The Beginning of Weimar in America?
Germany's Weimar Republic created the famous hyperinflation that wiped out the wealth of the German middle class and working class in the early 1920s. Accelerating social unrest exacerbated by the hyperinflation gave Adolph Hitler his first shot at grabbing power during the so-called "Beer Hall Putsch" in Munich. While Hitler's grab was stopped then, as we all know he didn't give up.
As the hyperinflation gained momentum, the German central bank not only ramped up its printing of paper money, but, at some point, turned to printing paper money in higher denominations. Since it took more and more German marks to but any item, it became impractical to print money in the old denominations. So, for example, instead of a 100 mark note, they'd print a 1 million mark note. (To get some understanding of how and why the German hyperinflation occurred and its devastating on the people of Germany, I strongly recommend you read When Money Dies by Adam Fergusson, a book we last discussed back in February.)
And so today we find this Opinion article by D. Wayne Johnson in the Wall Street Journal most interesting.
Mr. Johnson writes as corporate historian for a medal art company. His proposals are practical based on an informed understanding of coins and their real use and value in everyday life.
But what struck me about his remarks were the two paragraphs above. Notice that his recommendation is to print money in higher denominations. Now compare this to what the German Weimar Republic did in the early 1920s - print money in higher denominations.
We're not quite at the point of Weimar yet, but you have to wonder if this isn't the first inkling of what may come if our fiscal mess isn't dealt with - and soon.
As the hyperinflation gained momentum, the German central bank not only ramped up its printing of paper money, but, at some point, turned to printing paper money in higher denominations. Since it took more and more German marks to but any item, it became impractical to print money in the old denominations. So, for example, instead of a 100 mark note, they'd print a 1 million mark note. (To get some understanding of how and why the German hyperinflation occurred and its devastating on the people of Germany, I strongly recommend you read When Money Dies by Adam Fergusson, a book we last discussed back in February.)
And so today we find this Opinion article by D. Wayne Johnson in the Wall Street Journal most interesting.
...Keep the dollar as the unit, as well as a 10-cent and 50-cent division of the dollar. That is three coins to keep while eliminating the cent, nickel and quarter.
Then, add five-dollar and 10-dollar coins, and the U.S. would again have five denominations to fill the drawer of every cash register. Stop printing paper currency in these denominations and accrue even more savings, as coins outlast paper 20-to-one in circulation.
Mr. Johnson writes as corporate historian for a medal art company. His proposals are practical based on an informed understanding of coins and their real use and value in everyday life.
But what struck me about his remarks were the two paragraphs above. Notice that his recommendation is to print money in higher denominations. Now compare this to what the German Weimar Republic did in the early 1920s - print money in higher denominations.
We're not quite at the point of Weimar yet, but you have to wonder if this isn't the first inkling of what may come if our fiscal mess isn't dealt with - and soon.
Comments
http://howfiatdies.blogspot.com/2012/10/faq-for-hyperinflation-skeptics.html