Reichsdollars

There is no question, but that Cicero was correct, when in 80 BC he said that, “Not to know what happened before one was born is always to be a child.”  This sentence, uttered over 2,000 years ago, condemns 99% of Congress and the President.  Because what happened before any of them were born, was the hyper-inflation of Germany after WW I.  Why is it similar, and what happened then and will again in the US?  Germany lost the war, and the Treaty of Versailles, forced her to pay for damages.  Germany was broke, so she repaid in printing press reichsmarks, and naturally they soon became worthless.  The U.S. had a stock market crash, and real estate crash, neither of which are over, by any means.  The exact same thing happened here beginning in 1929. 

Then, the market crashed, and a few actually jumped out of windows, so broken and debt ridden were they.  Today, thanks to the crash, and real estate crumbling, many have committed suicide, many times taking their entire family with them.  In 1929-41 the market seemed to be strengthening, and more bought in, only to have it crash again.  This will happen in the near future, I really believe.  In the great depression, people lost their homes and farms, just like today.  The loss of farms may have accounted for the tragic dust storms which occurred in the 1930’s.  It may happen again, I don’t know, but I hope not.  In the great depression, the then President, Franklin Delano Roosevelt (FDR), tried his best to get America out of that depression, just like Obama and his Congress are now doing, but with a huge difference.

In the 1930’s, when FDR was trying to get America out of the depression, he was doing what Obama is now doing to a degree.  FDR was hot on public works projects, like Obama is, and he had hundreds of thousands restoring and building public buildings, building dams, and doing forestry.  FDR also expanded the public payroll by creating whole new bureaucracies, building buildings for them to work out of, and hiring tens of thousands to inhabit them.  Obama is doing exactly the same thing.  There was no unemployment in D.C. under FDR, and there is no unemployment in D.C. under Obama.  Spending is what FDR did, except he was stymied by one uncomfortable fact; and that was that the dollar was backed by gold, and couldn’t be printed with abandon to finance his programs.  FDR had to raise taxes, and he did, which made the depression even worse.  Obama is doing the same thing.

When FDR needed more dollars for his programs, none of which worked or helped us out of the depression, as Obama’s won’t, he told everyone to turn in their gold so he could print more dollars for his programs.  Most did, which gave FDR more spending money.  Those that could afford not to turn their gold in, didn’t, and it is available at Numismatic dealers today.  In other words it wasn’t confiscated.  Today, Obama has no such gold backing requirement of dollars, and he can order printed as many trillions as he chooses, and with the approval of his Democrat shills and a few liberal Republicans thrown in.  Today, there is no limit as to how many dollars that can be printed, which is the basic difference between the thirties great depression and the current great depression.  Will both last over ten years?  We will see.  Will our current great depression end up in WW III, like FDR’s ended in WWII?  We can hope not.

During FDR’s great depression, there was no inflation.  Absolutely none.  It was impossible, because the dollar was backed by gold, and without gold, no dollars could be printed.  No extra dollars, meant no inflation, because as you well know, inflation is an increase in the currency supply, resulting in higher prices.  Under FDR, prices stayed the same.  In WWII, there was a 50% inflation, because the Congress, at FDR’s urging, reduced the gold backing of the dollar, and the war was fought with depreciating, declining, dollar value.

Now we come to the crux of the matter.  In Germany, the presses rolled 24/7, and the result was hyper-inflation to the ultimate extreme.  Like every single un-backed paper currency in history, the reichsmark went to zero.  There was no limit on how many could be printed.  Those that saved in them or had insurance policies, lost everything.  Their reichsmarks were safe.  The number of them was safe, but their value wasn’t.  If a family had reichsmarks in a bank or under their mattress, they were safe.  The number of reichsmarks in one’s possession or stored in a bank was secure.  Today, the number of dollars one may have tucked away in  a mattress or in a CD, is totally safe.  But like Germany in the 1920’s, France in the 1790’s, or Zimbabwe in the 2000’s, and lots of other places and times when currency printing was not limited by a backing, they all went to zero and took those who saved in them to zero also.  It isn’t their numbers that count, it is their value or purchasing power.

Today, there is no currency in the entire world that is backed by anything.  Not a one.  All currencies are being printed as their respective governments need them, want them, or find it politically necessary to win an election by promising and delivering goods, paid for from the public treasury.  Some governments are more thrifty than others, and their presses run slower and produce less paper scrip.  Switzerland isn’t fighting two pointless wars, and hasn’t ever fought one in hundreds of years.  Still, Switzerland has a bit of inflation, just like every other nation on earth, because all print at their necessity, and are not hindered by incomes or taxes received.

America has had  eight hundred percent inflation in the last 80 years.  In other words, things now cost about eighty times what they cost eighty years ago.  Examples are not hard to find, be it food, homes, cars, or whatever.  Look at an old sears catalog, or dig out old newspapers if you want to check.  This is with yearly inflation being a couple of percent minimum, and lots more usually, whether the rate is honestly published by government or not.  Governments rarely, if ever, publish honest figures, as it makes them look bad, and we can’t have that.

With the current administration bailing out everything and every corporation usually employing unions, the dollars being inserted into the economy is in the trillions per year, and shows no sign of slowing.  The latest bailouts are for insurance companies and unionized trucking companies.  No one in D.C. seems alarmed, and no one in D.C. seems to give a hoot.  Broke?  Need a lift?  Call the D.C. Gang and apply for a bailout! Thomas Jefferson said in 1807, “History, in general, only informs us what bad government is.”

I have a friend who is a devout ’chartist,’ which I am not.  He goes on about ’head and shoulders’ formations, and other equally mysterious things that chartists love to observe and use to predict things.  Evidently the charts forecast a huge run up in metals prices soon.  I have no idea whether this is true or not.  I merely pass along his predictions, and will absolutely not be responsible if it doesn’t happen, even though I believe it is way past time for metals to go up and the stock market to crash.  I know this will happen, but who knows when?