The initial phase of the Weimar hyperinflation:
From 1919 sank off the mark against the U.S. dollar, but recovered. Consumer prices rose at that time low.
exploded But the stock prices. This Inflation policy prevented the new German government, the crisis of adjustment after 1 World War, which was in Great-Britain and the U.S., very deep.
also had the Socialists, who were new to the government, a whole list of "benefits" that it was distributed. The hyper-inflation could have been stopped at that time nor easy. The real cause of this hyperinflation was not the Allied reparations (which were paid in gold or goods), but a "weak" new government with great ideological baggage wanted to stay in power.
hyperinflation in Austria after 1 World War This hyperinflation did not participate in such dramatic Aussmasse, like those in Germany. But many countries at that time had a hyperinflation [15]:
Austria: 1: 14,000
Hungary: 1: 21,000
Poland: 1: 2,500,000
Russia: 1: 4 billion
Germany: 1: 1,000 .000.000.000
As in Germany came in 1918 in Austria a socialist government with a bag full of promise to the power (Karl Renner - even after 1945, hyperinflation produced).
also wanted the many civil servants are paid, which had flowed back from the lost Austria-Hungarian Empire. These guys in the government knew only their socialist utopia, but had no idea about business. Until they were replaced by the "prelates mercilessly" Ignaz Seipel, who exchanged the crown depreciated against Schilling.
Why was Seipel called "prelate without mercy"? Because he had to stop and take the inflation adjustment crisis. The people have not understood, of course.
Hungary Hungary in 1945 had 1945 and 1946, the worst hyperinflation in history. All the money of the country was in the end only 1500 USD worth. This paved the way to the rise of the Communists.
The biggest bill of all time: 100,000,000,000,000,000,000
pengo 1946 (100 million trillion pengo).
The pengo was replaced in 1946 by the forint.
Serbia 1990 et seq
After the disintegration of Yugoslavia began in 1991 to a series of wars that Serbia took their output. All these wars were lost for Serbia. The result are 3 Hyperinflation with different currencies in a row.
Since that time, every Serb D-Mark, now € in the pocket.
Latin America
This continent had numerous in the 1970s and 1980s, hyper inflation. Due to various domestic political constellations are there again and again populists to power, which then easily print in emergency money to keep himself in power.
Most of these hyper-inflation had nothing to do with wars, but with vote buying.
was not until 1990 the pressure became irresistible after hard currency, so they invented the "Dollarization," as a fixed connection of the new currencies to the U.S. dollar. However, heard the explosion of government deficits not, which led to the collapse of these bonds, about 2001 in Argentina.
For the Government: Inflate or Die
A deflationary crash brings national bankruptcy and plunging the government. This has been in Asia in 1997 and 2002, shown in Argentina. Argentina has "consumed" within 3 months 5 president. While the Asian crisis, even the dictatorships fell.
For the rulers, therefore, the word from Richard Russell: inflate or Die - that inflate or die. Nothing to hate those in power more than to be evicted from their prestigious jobs. This applies to politicians as well as for the bureaucracy. So they usually do everything possible to stay still for a while in power.
power costs a lot of money
Today's democracies are all degenerate into redistribution states where votes must be bought to take power or to remain in power. This has been seen for example in the last parliamentary election in Austria, where the ruling People's Party primarily because of was voted out of the pension reforms have brought, the incisions.
Another example is France, where 80% of all school and university graduates in the civil service do. Any "uprising" (immigrants, students) will fight the government primarily through new issues.
For Germany there are now calculations that more people live by the state, as it is employed. Such a situation leads directly to hyperinflation, because the politicians will try to abide by "printing money" in power. Specifically, the State
has now three major groups that need to be obtained: 1.The
officials.
The pure state administration is still relatively small. In addition, there are legions in the social, cultural, educational and other bureaucracies. Everyone wants to get their salaries on time and space to expand their power yet.
1.The welfare recipients.
Most of the state budget is now in the west everywhere on it for benefits. Not even the U.S. is an exception. There you go, despite the large military apparatus 2 / 3 of the budget in a myriad of social bureaucracies
1.Subventionsempfänger.
This gives it numerous, from coal mining in Germany until the culture crowd.
those reduced subsidies to immediately hear a huge Outcry.
The state power is increasing as we have seen in recent years, the massive reflation to inflation
, the state power increases with the amount of money. Most clearly shows in the U.S. today, turning into a fascist dictatorship. But in Europe, more and more into the nanny (Big Nanny) - and police state. War "gets" the way the state best.
