Weimar 1920-21 : "It felt like deflation was underway"

[drbubb]

Weimar, In 1920-21 : "It felt like deflation was underway"

 

: W-rm : glp : adv

 

GEI's WEIMAR Room : Is a Jump in Inflationary forces ahead of US, after our Deflation Scare ?



Listen to Jim Turk talk about the same period:
Comparisons of the US to Weimar Germany
http://www.kingworld...James_Turk.html
"Bank balance sheets will not be allowed to contract, by Mr. Bernanke."
"Like Havenstein, Bernanke is: 'Afraid to get off the speeding train.'
"The Central bank provides the money to the government (by printing), that the market does not want to lend."



Surely we should give 1920-21 Weimar period some more study

Personally, I am still expecting a big stock drop in the weeks or months to come, and think that could
trigger a money-printing panic

 

UPDATE: Long Term CRB chart - since 1749 ! ... Up : source / Last 3 years

 

 

Inflation TURNS - per CRB index : source

Year : -Level - : T : % chg. : yrs : Cycle

1749 : 024.00 ? L : ==== : ==== :

1781 : 136.30 : H : +468% : 32+ :

1792 : 030.25 : L : -77.8% : 11 - : 43yrs :

1815 : 103.84 : H : +243% : 23+ :

1843 : 032.32 : L : -68.9% : 28 - : 51yrs :

1864 : 131.42 : H : +307% : 21+ :

1897 : 026.71 : L : -79.7% : 33 - : 54yrs :

1920 : 112.03 : H : +319% : 23+ :

1933 : 029.35 : L : -73.8% : 13 - : 46yr :

1951 : 134.86 : H : +359% : 18+ :

1968 : 097.70 : L : -27.5% : 17 - : 35yrs :

1980 : 330.03 : H : +238% : 12+ :

1999 : 187.16 : L : -43.3% : 19 - : 31yrs :

===

2008 : 462.74 : H? +147% : 09+yrs?

2011 : 370.72 : H? +098% : 12+yrs?

2012 : 266.78 : L ? -42.3% : 03-yrs?

====

To 1999: 187.16

Ave : Upmove : H : +322% : 21.5+ yrs : 6 Times

Ave : Dnmove : L : -61.8% : 20.1- yrs : 6 Times

Predicts

2021 : 789.8 : H : +322% : 22+ : :

(Wrm: 11,271, A:649, Gl:444, G:8,549 : 9/21)

== ==

LINKS:
Weimar slideshow ............ :: http://www.slideshar...eimar-republic2
Revision Guide to Weimar :: http://www.mrallsophistory.com/podcasts/weimar.mp3
Weimar-related podcasts. :: http://www.google.co...&...q=&gs_rfai=

Inflation Charts, etc ......... :: http://tinyurl.com/WeimarRm

[drbubb]

....

.. Benjamin S Bernanke .. : .. Rudolf Von Havenstein ..

 

"I will get it right this time."

 

Rudolf E. A. Havenstein (10 March 1857 – 20 November 1923) was a German lawyer and president of the Reichsbank (German central bank) during the hyperinflation of 1921-1923.

 

Havenstein was born in Meseritz (Międzyrzecz), Province of Posen. He came from a family of government officials and studied law in Heidelberg and Berlin. After graduation in 1876, Havenstein worked in the Prussian Justice service until 1887 when he began his career as a judge. In 1890 he moved to the Prussian Ministry of Finance. From 1900 to 1908, Havenstein was President of the Prussian State Bank. From 1908 to 1923, he was president of the Reichsbank and his signature appears on German Reichsbank notes from 1908 to 1923.

 

Havenstein was involved in the introduction of war bonds at the beginning of the First World War. He died in Berlin and is buried in St. Anne's Cemetery in Berlin-Dahlem.

[Jake]

"The Central bank provides the money to the government (by printing), that the market does not want to lend."

 

Surely we should give 1920-21 Weimar period some more study

 

Personally, I am still expecting a big stock drop in the weeks to come, and think that could

trigger a money-printing panic

The question is will they do it again? This would be US, UK, EU perhaps Japan, anyone else? A hyperinflation in those 4 places at once would be a pretty horrific legacy to the West from our friendly rulers. Not that that alone is a reason to stop them, I guess.

