Weimar Hyperinflation caused by speculative bets

[GeezerMan]

link

Very interesting article about hyperinflation. Could it be that a fiat money issued by the govt is OK, if done right. I hate to quote Hitler here, but maybe his view on money creation was accurate during Germany's recovery of the 1930s, "?For every mark issued, we required the equivalent of a mark?s worth of work done, or goods produced.?

 

[feralkid]

If only we had some decent Cabaret to make it tolerable.


But seriously, Hitler was a pretty shitty leader, economically speaking.


Oh, and your sig is excellent.

 

[GeezerMan]

Originally posted by: feralkid
If only we had some decent Cabaret to make it tolerable.


But seriously, Hitler was a pretty shitty leader, economically speaking.


Oh, and your sig is excellent.

But he was probably a better economic leader than who we have in charge of our economy, Goldman Sachs

 

[soccerballtux]

My thought behind the fiat currency is that it makes restoring the balance of wealth very easy through inflation. There are problems with our financial system, government, the way we do things; our credit system, etc that will never be fixed with legislation. The good thing about credit is you can just inflate away the debt if the middle class becomes too burdened by it.

If our currency had inherent value this would not be an option; the middle class could become burdened by debt (through fault of their own, not claiming it's the big evil finance companies' fault or anything like some people love to do) and they'd never get out. A healthy middle class is the foundation paramount to an innovative, advancing society.

 

[soccerballtux]

Ok this guy is dead wrong on Zimbabwe. The government was printing cash to pay its workers. He's placing far too much weight on speculators.

The thing that's different in our situation is there are few public works we could spend on that would increase our workers' efficiency. A massive train system would do little for us considering how efficient our road system is. For us the solution is to just pay for buses; we already have the road infrastructure; just make use of that instead of buying new, unneeded infrastructure (trains).

I do applaud his attack on the AIG bailouts, his analysis of that situation (inflationary with little to no real wealth generated) is spot on.

We have been led to believe that we must prop up a zombie Wall Street banking behemoth because without it we would have no credit system, but that is not true. There is another viable alternative, and it may prove to be our only viable alternative. We can beat Wall Street at its own game, by forming publicly-owned banks that issue the full faith and credit of the United States not for private speculative profit but as a public service, for the benefit of the United States and its people.

Interesting.

Ultimately, the inflation will happen if there is too much demand floating around with not enough supply to back it up, speculators or not. You can't get around this fact, and it seems like he tries to explain it away. The key in the German situation is found here:

Hitler said, ?For every mark issued, we required the equivalent of a mark?s worth of work done, or goods produced.?

This is why they avoided inflation.
I'm pretty certain our government wouldn't abide by this rule for very long.

 

[BoberFett]

Originally posted by: soccerballtux
My thought behind the fiat currency is that it makes restoring the balance of wealth very easy through inflation.

The wealthy's money inflates at the same rate yours does, they just have more of it, unless you have some better explanation for your thought process.

 

[soccerballtux]

Originally posted by: BoberFett

Originally posted by: soccerballtux
My thought behind the fiat currency is that it makes restoring the balance of wealth very easy through inflation.

The wealthy's money inflates at the same rate yours does, they just have more of it, unless you have some better explanation for your thought process.

When the majority of society becomes burdened with excessive debt (easy mortgages and student loans are a major problem for us now), then that enables the debt-burdened to repay their loans with ease; an effective re-dealing of the cards. This is what I'm advocating.

_But_ it won't help us any if nobody is willing to take the time to pay off the debt. If we never feel the pain of taking on too much credit, there will be no disincentive to do it again, so the pursued inflation would be useless-- people would just use the extra money to buy more. Once the lesson is learned, the benefit will be two-fold-- middle class will have more money to spend and save (money that would have gone to interest payments on debt will now go to consumption or, better, savings); and we'll all be less likely to take on tons of debt (leading to things like the housing boom or exploding post-secondary-education tuition costs [caused by easy credit, institutions realized they could just spend nearly as much as they wanted because access to credit was so easy]).