In the U.S., with the lost war seems now all about spin, George W. Bush and his neocons away from the prison, as an article pointing to Common Sense: "Keeping Out Of Jail George." Therefore, the financial markets will go up to the no-more- manipulated.
Here is an excerpt of Bill Buckler's gold-This-Week, 15.9. 2006:
"There is no question that these manipulations will continue until November 7.
Undoubtedly, these efforts continue until then - and if it goes beyond that. Yes, the rest of the world could end this farce tomorrow, simply by rejecting one dollar. But the rest of the world came to an ugly way that it is not a good idea, a political regime that already feels crowded in the corner, block all the way out.
would also be even in front of huge losses if the Dollar was collapsing.
And we have noted many times that political power is based on the ability to control and manipulate a nation which used as money. Gold and silver can not be manipulated.
paper has also "reviews" of gold and silver by paper money. Currently, the whole world is held hostage in a failed dream of empire, based on an unsustainable monetary and financial system, which in turn is based on nothing more or less than the payment promises. Promises to pay what? More payment promises. "
Why play the other countries in this comedy dollar still with? Not primarily because they usually suffer massive losses of its dollar reserves would have to, but because the elites would thus be lost as well. But even that will have an end, then the dollar goes into hyper-inflation - if it is finally sold off.
The manipulation worked, not worked, both houses of U.S. Congress have been lost to the Bush party.
Last resort - War
Where the economic difficulties at home so great that they are no longer cope with "normal" measures, it will often start a war. A war has some advantages in such a situation:
the normal rules no longer
apply it, money can be printed to be herauszuinflationieren out of a deflationary
can the population with "patriotism" distract
can restrict freedoms, including the capital
The current situation of the current U.S. War cycle shows in that direction. You could cut interest rates to 1%, which will not accept that call people "patriotic" to buy on credit, and make themselves invulnerable.
Nobody puts it so well, like Bill Buckler in his
Privateer # 561:
The true political nature of all external wars:
politicians stop a war from the fence to divert attention from internal failures, all had to discover that they lose their support base at home, if these wars take too long. If a war drags on, breaking on two fronts. The military at the front where the battles take place. There is also the home front, the political front in the country. We can not afford to lose them. If it is lost, politicians have actually lost both wars. No foreign war can be won if the agreement breaks down for him in the land away. To get a war, despite the absence of such public support upright, you always need massive internal political repression of a public that does now publicly made known their opinion against the war. For that reason, in history, from Pericles in ancient Athens, to date, aggressive wars in the outer accessible to internal political repression.
Privateer # 559:
We are in the midst of the largest Potemkin village in world history - a seemingly rich facade, which was designed for and built to conceal the financial ruins that stretch beyond. Those who will do best with the least damage from the next financial disaster that who dare to watch through the mirror to to see what lies behind it. Sad, is that they are a small minority in every period or at any time.
Here is it: This
largest Potemkin village of the world (USA) has been around for a long time. Meanwhile, the exterior has only become more brittle. Hence it has been about war (with 9 / 11 as preparation) is trying to inflate itself out. The problem is that these wars are all lost. Meanwhile, also breaks the "internal front" together, as the lost for Bush congressional elections (the main subject of the electorate: the end of the war).
What does one do with the currency of a war loser? They are sold.
Synchronized hyperinflation
The debt situation anywhere in the world today is extreme. Moreover, the negative real interest rates everywhere, which alone could trigger even hyperinflation by sales of currencies. The problem is that governments and central banks since 2001 to perform with their massive reflation a "synchronized hyper-inflation", ie inflate all currencies simultaneously. Therefore, the investors do not escape to a safe paper currency.
The only "outlet" are raw materials, oil and gold / silver. Therefore, the permanent gold and silver price is depressed, sometimes the price of oil. Particularly important is the price of gold because gold was 3000 years of money. It is therefore the biggest "enemy" of politicians and central banks. Not for nothing
Bill Buckler, in his "Gold This Week":
The global paper money system is very young. It depends on the unbroken faith from the fact that the debt on which it is based are, once repaid. What could shake this belief, especially, and thus the foundation of the modern monetary system is a rise (especially a sharp rise) in the gold price in dollars.
If the gold price controls fail and fall and rise of the dollar gold price significantly, then is the scenario that describes Bill Buckler up there: the flight from paper money in the gold.
