nj Moran

    Does this mean We will have another Nazi Germany? I guess that’s what the new world order will look like.

  • Mara Singh

    Another classic example of “Biflation”.

  • Canadian Max

    Chicken little could prove the sky was falling, he had a lump on his head. If your cash is useless, package it up nicely and send it to me.

  • William

    Readers should carefully research the fate of the Weimer Republic, Argentina about 12 years ago, and Zimbabwe more recently. Since the land of the free and brave no longer operates under the rule of law, any notion of “American exceptionalism”, which will save the day, is wrong. Nothing will stop the collapse….the question is, will YOU survive?? If you believe the official US government report on the events of 911, you will likely NOT survive…..because you have no brain!

  • Washington

    September 27, 2012 – The truth is, she’s right, at least about the U.S. government giving away cell phones. We’re going broke as a nation, yet picking up the tab for millions of Americans’ cell phone bills.

  • http://kitco rick forman

    now is the time to vote republican……at least there is less of a chance of them taking our guns away……we’re gonna need ‘em..

    • Kevin2

      For the most part that is about the only difference in the two party’s platforms regardless of their statements for public consumption. Both signed on in majority percentages to both Free Trade (on every occasion that mattered) and the deregulation of and lack of enforcement upon the financial industry.

      Both party’s occupy glass houses of practically the same design paid for by the same people while throwing stones at one another’s domain. Even more pathetic is they are built out of two way mirrors allowing no one to truly look in and both complain about the others lack of transparency.

    • Paul

      Tweedledee time huh?

  • Mondobeyondo

    What caused the Weimar collapse in the first place?

    Well… (once again, stretching my memory back to those boring high school history classes in 1980 and 1981) – one of the conditions of the peace treaty that ended World War 1, was the payment of reparations to the victors, the Allies (England, France, the U.S.)

    Germany didn’t have the money to pay reparations. So they printed the money instead. (Sound familiar??) This caused the value of the Deutschmark to first plunge, then plummet, then crash through the cellar floor. The German people were angry, to say the least. And, just as in any crisis, they started to look for scapegoats.

    Adolf Hitler was jailed for a time, wrote a book called “Mein Kampf” while in prison, and began his political career with the Beer Hall Putsch in Munich….and we all know the rest.

    Which begs the question, “Why didn’t something similar happen in Argentina and Zimbabwe? Didn’t both countries have similar economic collapses?” Well, even though they did had massive economic crashes, and both have vast material and agricultural resources, neither is a major world power, and neither has any global significance. Germany did, and still does even to this day.
    An excellent summary of the events in Germany between the end of World War I and World War II is William L. Shirer’s “The Rise and Fall of the Third Reich”. I would highly recommend it to anyone interested in those times, and what led up to them. It’s a long read (like Tolstoy’s “War and Peace”, but definitely worth your time.)

  • Washington

    As Charlie Daniels has stated, “Something’s wrong and we all know it.”

  • Awake

    Debt monetizing is what the Weimars did, and now we are doing it. I hope this does not lead to the same chain of events. History never repeats itself, but it often does rhyme. I recommend anyone reading this to learn and develop true self reliance. This is somthing that cannot be bought, only learned. It can lead to confidence and bring clear thoughts when big decisions must be made. I pray for the courage to change what I can, accept what I cannot and the wisdom to know the difference.

  • Dezmo

    Anyone who has studied economy-101 knows that Hyperinflation is an effect of certain thing, certain stupid thing, done by the economic decision-maker. I wonder if the money-printing frenzy happening now is made deliberately, because I seriously don’t think that Helicopter-Ben and those sitting next to him are idiots. Or maybe they are? Let me know what you think.


  • Justin

    Michael is correct and if you read Bernanke’s QE3 statement he tells you exactly where he’s taking us: “the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens.” translation: THERE IS NO TURNING BACK! now is the time to prepare: “FOOD, GOLD, SILVER, SAFETY, PRAYER.”

  • Washington

    Countdown to 2012 – The Clueless Generation

  • Washington

    Editorial: Operation Screw Wednesday, September 26, 2012 – by Peter Schiff

    With the Fed decision and press conference [Sept. 13], Chairman Ben Bernanke finally and decisively laid his cards on the table. And confirming what I have been saying for many years, all he was holding was more of the same snake oil and bluster. Going further than he has ever gone before, he made it clear that he will be permanently binding the American economy to a losing strategy. As a result, September 13, 2012 may one day be regarded as the day America finally threw in the economic towel.

  • Doug Green

    Never commented on one of these before, but I have to on this one.

    I do the ordering for the grocery department at a grocery store. I.E. I am the guy that orders in your Cheerios and tomato juice and sugar and flour, etc. Package sizes on main items like cereal have been going down nonstop, every couple months for the past year. Now they’re down to about half of what they were in 2011.

    What this means is: you are paying $3.99 for a 10.7 oz. box of frosted flakes, compared to $3.99 for a 20 oz. box of frosted flakes 2 years ago.

    My point is, consumers don’t really notice the price increase on food as much because manufacturers GRADUALLY decrease the amount of food in the package.