The Christian God is in favor of something very similar to this as a means of taking care of the poor. In Jewish society, a standard practice was the "Year of Jubilee"; every 50 years all debts were canceled and the real capital (land) was returned to the original family line so that each generation had their own chance to be wise with their money. From there, each generation was capable of making use of and reaping the benefits of that capital. Nobody was permanently stuck in poverty like they can be now--lets face it, if your parents don't have good credit, it's impossible for you to get a non-predatory/usurious loan to finance a college education. Even the government Stafford Subsidized loans are looking pretty opressive at 6.85% in the current economic climate. Couple this with how student loans can no longer be bundled in with Chapter 7 bankruptcy and what you have is a very effective means of keeping the poor people stuck between a rock and a hard place for their entire life-- even if they get that education, get the job, they'll still be making payments on the 10% Fanny Mae student loans for a very long time. If they don't get the job? They'll be hit with the interest accruing while they try to find a job; and even that is assuming their lender will grant them extended forbearance instead of dening it so that they can rack up the late fees (or collection fees). Someone could be simply unlucky and enter the workforce at a very bad time, and boom their entire life is shot.

In contrast, if we didn't run a fiat currency, the middle and lower class could* get stuck in debt, indefinitely, short of our government playing Robin Hood. Inflation would be much less dangerous, in my opinion, than simply taking from the top and giving to the bottom. Look at what's happened to every other socialist country that pursued such a means of wealth redistribution. Everybody quit working. With inflation, the easing burden of debt on the middle to lower classes would only occur through work and personal involvement in the economy-- nobody gets out free. Inflation inherently induces bullish expectations in the economy, so finding a job would probably be much easier-- anybody that wanted a job would get one.

*(would). The problem starts with us-- greed, envy; can't say no. If the means are there (credit / option for debt), many in society would pursue that option (as they have). "You can't have a good society without good people" --CS Lewis.

 

[bamacre]

Originally posted by: soccerballtux
My thought behind the fiat currency is that it makes restoring the balance of wealth very easy through inflation. There are problems with our financial system, government, the way we do things; our credit system, etc that will never be fixed with legislation. The good thing about credit is you can just inflate away the debt if the middle class becomes too burdened by it.

Two major problems here. One, this is nothing more than theft of resources and legalized counterfeiting. You are punishing people who have saved, and rewarding those who have not. This is especially true of older people who are on fixed incomes, saved money for their retirement, and see their savings dwindle. And two, this causes a total distortion of economic conditions, causing malinvestment. What you are proposing is what causes the massive booms and busts.

If our currency had inherent value this would not be an option; the middle class could become burdened by debt (through fault of their own, not claiming it's the big evil finance companies' fault or anything like some people love to do) and they'd never get out. A healthy middle class is the foundation paramount to an innovative, advancing society.

And why is our middle class shrinking? Because the busts are dreadful on poorer and middle class people who are more likely to lose their jobs and go further into debt. And it is the wealthy that profit most from the booms.

 

[soccerballtux]

So what's your solution? We know socialism won't work.

 

[bamacre]

Originally posted by: soccerballtux
So what's your solution? We know socialism won't work.

That we know. We need to move toward a hard-backed currency, 100% reserve banking, dump the Fed, and cut spending. Start with overseas expenditures, and start getting people off reliance upon Medicare and SS. That's a good start.

 

[soccerballtux]

What metal would you back it with? We can't do gold without constantly revaluing the dollar. Silver is an option, there's enough of that.

 

[miketheidiot]

Originally posted by: bamacre

Originally posted by: soccerballtux
So what's your solution? We know socialism won't work.

That we know. We need to move toward a hard-backed currency, 100% reserve banking, dump the Fed, and cut spending. Start with overseas expenditures, and start getting people off reliance upon Medicare and SS. That's a good start.

this is all terrible advice.

