Economic Success

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.

The Mississippi River Is Drying Up

The worst drought in more than 50 years is having a devastating impact on the Mississippi River.  The Mississippi has become very thin and very narrow, and if it keeps on dropping there is a very real possibility that all river traffic could get shut down.  And considering the fact that approximately 60 percent of our grain, 22 percent of our oil and natural gas, and and one-fifth of our coal travel down the Mississippi River, that would be absolutely crippling for our economy.  It has been estimated that if all Mississippi River traffic was stopped that it would cost the U.S. economy 300 million dollars a day.  So far most of the media coverage of this historic drought has focused on the impact that it is having on farmers and ranchers, but the health of the Mississippi River is also absolutely crucial to the economic success of this nation, and right now the Mississippi is in incredibly bad shape.  In some areas the river is already 20 feet below normal and the water is expected to continue to drop.  If we have another 12 months of weather ahead of us similar to what we have seen over the last 12 months then the mighty Mississippi is going to be a complete and total disaster zone by this time next year.

Most Americans simply do not understand how vitally important the Mississippi River is to all of us.  If the Mississippi River continues drying up to the point where commercial travel is no longer possible, it would be an absolutely devastating blow to the U.S. economy.

Unfortunately, vast stretches of the Mississippi are already dangerously low.  The following is an excerpt from a transcript of a CNN report that aired on August 14th….

You might think this is some kind of desert just outside of Memphis. It’s not. I’m actually standing on the exposed bottom of the Mississippi River. That’s how dramatic the drought impact is being felt here. Hard to believe, a year ago we were talking about record flooding. Now, they are worried about a new kind of record: a record low. The river was three miles wide here, it’s now down to three tenths of a mile. And that’s causing all kinds of problems. There are some benefits, I mean, take a look over here: new beach front. In fact, some quip that now the Mississippi River has more beaches than the entire state of Florida, which would be funny if it didn’t have an impact on trade.

A lot of stuff we use goes up and down the Mississippi River. We are talking steel, coal, ore, grain. The problem is now a lot of those barges have had to lighten their loads, and even doing that, they are still running aground. There is a real fear that there could be a possibility of closing the Mississippi River. If that happens, well, all that product that used to be carried cheaply by barge is now going to be carried more expensively by truck or train. And guess who is going to pay for all of that.

You can see video footage of what is happening along the Mississippi right here.

It really is amazing that last year we were talking about historic flooding along the Mississippi and this year we are talking about the Mississippi possibly drying up.

As I mentioned earlier, there are some areas along the river that are already 20 feet below normal levels.  The following is from a recent article posted on inquisitr.com….

Just outside of Memphis the river is 13 feet below normal depth while the National Weather Service says Vicksburg, Mississippi is 20 feet below normal levels. Overall the Mississippi is 13 feet below normal averages for this time of year.

The drying up river is forcing barge, tugboat and towboat operators to navigate narrower and more shallow spots in the river, slowing their speeds as they pass dangerously close to one another. In some parts of the Mississippi the river is so narrow that one-way traffic is being utilized.

A lot of barges have been forced to go with greatly reduced loads so that they will sit higher in the river, and other commercial craft have been forced to stop operating completely.

For example, the Mississippi has dropped so low at this point that the famous American Queen Steamboat can no longer safely navigate the river.

Down south, the Mississippi River has gotten so low that saltwater is actually starting to move upriver.  The U.S. Army Corps of Engineers is fighting hard to keep that contained.

Other waterways in the middle part of the country are in even worse shape.

For example, a 100 mile stretch of the Platte River has already dried up.  Millions of fish are dying as rivers and streams all over the country continue to get shallower and warmer as a result of the ongoing drought.

The last time the condition of the Mississippi River was this bad was back in 1988.  At that time, a lot of barge traffic was stopped completely and the shipping industry lost approximately a billion dollars.

If a similar thing were to happen now, the consequences could potentially be far worse.

As I wrote about recently, a standstill along the Mississippi would cost the U.S. economy about 300 million dollars a day.

In fact, one towing company that works on the Mississippi says that it has already been losing about $500,000 a month since May.

In the end, who is going to pay for all of this?

You and I will.

In fact, this crisis could end up costing American consumers a whole lot of money….

So here’s the math. If you want to raise the average barge one inch above the water, you’ve got to take off 17-tons of cargo. To raise it a foot, you’re talking 200 tons.

And since, according to the American Waterways Operators, moving cargo by river is $11 a ton cheaper than by train or truck. The more that now has to be moved on land, well, the more the costs go up. Steven Barry says, “And, eventually, the consumer’s gonna pay that price somewhere along the line.”

And considering the fact that we are already facing a potential food crisis due to the drought, the last thing we need is for the Mississippi River to dry up.

So is there any hope on the horizon for the Mississippi?

Unfortunately, things do not look promising.

The fall and the winter are typically drier than the summer is along the Mississippi River.  That means that conditions along the river could actually get even worse in the months ahead.  The following is from a recent Time Magazine article….

But without significant rainfall, which isn’t in any long-range forecasts, things are likely to get worse. As summer turns to fall, the weather tends to get drier. Lower temperatures generally mean fewer thunderstorms and less rainfall.

