at Ambrose Evans-Pritchard’s latest article. Click here for the full article, The Death of Paper Money.
OK, let’s assume that the US will experience at some point in the future a hyperinflationary event and fall out similar to the Weimar Republic in Germany during the 1920’s. Groovygirl has a few comments.
“Velocity took an almost right-angle turn upward in the summer of 1922,” said Mr O Parsson. Reichsbank officials were baffled. They could not fathom why the German people had started to behave differently almost two years after the bank had already boosted the money supply. He contends that public patience snapped abruptly once people lost trust and began to “smell a government rat”.
Groovygirl: this will happen. The distrust of government and Wall Street is already occurring. Ben, Tim, and Obama lose more creditability every day. The USDollar will be a “hot potato” very soon nationally and internationally.
But fact that O Parsson’s book is suddenly in demand in elite banking circles is itself a sign of the sort of behavioral change that can become self-fulfilling.
Groovygirl: I could not agree more. Big investors requesting physical gold and silver is a reflection of the same pattern. Big players are nervous and uncertain even as they control government policy. That means they think that these financial issues are systemic and out of the ultimate control of anyone. They are protecting themselves as much as possible.
Near civil war between town and country was a pervasive feature of this break-down in social order. Large mobs of half-starved and vindictive townsmen descended on villages to seize food from farmers accused of hoarding. The diary of one young woman described the scene at her cousin’s farm.
Groovygirl: now this was Germany, how might starving mobs in the US respond? Loot grocery stores? Warehouses? Freight trains and trucks? I doubt they would attack farms directly, they don’t know how to butcher a cow or mill grain. Would they loot banks because they can not get more than $100 cash at a time?
Grand pianos became a currency or sorts as pauperized members of the civil service elites traded the symbols of their old status for a sack of potatoes and a side of bacon. There is a harrowing moment when each middle-class families first starts to understand that its gilt-edged securities and War Loan will never recover. Irreversible ruin lies ahead. Elderly couples gassed themselves in their apartments.
Groovygirl: there will be panic as the middle class sees their savings fall away to complete poverty. Treasuries and bonds will be worthless. Banks accounts wiped out. There will be many murder-suicides. But that is not for us. We have a plan to survive, a network of people to assist us, and hope that the spring economic cycle will be here very soon. The winter economic cycle will end, it doesn’t go on forever.
Foreigners with dollars, pounds, Swiss francs, or Czech crowns lived in opulence. They were hated. “Times made us cynical. Everybody saw an enemy in everybody else,” said Erna von Pustau, daughter of a Hamburg fish merchant.
Groovygirl: low economic profile.
Great numbers of people failed to see it coming. “My relations and friends were stupid. They didn’t understand what inflation meant. Our solicitors were no better. My mother’s bank manager gave her appalling advice,” said one well-connected woman.
Groovygirl: this is already happening as people say “we are in a recovery” and “invest in stocks for the long-term”. Well-connected will not guarantee you good advice.
Corruption became rampant. People were stripped of their coat and shoes at knife-point on the street. The winners were those who — by luck or design — had borrowed heavily from banks to buy hard assets, or industrial conglomerates that had issued debentures. There was a great transfer of wealth from saver to debtor, though the Reichstag later passed a law linking old contracts to the gold price. Creditors clawed back something.
Groovygirl: as I stated on my K-wave page, crime will rise. It will be tempting to run up debt and default. This is not a good idea. I believe that the new USDollar or global reserve currency will work in as much past and defaulted debt into itself as possible. Better to remain as debt free as possible throughout the whole crisis.
A conspiracy theory took root that the inflation was a Jewish plot to ruin Germany. The currency became known as “Judefetzen” (Jew- confetti), hinting at the chain of events that would lead to Kristallnacht a decade later.
Groovygirl: this is the dangerous part. I have warned against this before. People will want to blame others for this crisis. Groovygirl can see the blaming of foreigners and illegals coming. Do not get dragged into this kind of thinking. It is unproductive. This crisis is the end of an empire, end of a fiat currency, end of an economic cycle. This is a cycle and has nothing to do with 911 or immigration. Those situations are symptoms not causes of the path we are on… started long ago before the industrial age. (Do not think that you have cured the lung cancer by surpressing the cough.) The cause is the End of Paper Money, everything else is a fallout from that and nothing else. Put your energy and talents into being proactive for the spring cycle, not reactive to the winter cycle.
The Carthaginian peace of Versailles had by then poisoned everything. It was a patriotic duty not to pay taxes that would be sequestered for reparation payments to the enemy. Influenced by the Bolsheviks, Germany had become a Communist cauldron. partakists tried to take Berlin. Worker `soviets’ proliferated. Dockers and shipworkers occupied police stations and set up barricades in Hamburg. Communist Red Centuries fought deadly street battles with right-wing militia.
Groovygirl: expect several major fractures in the US. Warren Pollock’s video on American Disassembly is very interesting. Click here. Groovygirl thinks that the Patriotic Act and other policies stemming from 911 will have a similar effect as the Carthaginian Peace of Versailles after WWI. Looks like it will address the issues, but just causes major systemic problems in the end, setting all of us up to fail. It is really too bad.
Groovygirl doesn’t think the hyperinflation fall out will be that severe or that severe for as long as in Germany. Because the USDollar is the world’s global currency and the world will demand a solution immediately. Now keep in mind that solution may not help Main Street in the least, but it could get commence moving from dead stop to snail pace.
For the record, groovygirl is in the hyperinflationary depression camp triggered by a collapse in the USDollar around 2015.
Side musing: Jim Rickards talks about the end of the empire on kingworldnews.com, echos this post and groovygirl’s personal opinion. Click here.
Side-side musing: from Jim Sinclair’s website. Uncle Harry and Jim Sinclair know what they are talking about. A sudden hyperinflation event is the same as Martin Armstrong’s “waterfall effect”. :
My Dear Friends,
The following note preceding the excellent article written by Ambrose Evans-Pritchard is from the man who I consider the “Dean of Gold,” Harry Schultz.
This is what the Goldmans of the world are in the process of positioning themselves for at your expense.
At the same time many in the gold community are in the bathtub with their razor blade kit. Please, no cutting yet.
Regards,
Jim
Dear CIGAs,
Hyperinflation will come overnight as Jim predicts. Forget gradual.
How do you protect assets and food? Hide stuff. Avoid medium profile. The following article describes how bad it got in German hyperinflation and how dangerous it was to even own a painting. Read it all, then plan appropriately.
Harry Schultz
muses of the moment 