They sure as hell dont want to let it go the other way either. But can they stop the rot?

Better to let gold go to 50,000/oz, repay the debts and start again with a new currency.

[drbubb]

Like Bernanke, Havenstein was stuck with an unmanageable legacy

It is sometimes argued that Germany had to inflate its currency to pay the war reparations required under the Treaty of Versailles, but this is misleading. The German currency was relatively stable at about 60 Marks per US Dollar during the first half of 1921. But the "London Ultimatum" in May 1921 demanded reparations in gold to be paid in annual installments of 2,000,000,000 gold marks plus 26 percent of the value of Germany's exports. The first payment was paid when due in August 1921.[3] That was the beginning of an increasingly rapid devaluation of the Mark which fell to less than one third of a cent by November 1921 (approx. 330 Marks per US Dollar). The total reparations demanded was 132,000,000,000 gold marks which was far more than the total German gold or foreign exchange. An attempt was made by Germany to buy foreign exchange, but that was paid in treasury bills and commercial debts for Marks which only increased the speed of devaluation.

/source: http://www.statemaster.com/encyclopedia/Hyperinflation

== ==

The bankers needed to squeeze it from the German workers somehow

"London Ultimatum":

World War I reparations refers to the payments and transfers of property and equipment that Germany was forced to make under the Treaty of Versailles 1919 following its defeat during World War I. Article 231 of the Treaty the so-called 'war guilt' clause declared Germany and its allies responsible for all 'loss and damage' suffered by the Allies during the war and provided the basis for reparations.

In January 1921, the total sum due was decided by an Inter-Allied Reparations Commission and was set at 269 billion gold marks 2,790 gold marks equalled 1 kilogram of pure gold, about £23.6 Billion, about billion roughly equivalent to 3.6 Billion US Dollars as of 2005, a sum that many economists at the time deemed to be excessive.

/source: http://www.servinghistory.com/topics/London_ultimatum

[drbubb]

TAKE ME BACK to the Summer of 1920 ... before the Hyperinflation hit

Jazz

Fashion

Art

This doesn't look like a "depressed" time, does it? More decadent than 2010.

Strengthening currency in the first half of 1920 .. whole chart

"Gold marks" fell into mid-year, before the hyperinflation took off

Weimar : "a period of tremendous social and cultural creativity"

Here's an interview with a historian/ writer:

http://www.writersvoice.net/2008/03/eric-w...weimar-germany/

historian Eric Weitz about WEIMAR GERMANY: Promise and Tragedy.

On the one side, there was Bauhaus, Expressionism, Magnus Hirschfeld and new freedom for gays and women, a vital and experimental theater–in short, an explosion of intellectual and artistic creativity. On the other: hyperinflation, economic depression, and bullies of the left and right rampaging in the streets, setting the stage for the Nazi seizure of power in 1933.

We explore both sides of Weimar Germany and what lessons it may hold for us today.

[romans holiday]

Is WEIMAR on the table?  maybe not

Actually, if you listen to that interview, James Turk says any hyper-inflation in the US will NOT resemble Weimar. The reason he gives is that the US, unlike Weimar, has a sophisticated banking system involving bank deposits, digits, credit etc

So for Turk, Weimar and Zimbabwe are off the table. He now looks for a parallel in Argentina. So it is Argentina, according to Turk, we sould be studying. Weimar is just a bogeyman.

Though I reckon it's 30s and Japan we should be looking at.

http://www.greenenergyinvestors.com/index....st&p=175036

[drbubb]

romans holiday said:

Actually, if you listen to that interview, James Turk says any hyper-inflation in the US will NOT resemble Weimar. The reason he gives is that the US, unlike Weimar, has a sophisticated banking system involving bank deposits, digits, credit etc

So for Turk Weimar and Zimbabwe are off the table. He now looks for a parallel in Argentina. So it is Argentina we sould be studying. Weimar is just a bogeyman.

My point is that:

The German currency STRENGTHENED into the summer, and for a while, "it felt like Deflation",

as Jim Turk also reported.

Von Havenstein was frightened by that prospect, and took the first steps towards money printing.