There have been several attempts to do, the last date in April and May 2006 when the dollar fell and gold rose - see chart below.
If such contact is successful, and he will give it once, then central banks would have to really begin to defend their currencies:
1.A high interest rates
2nd and drastically reduced government spending.
1979 the interest had to be increased by 2% per month. Only about 20% in the U.S. and similar values in the other countries have stopped the flight into gold again. Bill Buckler says that today would have to reach a multiple of the interest at that time (about 30 .50%), simple due to the much higher credit risk because of the extreme debt.
Such interest rates would, of course, the economy directly to collapse and trigger a deflationary crash of the ordinary. The consequence would be an even greater escape in the gold, behind the posts with no debt. Today's paper money systems are then done in reality. If the gold price can not be held down, Ben Bernanke is expected to be "inflation-torture" (Helicopter to the money drop, etc.) Unpack to at least internally the system by hyperinflation preserved for a time in life.
money is scarce in the hyperinflation
Although There are more and more money, it is still scarce. At least for the mass of ordinary citizens. The cost of living rising so quickly that wages keep up or even the pensions can not.
To Jens O. Parsson (by Jim Puplava quote):
"Everyone loves the early stages of inflation, the effects at the beginning are all well
There is a sharp increase in money supply, increased government spending, budget deficits, booming stock markets, incredible prosperity,.. all this while still stable prices. benefit all, no one has to pay more. This is the first part of the cycle.
Later in the cycle, the effects on the other hand, all bad. The government will probably continue to increase the money supply, but the other effects are no longer on. In the final phase, there are diminishing wealth, tight money, falling stock prices, rising taxes and spiraling monetary expansion, and widening deficits, but now accompanied by soaring prices and ineffectiveness of conventional control methods. Each is charged on it and no one benefits. This is the complete cycle of every inflation. "
We are currently in transition from the Early Inflation" to "Later" inflation. You can see them all over, that the consumer prices are rising faster than incomes. It is almost a necessity consumer price increases to falsify (CPI-inflation) down, or would the big bond sales used long ago.
The stronger inflation gets, the more impoverished the population. At least those living on fixed incomes. Gradually, the depressed economic situation - the hyper-inflationary depression.
For example, during the Russian hyperinflation in the 1990s, an estimated 3 million people starved or froze to death. It worked, nothing, not even the district heating systems - lack of money. But corruption has exploded.
is this lack of money is precisely what led the government, more and more to print money to avoid a complete meltdown with their own downfall.
During the final phase of the Weimar hyperinflation have been heated with money. Because this was cheaper than firewood, they could have it now.
The demand for money rises dramatically
The rocketing prices need both companies and individuals more and more money they need to share, but immediately so that it does not lose too much in value. During the Weimar hyperinflation, people have started to pay workers at least 1 time a day. They threw the wad of money simply by a truck down. The workers have taken this and immediately went shopping.
opposite end 300 paper mills and 150 printers only with the production of banknotes were employed. However it was still too little. All the money at the end of the hyperinflation was only 168 million gold marks from 1914 worth. They allow you to see how far prices have fallen all in U.S. dollars or gold - a dramatic deflation.
banking crisis and bankruptcies A hallmark of hyper-inflation is that it is free of major crises in the banking system and economy. The scope of the entire financial sector shrinks dramatically because less money is left in the system. The deposits can be withdrawn and spent.
the same time, many loans uncollectibility, as the economy collapses.
is in a late hyperinflation, the population increasingly on barter economy or uses foreign currencies.
The irony is that even with the massive Monetize / print money just this banking crisis is to be prevented. There are, however, the side effects that come into effect here.
is still given that the galloping inflation by proper accounting impossible. The companies have lost their wealth position. In addition, the impoverishment of the population strangled the economy. Impossible imports also paralyze.
A good example is Russia in the hyper-inflation in the 1990s. Nothing works more, lack of money everywhere. The farmers could not import spare parts from the former GDR (which are piled up there) because they had no D-Mark for imports.
Foreign trade breaks because of the non-convertibility of the currency together virtually.
exchange controls
A common vehicle for practically all the governments which induce a hyper-inflation is that they try to brake by exchange controls an outflow of capital abroad. Even Britain has had such during its currency crises in the 1950s to the 1970s.
Such currency controls are of course only a superficial effect by its own citizens disincentives to transfer their assets abroad. In fact, they only create a huge bureaucracy and paralyze the economy even more.