 

[LegendKiller]

Originally posted by: bamacre

Originally posted by: soccerballtux
So what's your solution? We know socialism won't work.

That we know. We need to move toward a hard-backed currency, 100% reserve banking, dump the Fed, and cut spending. Start with overseas expenditures, and start getting people off reliance upon Medicare and SS. That's a good start.

So, effectively, you want to go back to the mini boom/bust periods of the 1800s where companies are constantly capital starved and unable to grow at a pace with the rest of the country. Companies also become smaller and disaggregate, causing higher prices through lower economies of scale, effectively choaking off our ability to compete on a global basis.

Additionally, since the Fed can't respond to crisis and there is no lender of last resort, predictability becomes nil and companeis horde more cash, constraining growth yet further, putting them at an even larger disadvantage on a global scale.

Since you require 100% reserves, bank's cost of capital skyrocket, requiring higher priced loans, further constraining companies' ability to grow outside of equity raisings, which is a very costly way of doing business, further putting them at a disadvantage globally.

So, effectively, you're willing to destroy the economy, gut our ability to compete internationally, constrain our ability to develop R&D on a cost-effective basis, and regale the world's strongest economy back to an agrarian capital constrained pauper economy.

Wow, great fucking job dipshit.

Why do you want to do all of this? Because you can't think past 18th century ossified theories.

 

[Moonbeam]

Originally posted by: LegendKiller

Originally posted by: bamacre

Originally posted by: soccerballtux
So what's your solution? We know socialism won't work.

That we know. We need to move toward a hard-backed currency, 100% reserve banking, dump the Fed, and cut spending. Start with overseas expenditures, and start getting people off reliance upon Medicare and SS. That's a good start.

So, effectively, you want to go back to the mini boom/bust periods of the 1800s where companies are constantly capital starved and unable to grow at a pace with the rest of the country. Companies also become smaller and disaggregate, causing higher prices through lower economies of scale, effectively choaking off our ability to compete on a global basis.

Additionally, since the Fed can't respond to crisis and there is no lender of last resort, predictability becomes nil and companeis horde more cash, constraining growth yet further, putting them at an even larger disadvantage on a global scale.

Since you require 100% reserves, bank's cost of capital skyrocket, requiring higher priced loans, further constraining companies' ability to grow outside of equity raisings, which is a very costly way of doing business, further putting them at a disadvantage globally.

So, effectively, you're willing to destroy the economy, gut our ability to compete internationally, constrain our ability to develop R&D on a cost-effective basis, and regale the world's strongest economy back to an agrarian capital constrained pauper economy.

Wow, great fucking job dipshit.

Why do you want to do all of this? Because you can't think past 18th century ossified theories.

You are asking him to abandon his religion and become impure. That would be tantamount to having the mental flexibility to vote for the lesser of two evils. To be impure, to let go of absolutism would plunge him into despair where feelings of self hate lurk. It isn't going to happen.

 

[LegendKiller]

Originally posted by: Moonbeam

Originally posted by: LegendKiller

Originally posted by: bamacre

Originally posted by: soccerballtux
So what's your solution? We know socialism won't work.

That we know. We need to move toward a hard-backed currency, 100% reserve banking, dump the Fed, and cut spending. Start with overseas expenditures, and start getting people off reliance upon Medicare and SS. That's a good start.

So, effectively, you want to go back to the mini boom/bust periods of the 1800s where companies are constantly capital starved and unable to grow at a pace with the rest of the country. Companies also become smaller and disaggregate, causing higher prices through lower economies of scale, effectively choaking off our ability to compete on a global basis.

Additionally, since the Fed can't respond to crisis and there is no lender of last resort, predictability becomes nil and companeis horde more cash, constraining growth yet further, putting them at an even larger disadvantage on a global scale.