“Take away the thunderstorm mechanism and you run into more serious problems,” says Alex Sosnowski, expert senior meteorologist for AccuWeather.com. And while droughts tend to be a temporary setback, longer-range forecasts are troublesome. Sosnowski says he is anticipating an El Niño weather pattern next year, which would mean below-normal snowfall and above-average temperatures.

Let us hope and pray that we don’t see another 12 months similar to the 12 months that we have just been through.

The U.S. economy is already in bad enough shape.

We don’t need any more major problems on top of what we are already dealing with.

So what do you think about this?  Please feel free to post a comment with your thoughts below….

The United Nations Wants To Crash The World Economy In Order To Save The Environment

The United Nations says that the earth is in great danger and that the way you and I are living is the problem.  In a shocking new report entitled, “Resilient People, Resilient Planet: A Future Worth Choosing” the UN declares that the entire way that we currently approach economics needs to be changed.  Instead of focusing on things like “economic growth”, the UN is encouraging nations all over the world to start basing measurements of economic success on the goal of achieving “sustainable development”.  But there is a huge problem with that.  The UN says that what we are doing right now is “unsustainable” by definition, and the major industrialized nations of the western world are the biggest culprits.  According to the UN, since we are the ones that create the most carbon emissions and the most pollution, we are the ones that should make the biggest sacrifices.  In addition, since we have the most money, we should also be willing to finance the transition of the developing world to a “sustainable development” economy as well.  As you will see detailed in the rest of this article, the United Nations basically wants to crash the world economy in order to save the environment.  Considering the fact that the U.S. and Europe are in the midst of a horrible economic crisis and are already drowning in debt, this is something that we simply cannot afford.

There is certainly nothing wrong with taking care of the environment.  But what the United Nations wants is a fundamental restructuring of the global economy based on flawed science.

In this new UN report, we find the following statement….

Achieving sustainability requires us to transform the global economy. Tinkering on the margins will not do the job.

This is absolutely crucial to understand.

The folks over at the UN don’t just want to change things a little.

Their goal is a radical transformation of the entire world.

According to the United Nations, if we don’t implement their recommendations the consequences will be absolutely disastrous….

But what, then, is to be done if we are to make a real difference for the world’s people and the planet? We must grasp the dimensions of the challenge. We must recognize that the drivers of that challenge include unsustainable lifestyles, production and consumption patterns and the impact of population growth. As the global population grows from 7 billion to almost 9 billion by 2040, and the number of middle-class consumers increases by 3 billion over the next 20 years, the demand for resources will rise exponentially. By 2030, the world will need at least 50 percent more food, 45 percent more energy and 30 percent more water — all at a time when environmental boundaries are throwing up new limits to supply. This is true not least for climate change, which affects all aspects of human and planetary health.

So what changes are needed in order for us to achieve a “sustainable” global economy?

Well, the following are some of the disturbing recommendations that we find in the new UN report….

Raise Prices

According to the United Nations, we need to start significantly raising the prices of things that are made in an “unsustainable” way so that they reflect the “true cost” of their production….

Most goods and services sold today fail to bear the full environmental and social cost of production and consumption. Based on the science, we need to reach consensus, over time, on methodologies to price them properly. Costing environmental externalities could open new opportunities for green growth and green jobs

That means that you and I would start paying a lot more for the basic things that we need every day – food, gasoline, etc.

Carbon Taxes

The UN report also discusses the need to use regulations and taxation as tools to penalize economic activities that are not “sustainable”….

Establish natural resource and externality pricing instruments, including carbon pricing, through mechanisms such as taxation, regulation or emissions trading systems, by 2020

This is one of the favorite things that social engineers like to do.  They love to use taxation and regulations as weapons to get people to do the things they want.

Base Lending Decisions On Sustainable Development Criteria

The United Nations is actually suggesting that lending decisions be based on whether or not the money will be used for something “sustainable”….

Reform national fiscal and credit systems to provide long-term incentives for sustainable practices, as well as disincentives for unsustainable behaviour

Considering the fact that the entire global economy is based on credit, this is a very dangerous recommendation.

Green Jobs

The UN report also says that governments all over the world should seek to create as many “green jobs” as possible….

Governments should adopt and advance “green jobs” and decent work policies as a priority in their budgets and sustainable development strategies while creating conditions for new jobs in the private sector.

This is something that we have seen Barack Obama try to do, but obviously he has not had much success at it.

A New Economic Paradigm

According to the UN, the very way that we define “economic success” needs to be changed.  Instead of looking at statistics such as GDP and inflation, we should be measuring what we do by how much it gets us closer to a “sustainable world”….

Expanding how we measure progress in sustainable development by creating a sustainable development index or set of indicators

So an economic collapse could actually be “good” if we make “progress” toward the goal of sustainable development.

Wealthy Countries Funding The Sustainable Development Goals Of Poor Countries

The UN report makes it clear that you and I will be paying for sustainable development all over the world in addition to paying for our own transition to a sustainable economy….