The foreign capital and domestic "Smart Money" are already hard hit, because this takes even before the flight. It is this cash flow is that triggers the initial sale of the currency.
The only "nice" effect for the rulers is that they do not have to take "hard" measures of economic reform that would bring their downfall.
A side effect of such controls is that a black market for foreign exchange is where much foreign exchange be sold more expensive than the official exchange rate. We also knew from the former Eastern Bloc.
Another side effect is that certain goods are to be given only for foreign currency. Who does not remember even at the Inter-shops "of the Soviet bloc?
Besides exchange controls still like to introduce rationing of certain goods. This is especially popular in times of war. In reality they only suppress the visible inflation by artificially reducing the supply of goods. Price controls only sell the products from the market.
Weak governments
hyperinflations characteristic of internally weak governments. Especially for lost Wars, when the national debt are large, are the favorites this way.
weak in this case means the government would expect in an economic plight of the population no hard rescue package - and not even the fall. Often wars are started, therefore, to divert attention from the economic difficulties, for war is always inflationary. A current example is the current U.S. wars in Afghanistan and Iraq. With the apparent loss of the war, it is then often to sell off the currency.
In reality, all governments in Europe, "weak," even if they begin with the exception of Tony Blair no wars to save themselves. Not yet?
A good example is the recent immigrant and student unrest in France. In both cases, the deVillepin / Chirac government was the first "tough" and then relented and played poker with new government spending "the situation defused. If the situation gets really bad, then the bare print money will began. In the euro area it will probably break out on a pretext of the euro and then organize a hyper-inflation.
Lügen und Euphorisierung
Eines der wesentlichsten Mittel der Regierung bei der Inflationierung ist die Verschleierung der Wirklichkeit. The first is very good, it even appears a real euphoria, because the initial effects are very pleasant - see the chapter "Money is tight in the hyper-inflation." In the beginning there is enough money available later income spending is sluggish and the euphoria is tipping.
is the essential means that the statistics are fake, as happens at present.
this does not help more and begin the flight of capital, then comes the fork channels between currency and money-saving printing, as described in "The sale" described.
particularly favorable for those in power at that time, of course, is a war, so you can easily distract the crowd and introduce foreign exchange controls and rationing.
Endgame
The final phase of hyper-inflation is simply ghastly. The entire economy will collapse because the money is not taken. In Germany joined this case, a mid-1923rd Malnutrition has increased, the company began to close down, farmers sold more than food for money. This is known as the "hyperinflationary depression."
The company rises to barter or other currencies. The quality of the goods that are there for the money hyperinflationierende is getting smaller. First-quality items such as real estate is only against "good money" selling, but not for the "bad Money ".
example, there are certain things only against Serbia in €, not dinars. In Israel, since the hyperinflation in the 1970s, real estate generally offered for U.S. dollar.
Good for investors in such a time is that these things for little of the "good money" there. So you could in 1923 an entire city block in central Berlin for about 500 USD (750g was gold) buy, but not for Mark. This shows how the money is accepted hyperinflationierende less and less. First, no more for imported goods, then real estate, then no more for food. If this point is reached, it is with the usefulness that currency over. Then there is only barter or foreign currencies.
confidence in the value of a new currency comes after such an adventure back very slowly. It is said that more and more than 50% of all 100-dollar bills in Russia are mattresses. Russia's government is still struggling against the fact that the prices of various goods are still quoted in U.S. dollars or euro. The article "Weimar and Wall Street" by Robert Blumenfeld describes this situation exactly. This rejection of hyperinflationierenden money is the end point of a possible inflation of a government. First, rejects the "smart money" this money . From, until recently, the "Dumb Money" From the article by Robert Flowers is a nice anecdote from the high-tech boom
"The end result of unbridled inflation, the rejection of money as a medium of exchange and the use of barter economy. During the last phase of the equity bubble led to a partial rejection of money and a reliance on equities as a medium of exchange economy. In San Francisco it was impossible from 1998 to 2000 at the height of the technology stock mania, to purchase certain goods or services for money. A company could hire no money for bare spaces, corporate lawyers set Headhunter commission or an employee . Setting Such contracts could only be completed when contractually promised stock options. Houses in Palo Alto were sold for cash plus stock options. Money alone lost rapidly its purchasing power in comparison to these goods or services. So you could buy during the high-tech boom, certain benefits not only for dollars. You had to give stock options. So great was the greed for it. Even houses in Silicon Valley would buy a cash down payment plus some stock options. "
The new currency hyperinflation
Each item once. This end is called the "stabilization crisis", a brutal deflation, in of which are previously set right on the head made things again.