Since you require 100% reserves, bank's cost of capital skyrocket, requiring higher priced loans, further constraining companies' ability to grow outside of equity raisings, which is a very costly way of doing business, further putting them at a disadvantage globally.

So, effectively, you're willing to destroy the economy, gut our ability to compete internationally, constrain our ability to develop R&D on a cost-effective basis, and regale the world's strongest economy back to an agrarian capital constrained pauper economy.

Wow, great fucking job dipshit.

Why do you want to do all of this? Because you can't think past 18th century ossified theories.

You are asking him to abandon his religion and become impure. That would be tantamount to having the mental flexibility to vote for the lesser of two evils. To be impure, to let go of absolutism would plunge him into despair where feelings of self hate lurk. It isn't going to happen.

he already has feelings of self-hate, which is why his only recourse is to see everything crumble to satisfy his own inability to deal with the fact that nothing, including himself, is perfect.

 

[bamacre]

Originally posted by: LegendKiller
So, effectively, you're willing to destroy the economy, gut our ability to compete internationally, constrain our ability to develop R&D on a cost-effective basis, and regale the world's strongest economy back to an agrarian capital constrained pauper economy.

Ironically, the system we have is doing exactly that, right now.

Why do you want to do all of this? Because you can't think past 18th century ossified theories.

And yet again, ironically, it is Austrian ideas that are newer than the ideas behind the system we have now. Central banks, manipulation of the money supply, fractional reserve banking, "lenders of last resort," were the ideas of tyrants, central planners, and corrupt bankers. All of this went on well before our Constitution was written. So, for you to say I want us to go back to ancient economic times, or whatever, is just totally misleading.

 

[bamacre]

Originally posted by: LegendKiller

Originally posted by: Moonbeam
You are asking him to abandon his religion and become impure. That would be tantamount to having the mental flexibility to vote for the lesser of two evils. To be impure, to let go of absolutism would plunge him into despair where feelings of self hate lurk. It isn't going to happen.

he already has feelings of self-hate, which is why his only recourse is to see everything crumble to satisfy his own inability to deal with the fact that nothing, including himself, is perfect.

:roll:

And nice straw man, LK. Never said anything was "perfect." I'm surprised you couldn't find a way to fit "libertopian" in their somewhere.

 

[soccerballtux]

There are plenty of valid reasons why Austrian economics wouldn't work.

If we could
a). Regulate CDS (capital requirements)
b). Regulate (abolish?) MBS
c). Begin to cut off Medicare, SS

then that's all I could ask for.
We'd be back on track in no time.

 

[BansheeX]

Originally posted by: soccerballtuxThe good thing about credit is you can just inflate away the debt if the middle class becomes too burdened by it.

That is only true so long as you can get away with doing it. Anyone holding dollars has the scarcity of them diminished relative to goods (the only value that matters is relative). Since we depend on massive deficits to maintain this level of government spending (this includes 60 trillion in unfunded future welfare payouts), we have to sell more and more short-term debt to foreigners in perpetuity (we have negative domestic savings). If foreigners are unwilling to buy our bonds at the current interest rate, the Fed either has to raise the rate or buy the bonds with inflation. The "problem" with raising them right now is that it will induce the "withdrawal" symptoms of our recent high, ARMs will reset at those higher rates and we will have a short depression as massive amounts of unsustainable debt is liquidated. The banking sector would essentially experience an enema, as they would be the ones taking the losses for loans on assets that were only worth the loan when seemingly endless amounts of credit was being extended to bid up the prices. Nobody realized that real credit comes from a creditor who forwent consumption to have savings. We were essentially expecting global wrist-cutting deeper to the bone each year to subsidize the ravenous American consumer who consider GDP growth to be consumption based and not production based.

