14 Comments

A more recent example we should look at in this century is Venezuela. A beautiful, resource rich prosperous country bankrupted and destroyed by an authoritarian, corrupt, socialist government (Chavez) complete with runaway inflation and a debt jubilee.

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Even "moderate" inflation (say 4-8%) is extremely destructive to the stability of the financial system and any savings in that currency and very painful for those on fixed incomes.

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Hjalmar Schacht, president of the Reichsbank, was a key architect of the BIS, along with Montagu Norman, the governor of the Bank of England. The BIS had central banks of Britain, France, Germany, Italy, Belgium, along with banks from Japan, as founding members. Participating were First National Bank of New York, First National Bank of Chicago, and JP Morgan. The Economist newspaper wrote central bankers "seem more powerful than politicians, holding the destiny of the global economy in their hands." from the book Tower of Basel

the game is replayed over decades, bankrupt countries and populations and buy them up on the cheap. Implement technocratic solutions to resolve problems they themselves created while gathering more wealth and power ever imagined.

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Amazing explanations of crucial and horribly failed experiments in economics.

Bitcoin BTC BITCOIN!!!

Go Milei Go Argentina !

Thank you Professor . Time to right this ship or create our new society with sound principles in all areas of society.

Question is, WHERE DO WE EXIST ??

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i tried to explain this concept to my dad the other week, tried to explain to him about spiralling debt burden / interest payments etc.

he said he didn't care because it wouldn't be his problem

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Thanks for this. I remember learning about the massive German inflation in middle school, back in the early 1970s. I would guess this has not been taught in a long time now. Most Americans do not get it.

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A loaf of break?

That's where I gave up reading this article.

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The real problem was a collapse in worthy production after France took the Ruhr. That is when inflation truly soared.

Why was the German central bank buying gov't bonds?

So it's gov't could spend more, garnering greater fractions of the nation's economy. This isn't a money issue. It's a gov't spending issue.

Debt to GDP declined in the 70s in the US as inflation soared. It rose in the 80s as inflation was comparatively muted.

You are getting the causes of inflation backwards, Peter.

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Thanks for the article. What is missing is that many, if not all, episodes of hyperinflation involve debt in foreign assets, e.g. foreign currencies. If you take the example of Germany, their productive capacity went straight to the reparations. Money printing or not, their wealth would have been depleted anyway.

In modern FIAT-economies government deficits is how governments are creating FIAT and taxes is how they take it back. If the government would run a surplus all the time, there would be no more money in the economy at some point. Obviously the government can do too much spending but if anything, Western governments spend too little on public services and way too much on the private industry who mostly just sit on the money, speculate and engage in rent seeking. Which is why we have massive asset inflation but not so much in the real economy. This is why nobody can buy a house. Especially since 2008 when the private industry came begging to the government/public to bail them out they've become used to free handouts.

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I always enjoy your posts, thank you. In school, we were told of Germany's "wheel-barrows" of money to buy bread but now I know it was so much worse than that. Also, I didn't realize the Roman's diluted the metal in coins (hasn't the US done exactly the same). I also wonder if WWII might have been avoided if the required German reparations hadn't been so strict. I welcome your analysis of Javier Milei's actions in the days to come but realize, for the most part, we'll have to just wait and see.

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