What happened to German stocks in 1920? Was there a big drop?

[romans holiday]

My point is that:

The German currency STRENGTHENED into the summer, and for a while, "it felt like Deflation",

as Jim Turk also reported.

 

Von Havenstein was frightened by that prospect, and took the first steps towards money printing.

 

What happened to German stocks in 1920? Was there a big drop?

But that may be irrelevant given the utterly distinct monetary systems. Weimar could literally print pieces of paper and put them to work in the economy being an un-sophisticated cash based economy. Our economies are digital debt-based economies, with deflationary forces much harder, if not impossible to overcome by monetary means..... given the legal and political constraints on major world powers. Weimar is utterly different from the US, a down and out defeated nation lumbered with terribly unjust war debts.

 

I think the admission from Turk that a US hyper-inflation can not resemble Weimar is telling.

[drbubb]

But that may be irrelevant given the utterly distinct monetary systems. Weimar could literally print pieces of paper and put them to work in the economy being an un-sophisticated cash based economy. Our economies are digital debt-based economies, with deflationary forces much harder, if not impossible to overcome by monetary means..... given the legal and political constraints on major world powers. Weimar is utterly different from the US, a down and out defeated nation lumbered with terribly unjust war debts.

 

I think the admission from Turk that a US hyper-inflation can not resemble Weimar is telling.

I am interested in what led to the money-printing panic.

 

[romans holiday]

I am interested in what led to the money-printing panic.

Adam Fergusson's book on Weimar is pretty good.

 

When Money Dies: The Nightmare of the Weimar Collapse

http://www.wolf1168.us/misc/Articles%20of%...oney%20Dies.pdf

[mSparks]

I am interested in what led to the money-printing panic.

 

The British printed lots of Weinmar notes and went on an international spending spree as "reparations" for the naughty Germans starting a war.

Of course, I think it was us that started that one too.

 

yup

http://www.historyonthenet.com/WW1/WW1_timeline.htm

4 Aug 1914 British declaration of war

Germany did not withdraw from Belgium and Britain declared war on Germany.

 

Guess the King didn't take to kindly to having his family usurped in Belgium.

[drbubb]

Strengthening currency in the first half of 1920

"Gold marks" fell into mid-year, before the hyperinflation took off

Might we get a Stock crash ? .. update

... and a Gold-price drop .. update

 

... Before a panic, and a reckless reaction leads to money printing

[mSparks]

... Before a panic, and a reckless reaction leads to money printing

No.

The Royals print money as economic warfare against their enemies.

Something similar is happening in Rhodisia Zimbabwe now, after Mugabe expropriated all the Royals lovely farms and mines, after such a successful transfer to "independence".

[drbubb]

No.

The Royals print money as economic warfare against their enemies.

Something similar is happening in Rhodisia Zimbabwe now, after Mugabe expropriated all the Royals lovely farms and mines, after such a successful transfer to "independence".

??

... we can see commodity inflation, and deflation of incomes are not polar opposites - and an investor does not have to choose between one camp or another. Both influences co-exist. In the months to come, we will see both of these trends, sometimes overlapping, and sometimes following each other in alternation. The pressures, and price shocks will continue until the required economic adjustments are made, and the West has learned to cope with higher food and energy prices, and live on its own savings, while manufacturing locally more of the products it needs.

 

The move towards this new alignment is too controversial to be led by our politicians and business leaders, so it will tend to progress through a series of sharp and painful "surprise" adjustments, experienced as "inflationary" commodity price jumps and "deflationary" stock and commodity price crashes. These will be painful to the wealth of the majority who are unprepared for the swings. But for those who understand what is going on, they will look inevitable and predictable. Those who are prepared can protect, and maybe even increase their wealth, as the shocks hit.

 

The drivers of the price swings come from both sides of the globe. We have seen a clear pattern. First, deflationary pressures in the West push asset prices lower. Then, the other two drivers kick in, as a reaction to the falls, and they work to push prices higher.

 

I call them MANIC SWINGS

 

[mSparks]

??