A hyper-inflation can end in two ways:
only through the stabilization crisis alone is to stop the money printing.
then stay still left high numbers. Examples are the Japanese yen, the Korean won and the Turkish lira. This method is used in smaller hyper-inflation. Often, after a while then crossed off a few zeros. it a new currency is introduced, usually with a new name. This is most often used in "serious cases". Examples are the pension market in Germany, or different currencies in Latin America.
In some cases, such as Argentina or Brazil, we sometimes fix the currency pegged to the U.S. dollar - with known consequences. Such a "cover" of a new currency is necessary for psychological reasons in order to be accepted. One must not forget: it is always the seller of a commodity that determines whether a particular taking money in exchange.
A new world's reserve currency has so far always
currencies "caught", which actually had only local importance. If this time go to the U.S. dollar and the euro (or its components) in the hyper-inflation, it looks much worse. Then gold will automatically reflect the world's reserve currency be. Fiat Money is then not taken internationally in general, just as it is today for most currencies. Then God help the one country that has neither gold nor marketable goods. It is expected that world trade will suffer heavily if the dollar no longer accepted as a reserve currency. This is to allow about 2007th
wages, debt and inflation
It is known that the real wage level in each inflation (not only hyper-inflation) falls. On the other hand, it is currently in the West is not possible to reduce by simple inflation of the money supply, the real debt burden. These include our real incomes are compared to the competition in Asia and Eastern Europe still too high and are in competition. The same experience as Japan has done, where all the money printing (currently 50% of the national deficit monetizes) so far availed nothing, the debts have only risen further, the yen but declined. Only when a massive sales of the U.S. dollar or the euro or its remnants in Asia could rise again in our nominal wages, so the debt will be reduced in real terms. Until there is still a long way. But do not forget, the relative depletion limits this effect.
This case is likely to occur only in the "endgame" of the hyper-inflation, so in the meantime, all debt a high risk.
A real relief may be possible:
A characteristic of hyperinflation is that the real value of debt is reduced to zero. I keep getting requests from property owners, whether one should not hope for a hyper-inflation to debt relief.
But several conditions must be met:
1.the credits must be in local currency, the euro us, but not SFR
2.the interest must, if possible, to 5 or more years be fixed
3.es must previously be no deflationary crash, all property prices suddenly lowers
4.the Banks may not be able to terminate the loan prematurely
5.The itself must always be in a position to service the loan
To improve the conditions c) and d) meet, should the total debt on the value of the property be as low as below 50%. With a 90% or 100% financing or even a bullet SFR loan you will hardly get through. In any case, it is a gamble.
Summary and Recommendations
A hyper-inflation is the worst of all monetary disaster and yet it is the end of all government paper money systems. Each of these systems has not ended in hyperinflation, and our current is it.
not only impoverished the population and thereby loses its power, it created enormous distortions in the economy that need to be repaired in the ensuing stabilization crisis.
Did you wear under the Weimar hyperinflation excess infrastructure, such as cement works, it will be this time, houses, office buildings and apartments, not to mention many shopping malls.
A hyperinflation arises primarily from misguided economic policies of "weak" Poliiker who want to prevent their falling into an economic crisis. They lead to even worse.
The beginning of inflation for all Pages nice, but with their persistence and the selling of the currency concerned the conditions for the mass to be getting worse, to a complete economic collapse.
The speculators and the "Smart Money" benefit immensely, there comes a new layer of highly rich, who understands the system and can use for themselves. The mass, however understood, mostly to the last not know what happened, and loses. There
m contrast to conventional belief, it is not for the masses "too much money," but the money is running out, because all prices rise.
a debt in a hyper inflation is possible, but not as easy as you might imagine. The primary reason for this is the most widely occurring nonlinearity of alternating inflation and deflation phases.
After this time the primary world reserve currency, U.S. dollars will be affected, there is virtually no "safe" currencies more. The only alternative is, therefore, gold and silver. They are making a comeback after this nightmare experience than money.
Quote conclusion:
Any government, now and previously published material, the "Golden Rule" - who has gold, sets the ground rules. When times are rosy, then it can come with a government paper money, bonds and loans. But when times get rough, then the creditors lose confidence in paper and promises, they want real money. And gold is real money. - Bill Bonner
Source: hartgeld.com
Another article on hyperinflation
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