Alternatively, the Fed keeps them low and buys the unsold bonds itself with new counterfeit notes. That essentially devalues foreign dollar reserves by diminishing their scarcity relative to goods. Thus, instead of having a short deflationary correction from which we recover, the Fed is taking us into a hyperinflationary scenario wherein biggest bond purchaser becomes the Fed and all the new money stays here at home to bid up prices. It will bid up goods far more than wages because American labor is not the labor behind most of the goods we buy. We import far more than we export, including 70% of our oil, and if we can't transport ourselves or goods as cheaply, that's going to contribute to rising prices just as much as the Fed's inflation.

Right now, the Fed's inflation really isn't making its way into circulation as banks are refusing to make the same kind of risky loans they made before. This, of course, is the smart thing to do with the huge gift taxpayers voted for when they elected Bush/Obama. But the government wants an expedient return to the high they couldn't sustain, and this generation has always been able to mortgage the future to defer unpopular pain of a recession to some future date. So the idea that they could one day fail to find a lender to finance a previous or current expenditure could be as alien to this generation of politicians as it was to Madoff. I would expect the government at some point to take them over or start forcing them to loan out the money again.

 

[halik]

Originally posted by: GeezerMan
link

Very interesting article about hyperinflation. Could it be that a fiat money issued by the govt is OK, if done right. I hate to quote Hitler here, but maybe his view on money creation was accurate during Germany's recovery of the 1930s, "?For every mark issued, we required the equivalent of a mark?s worth of work done, or goods produced.?

Why should I read something from a self-published site book?

If you want to a publish an article, publish it into a peer reviewed journal, otherwise I assume it's a pile of horseshit.

 

[halik]

Originally posted by: GeezerMan

Originally posted by: feralkid
If only we had some decent Cabaret to make it tolerable.


But seriously, Hitler was a pretty shitty leader, economically speaking.


Oh, and your sig is excellent.

But he was probably a better economic leader than who we have in charge of our economy, Goldman Sachs

Hah yeah, I atttended many, many world domination meetings when I was working there. Some of them actually were joint with the jew-world-domination meeting also. Those had kosher catering.

 

[halik]

Originally posted by: Moonbeam

Originally posted by: LegendKiller

Originally posted by: bamacre

Originally posted by: soccerballtux
So what's your solution? We know socialism won't work.

That we know. We need to move toward a hard-backed currency, 100% reserve banking, dump the Fed, and cut spending. Start with overseas expenditures, and start getting people off reliance upon Medicare and SS. That's a good start.

So, effectively, you want to go back to the mini boom/bust periods of the 1800s where companies are constantly capital starved and unable to grow at a pace with the rest of the country. Companies also become smaller and disaggregate, causing higher prices through lower economies of scale, effectively choaking off our ability to compete on a global basis.

Additionally, since the Fed can't respond to crisis and there is no lender of last resort, predictability becomes nil and companeis horde more cash, constraining growth yet further, putting them at an even larger disadvantage on a global scale.

Since you require 100% reserves, bank's cost of capital skyrocket, requiring higher priced loans, further constraining companies' ability to grow outside of equity raisings, which is a very costly way of doing business, further putting them at a disadvantage globally.

So, effectively, you're willing to destroy the economy, gut our ability to compete internationally, constrain our ability to develop R&D on a cost-effective basis, and regale the world's strongest economy back to an agrarian capital constrained pauper economy.

Wow, great fucking job dipshit.

Why do you want to do all of this? Because you can't think past 18th century ossified theories.

You are asking him to abandon his religion and become impure. That would be tantamount to having the mental flexibility to vote for the lesser of two evils. To be impure, to let go of absolutism would plunge him into despair where feelings of self hate lurk. It isn't going to happen.

self hate... roflcopter
You just won't quit with that xanga/livejournal bullshit...

 

[Moonbeam]

h: self hate... roflcopter

You just won't quit with that xanga/livejournal bullshit...

I have no idea what either of those are but I bet in your delusional state it would never occur to you that the reason I get on your nerves is because I keep mentioning a truth you are trying to repress, although, this will only be obvious to me. Your need to avoid what you really feel will produce other notions as rationalizations.