Financing sustainable development requires vast new sources of capital from both private and public sources. It requires both mobilizing more public funds and using global and national capital to leverage global private capital through the development of incentives. Official development assistance will also remain critical for the sustainable development needs of low-income countries

But considering the fact that the United States is already flat broke, where are we going to come up with all of this money?

Teach Sustainable Development To Our Children

The United Nations also believes that this philosophy of “sustainable development” should be taught to children in public schools all over the globe….

Government and non-governmental entities should promote the concept of sustainable development and sustainable consumption, and these should be integrated into curricula of primary and secondary education.

Sadly, this agenda is already being pushed on our children in schools all over the United States.  When these children grow up, the concepts behind “sustainable development” will be second nature for them.

Population Control

Those that believe in sustainable development want to reduce carbon emissions by as much as possible.

When you sit down and really think about that, it becomes quite frightening.

Nearly every form of economic activity produces carbon emissions.

In fact, if you just sit in your home and breathe, you are producing carbon emissions.

So to them, you and I are the problem.

For those that are worried about man-made global warming, the math is simple.

The more people on earth, the higher the level of carbon emissions will be.

The less people on earth, the lower the level of carbon emissions will be.

So those that believe in sustainable development love to promote things that will reduce the human population of the earth.

In fact, we see this agenda reflected in one of the recommendations of the new UN report….

Ensuring universal access to quality and affordable family-planning and other sexual and reproductive rights and health services.

If more women have access to abortion facilities, then less babies will be born.  For those that believe in sustainable development, that is a good thing.

But the UN has been pushing this kind of agenda for a long time.

For example, the United Nations Population Fund released a report back in 2009 entitled “Facing a Changing World: Women, Population and Climate” that included the following very chilling statement….

“Each birth results not only in the emissions attributable to that person in his or her lifetime, but also the emissions of all his or her descendants. Hence, the emissions savings from intended or planned births multiply with time.”

This population control agenda is also being heavily promoted by many of the wealthiest people in the world.  Many big “philanthropists” such as Bill Gates are using their money to fund research into population control measures.  For example, Gates is currently funding research on “cutting edge” forms of birth control that could potentially be used all over the world.  The following comes from a recent Natural News article….

Mass vaccination is apparently not the only depopulation strategy being employed by the Bill & Melinda Gates Foundation, as new research funded by the organization has developed a way to deliberately destroy sperm using ultrasound technology. BBC News reports that the Gates Foundation awarded a grant to researchers from the University of North Carolina (UNC) to develop this new method of contraception.

For their study, the UNC team tested ultrasound on lab rats and found that two 15-minute doses “significantly reduced” both sperm counts and sperm integrity. When administered two days apart through warm salt water, ultrasound caused the rats’ sperm counts to drop below ten million sperm per milliliter, which is five million less than the “sub-fertile” range, and stay that way for up to six months.

This population control agenda is one of the most frightening elements of sustainable development.  Many advocates of sustainable development would actually cheer if something suddenly caused the population of the earth to drop dramatically.

Much Stronger Global Governance

The new UN report also advocates stronger “international governance” by bodies such as the United Nations….

International institutions have a critical role. International governance for sustainable development must be strengthened by using existing institutions more dynamically and by considering the creation of a global sustainable development council and the adoption of sustainable development goals

But this has been the ultimate goal of these control freaks for a long time.  The idea is that a “global government” and a “global economy” will bring a great era of peace and prosperity to all of humanity.

Of course that is a complete and total lie, but there are a lot of people out there that actually believe this stuff.

In fact, the economic crisis that we are going through right now has renewed calls for a “global currency” which would be used by the whole world.

For example, you can watch banker Evelyn de Rothschild discuss the “need” for an “international currency” on Bloomberg Television in the following video….

The new UN report reflects this globalist agenda.  The report states that “the peoples of the world” are not going to put up with all of this “inequality” any longer and that they will be demanding that their national governments adopt a “sustainable development” agenda….

“The peoples of the world will simply not tolerate continued environmental devastation or the persistent inequality which offends deeply held universal principles of social justice. Citizens will no longer accept governments and corporations breaching their compact with them as custodians of a sustainable future for all. More generally, international, national and local governance across the world must fully embrace the requirements of a sustainable development future, as must civil society and the private sector.”

If you want to get a really good idea of what a “sustainable development” society would look like, just check out the video posted below….

If you do not want to end up living in a “Planned-opolis” where virtually everything you do is watched, tracked and controlled by bureaucratic control freaks, then you better say something now.

If the United Nations actually succeeded in implementing this agenda worldwide, it would crash the global economy and it would be the end of national sovereignty.

Unfortunately, many of those that are promoting this agenda are absolute fanatics about it because they are convinced that they are saving the planet.  They are so obsessed with “rescuing the earth” that they would do almost anything to all the rest of us in order to accomplish that goal.

Yes, we need to be concerned about the future of the planet, but the truth is that the “sustainable development” agenda is based on flawed science and it would make our economic problems far worse.

But the control freaks that are obsessed with “sustainable development” are going to continue to try to cram this agenda down our throats, so this is a battle that is likely to go on for many years.