... we can see commodity inflation, and deflation of incomes are not polar opposites - and an investor does not have to choose between one camp or another. Both influences co-exist. In the months to come, we will see both of these trends, sometimes overlapping, and sometimes following each other in alternation. The pressures, and price shocks will continue until the required economic adjustments are made, and the West has learned to cope with higher food and energy prices, and live on its own savings, while manufacturing locally more of the products it needs.

 

The move towards this new alignment is too controversial to be led by our politicians and business leaders, so it will tend to progress through a series of sharp and painful "surprise" adjustments, experienced as "inflationary" commodity price jumps and "deflationary" stock and commodity price crashes. These will be painful to the wealth of the majority who are unprepared for the swings. But for those who understand what is going on, they will look inevitable and predictable. Those who are prepared can protect, and maybe even increase their wealth, as the shocks hit.

 

The drivers of the price swings come from both sides of the globe. We have seen a clear pattern. First, deflationary pressures in the West push asset prices lower. Then, the other two drivers kick in, as a reaction to the falls, and they work to push prices higher.

 

I call them MANIC SWINGS

Sure, but these have nothing to do with "money printing" its just "hot money" chasing one asset yield after another. It always has been thus, only now, as the global economy digitizes, there's more hot money than there was before, and global transactions are escaping the death grips of the old families in the new netocracy.

 

Much of these problems the westernized economies are facing are not so much a shortage of assets, but rather a shortage of assets denominated in Royal/Federal Currency.

 

 

[drbubb]

Sure, but these have nothing to do with "money printing" its just "hot money" chasing one asset yield after another. It always has been thus, only now, as the global economy digitizes, there's more hot money than there was before, and global transactions are escaping the death grips of the old families in the new netocracy.

 

Much of these problems the westernized economies are facing are not so much a shortage of assets, but rather a shortage of assets denominated in Royal/Federal Currency.

??

Have you missed the point? Actually the Manic Swings have everything to do with Printing Money.

 

The great orgy of Stimulus and QE followed the stock crash, and the next stock crash may inspire yet another,

perhaps two years after the first.

 

The point of the Manic Swing idea, is wait. Do not expect hyperinflation yet. The conditions are not right.

Reckless QE and wild new schemes to "get money in people's hands" are required to trigger hyperinflation There is not enough political will for this now. What is required is a deep crash in stock prices, and a new slide in the economy, before you will see that.

 

This concept has kept me cautious towards Gold. Some may be surprised when I turn "wildly bullish" on Gold. But not until the conditions are right. They are not right now IMHO, since I believe we are still in a big Manic Swing to the downside.

[mSparks]

??

Have you missed the point? Actually the Manic Swings have everything to do with Printing Money.

 

The great orgy of Stimulus and QE followed the stock crash, and the next stock crash may inspire yet another,

perhaps two years after the first.

 

The point of the Manic Swing idea, is wait. Do not expect hyperinflation yet. The conditions are not right.

Reckless QE and wild new schemes to "get money in people's hands" are required to trigger hyperinflation There is not enough political will for this now. What is required is a deep crash in stock prices, and a new slide in the economy, before you will see that.

 

This concept has kept me cautious towards Gold. Some may be surprised when I turn "wildly bullish" on Gold. But not until the conditions are right. They are not right now IMHO, since I believe we are still in a big Manic Swing to the downside.

Let me put it this way.

US and UK QE only covers some $2Trln of the >$10Trln contraction in Corporate Money. It was opportunistic rather than inflationary saviour printing.

 

No one wants $'s £'s or €'s for anything other than paying down debt, because you can't buy shit with them and the tax regimes are so godawfull.

 

I've yet to see one piece of evidence of "inflation", most of the rebounds in prices over the past few months are barely explained by closing out of short positions as interest rates crashed through the floor. Let alone any increase in $/£/€ transactions.

 

This is all completely separate from "hyperinflation" - which is a rapid expansion of the base currency, usually via projects such as Operation Bernhard, of which all the British ones still seem to be classified, even American ones are barely declassified:

https://www.cia.gov/library/center-for-the-...i3a06p_0001.htm

But at least they point out "The British were by far the best".

Which explains why the imperial empires enemies have such a nasty historical habbit of catching a dose of Hyperinflation.