 

[First]

Originally posted by: bamacre

Originally posted by: LegendKiller
So, effectively, you're willing to destroy the economy, gut our ability to compete internationally, constrain our ability to develop R&D on a cost-effective basis, and regale the world's strongest economy back to an agrarian capital constrained pauper economy.

Ironically, the system we have is doing exactly that, right now.

Why do you want to do all of this? Because you can't think past 18th century ossified theories.

And yet again, ironically, it is Austrian ideas that are newer than the ideas behind the system we have now. Central banks, manipulation of the money supply, fractional reserve banking, "lenders of last resort," were the ideas of tyrants, central planners, and corrupt bankers. All of this went on well before our Constitution was written. So, for you to say I want us to go back to ancient economic times, or whatever, is just totally misleading.

Gold has been used as a type of currency exchange long before fiat. You are so out of your element it's sad to see you still think people take you seriously.

 

[halik]

Originally posted by: Moonbeam
h: self hate... roflcopter

You just won't quit with that xanga/livejournal bullshit...

I have no idea what either of those are but I bet in your delusional state it would never occur to you that the reason I get on your nerves is because I keep mentioning a truth you are trying to repress, although, this will only be obvious to me. Your need to avoid what you really feel will produce other notions as rationalizations.

...WAT?

I'm merely laughing at the nonsensical drivel you share with us at every opportune moment. It's great that you recall one chapter from Pysch 101 but for the love of god STOP IT.

Just search "self hate" and your handle to see the enormous pile of livejournal worthy teen angst stream of consciousness you've created over time.... just stop.

Here's small sample of your 'contributions'

Saddam and self hate:

Maybe Saddam so traumatized that society the level of self hate is really so great the people there can't wait to self destruct.

Teh Gay and self hate:

If you take these guys as being real you ought to be able to see how it all arises out of self hate. It explains the split personality, the contempt for one part of the self for the other, and the compulsive need to act out and get caught so you can feel how deeply ashamed you were made to feel about being gay. When we look at these hypocritical freaks we are looking at ourselves. We all live the same duplicitous lie, a big phony hypocritical ego who hates our inner child, that deeply persecuted little self that's all that's left of what's true and good.

Ahmadinejad and self hate:

Ahmadenijad, child molesters, it's all the same for us. Let us show him the sickness of our self hate by reflecting it onto him.

Moonbeams own self hate and related incoherent drivel:

As the nation slowly evolves toward blue we will start strangling enclaves of red. The left is not obligated to be sane either. What is important is that difference be stamped out. People who think differently than me threaten the lock on iron box I've hidden my self hate in.

Anne coulter and self hate:

She sells books because she redirects her self hate out onto others and allows those with the worst self hate to join her. Her success is based on the fact that she has tapped into the human need to avoid the emotional pain of remembering by bleeding off the pressure by craping on others.

Everyone and self hate

The hidden force that drives humanity is self hate and everybody has the disease. You will do whatever it takes not to be a loser because you already are. It is what you were made to feel.

The one was so completely out of context of the conversation:

What people fail to realize is the nature of self hate. We hate ourselves and hide from that fact. That means we act out against ourselves unconsciously, since we deny this reality and are yet impelled to experience it. The result, of course, is that we are unconsciously causing our own extinction. We pollute the earth our of self hate because we know it's not nice to fool Mother nature and we want Her to punish us. All our sins are an unconscious need for self destruction. It's why the thief leaves his wallet at the crime scene.

Confucius sez:

Blame is self hate. There is no blame.

On Obama:

Find something to hate then tie Obama to it. Obama is 'other'. He's not white like us. He's from some underground movement lurking around like self hate in our unconscious. He hates us. He is what we will find if we awaken to what we feel. He could destroy denial. He must be destroyed. We have to have something to hate.