    • Michael

      That is a great point Doug. Thank you for sharing that insider viewpoint. :)


    • kissitgoodbye

      fast food chains are doing the same thing.

  • don

    Nothing will change until the congress stops taking money from the FED. The FED cannot print money except to cover debt. Read G. Edward’s book the Creature from Jekyll Island. This deal was set up in 1910 and was given birth in 1913. When the boys in DC needed help they all jumped into bed. That was the beginning of ridding our currency of being backed by precious metals. When Nixon pulled the plug to pay for Veitnam, the Fed had the golden check book. It’s about Big Banks and interest revenues and taxing the little guy via inflation. The real taxation withour representation on steriods.

  • The Day After

    I suggest that we are at the point that everyone really needs to watch the movie The Day After. ABC produced this movie in the 80 s when things were still on edge with the soviets and the Germans. Over 30 million watched the movie and it was one of the highest watched made for tv movies ever. It presented a nuclear holocaust in a a real way, that was frightening. One of the comments above that Einstein used was in that movie. Freaky! More to the point about this was there was an ex KGB defector that said the Soviets had a plan in place but never executed called Operation Ryan to take the US down. Who is Romneys running mate for VP. Paul Ryan? If you people don’t believe we have been infiltrated at the highest levels of government you are sadly Nieve. They have got us boxed in at every corner and they know it. Reagan said after the movie it left him Depressed. The next day he signed a treaty of reducing nuclear warheads with Russia. Folks you better get ready, this isn’t going to end pretty. this is an enemy that cannot be defeated unless there is a 100 million or more of us taking things back at the state level first. 1 to 10 people doing it is suicide, 100 million or more is what’s needed to take our country back! be the change!

  • Stuart Dobson

    Excuse my ignorance, but wouldn’t hyper inflation be great news for those with mortgages? Your wages would have to go up, but your mortgage costs would stay the same, meaning you could pay off your house quicker. Those without a mortgage would struggle to get one of course as the value of houses would go through the roof.

    Or am I completely off base?

    • MamaMia!


      I am wondering the same too. If you own a mortgage and hyperinflation happens, what will happen to your mortgage? There are 2 components of the mortgage and they are the principal and the interest.

      This is my thought.

      If hyperinflation happens, the Fed wants to increase interest rate to fight, or control at least, the hyperinflation. That means our mortgage rate will increase too. Consequently, the mortgage’s interest components will increase dramatically. So, if you still have a job (remember, during hyperinflation, most probably you will lose your job as businesses struggle to be alive) and some savings during the hyperinflation, you can still service the interest components. If you are able and willing to pay the high interest rate until the Fed is able to tackle the hyperinflation (lowering interest rate), then you can keep the house. There are 2 ways to lose the house. First is the bank will take your house by force. This happens when the value of the house is lower than the value of the mortgage, which happens lately in USA. Secondly, you can sell the house yourself and pay off the mortgage. You will be lucky if you have anything left at this stage because during hyperinflation, many people will go bankrupt and there is so much assets selling thus depressing the house price.

      Your mortgage principal component will still be the same.

      Hopefully hyperinflation will not happen.

    • Jared

      It all depends on the type, fixed rate mortgage vs adjustable.

      • Craig Nim

        However, aren’t adjustable rates also regulated by how quickly the interest rate can increase? Thus, since inflation would have no restrictions on its explosive growth, then wouldn’t it vastly surpass the legislated limit on the growth of adjustable rates?

  • comnenus

    There was a wealthy industrialist named Hugo Stinnes who used this hyperinflation to his advantage, and ended up with 6 billion US dollars (when John Rockefeller I had at most 2 billion).

    Stinnes owned more than 600 newspapers and 100 power plants, among others.

    When he died his empire supposely broke up, but the money was never found. His desdendants are reported to own a bunch of islands on the Baltic Coast to this day.

    • MamaMia!

      There is a profile about Hugo Stinnes in Wikipedia. It is described that he took advantage of hyperinflation by leveraging and buying hard foreign currency.

      I guess this is the more logical choice rather than buying a house with a mortgage. To take advantage of the hyperinflation, you need to buy foreign currency.

      As with mortgage, leveraging by borrowing in the local currency has 2 components: the interest and principal. During hyperinflation, the interest part of the loan will increase dramatically by following the hyperinflation. Meanwhile the principal will still be the same numerically.

      Unlike a mortgage, a foreign hard currency in the bank account will get income from the interest. You can use this income to pay the interest of the local currency loan. Because of hyperinflation, the foreign currency will gain so much value against the local currency. Therefore, the interest from the foreign currency might be able to pay all the interest in the local currency loan. At the same time, paying back the principal will be like buying peanuts on the street.

      You cannot say the same if you get a mortgage for a house because the house is in the same local currency.

  • raffaro

    Allot of people are awake; they’re buying guns like crazy! @30% over cost and around 40% more than six years ago.

    An AR-15 in 1994 went for about $450.00. And less if your buddy was a class III firearms licensed dealer.

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