_____

 

[G0ldfinger]

But that may be irrelevant given the utterly distinct monetary systems. Weimar could literally print pieces of paper and put them to work in the economy being an un-sophisticated cash based economy. Our economies are digital debt-based economies, with deflationary forces much harder, if not impossible to overcome by monetary means.....

This myth has been busted many times before. That Bernanke does not have to "literally print" is due to electronic cash, but the money is just created in the same way (buying treasuries). Why do you repeat this misleading (IMO outright WRONG) thought over and over again?

 

I think the admission from Turk that a US hyper-inflation can not resemble Weimar is telling.

It tells us that each HI is different. As such, it isn't telling much at all. It's just common sense.

[mSparks]

This myth has been busted many times before. That Bernanke does not have to "literally print" is due to electronic cash, but the money is just created in the same way (buying treasuries). Why do you repeat this misleading (IMO outright WRONG) thought over and over again?

But with printed paper, you can walk into a factory and buy all their stock for the next 2 months with little to no traceability to your forged notes.

Digital digits have a heritage you cannot escape from, hard for them to escape into peoples hands when they are just filling a void of defaulted digital digits.

 

It tells us that each HI is different. As such, it isn't telling much at all. It's just common sense.

Are you referring to some kind of HI not caused by expansion of the monetary base?

[G0ldfinger]

But with printed paper, you can walk into a factory and buy all their stock for the next 2 months with little to no traceability to your forged notes.

Digital digits have a heritage you cannot escape from, hard for them to escape into peoples hands when they are just filling a void of defaulted digital digits.

I have no idea what you try to say here. We're not talking forging, we talk cold hard cash, be it printed or not (which makes no difference at all as long as transactions are not illegal).

 

Are you referring to some kind of HI not caused by expansion of the monetary base?

Not necessarily. All crises turn out (slightly) differently.

[confounded]

http://www.zerohedge.com/article/ben-berna...ermanys-hyperin

 

 

[mSparks]

I have no idea what you try to say here. We're not talking forging, we talk cold hard cash, be it printed or not (which makes no difference at all as long as transactions are not illegal).

non "forged" money does not cause any kind of inflation, it is destroyed once it is used - i.e. runs through the legitimate taxation cycle.

For inflation

Either its literally forged - as in not created by those responsible for its legitimate uses.

Or its objectively forged - as in created for illegitimate purposes by those responsible for its uses (the common explanation for Weinmar - "pretending" to pay off debt).

Not necessarily. All crises turn out (slightly) differently.

Albert Einstein

Insanity: doing the same thing over and over again and expecting different results.

[G0ldfinger]

non "forged" money does not cause any kind of inflation, it is destroyed once it is used - i.e. runs through the legitimate taxation cycle.

For inflation

Either its literally forged - as in not created by those responsible for its legitimate uses.

Or its objectively forged - as in created for illegitimate purposes by those responsible for its uses (the common explanation for Weinmar - "pretending" to pay off debt).

OK, so you just want to view or "declare" all outright money creation illegal it seems. Because one thing is for sure: all that was done in Weimar, the US, the UK, and in Zimbabwe was "legal".

[mSparks]

OK, so you just want to view or "declare" all outright money creation illegal it seems. Because one thing is for sure: all that was done in Weimar, the US, the UK, and in Zimbabwe was "legal".

ripping off the poor and disadvantaged for profit has always been "legal" in capitalist society, except for a few exceptions where TPTB don't get enough of a cut to risk the backlash.

Doesn't mean its legitimate.

[romans holiday]

This myth has been busted many times before. That Bernanke does not have to "literally print" is due to electronic cash, but the money is just created in the same way (buying treasuries). Why do you repeat this misleading (IMO outright WRONG) thought over and over again?

It's not "cash", its capital.... recapitalization of banks. It is really just rearranging the deck chairs on a sinking/ deflating ship; capital is being destroyed faster in the banks as collateral values erode than can be replaced by Fed injections of capital. The capital is not going to be turned/ multiplied into cash in the economy as banks will continue to restore their balance sheets. With further downturns in residential and commercial property this process is only going to worsen.

 

As Turk says, nothing like Weimar.... so you better start studying Argentina instead, and see if there are parallels.

 

But frankly, I think your time would be better spent studying Japan.