Nowadays people like John Locke “Love the truth for the truth’s sake” I’m in the minority. American institutions of higher learning produce a young populace with dirty brains and crazy minds.
They haven’t learned how to think under the huge price tag currently being imposed on taxpayers. But what should we think? By doing so, they diminished their mental abilities.
People who skip college to learn a job can more easily discern objective truth by using basic common sense. They are not exposed to huge amounts of waste like their college-educated peers. This gives them the freedom to independently separate fact from fiction.
The decadence of ideas is closely linked to the decline of the West. If you really open your eyes and listen, you will see that as society degenerates, reality is distorted in unnatural and wrong ways.
For example, over the past decade, pronouns have been undermined to authenticate non-binary gender designations. ‘them’ It is used in the singular form to convey something unspecified. Social enlightenment takes precedence over biological facts and violations of English grammar.
And recently, Google’s new AI image generator generated racially diverse Nazi soldiers among fake images. The principles of diversity and inclusion go beyond historical facts. This also shows that AI reflects the biases of its creators.
But the ultimate devaluation of society begins with the devaluation of the currency. To this end, inflation in both consumer prices and asset prices begins with inflation in the money supply.
Here we take a moment to consider the activity and impact of the important historical event of extreme currency devaluation.
extreme currency devaluation
Rudolf von Havenstein has served as president of the Reichsbank, Germany’s central bank, since 1908. He knew better than anyone else how central bank debt issuance worked. He was a central banker at the Central Bank. He was good at it.
So historically, when he was asked to perform a miracle for the German Empire after World War I, he knew exactly what to do. He will provide monetary stimulus. In fact, he’s been doing it for a few years already.
On August 4, 1914, when the War to End All Wars began, the Gold Mark (or gold-backed Reichmark) became an unsupported paper mark. Excluding gold would allow the money supply to expand to meet the endless demands of war.
For this purpose, von Havenstein Public debt increased from 5.2 billion marks in 1914 to 105.3 billion marks in 1918. During this period he increased the size of the debt from 5.9 billion marks to 32.9 billion marks. German wholesale prices rose 115%.
By the end of the war, the German economy was in deep decline. Industrial production in 1920 fell to 61% of its 1913 level. With the economy weak and the debt burden heavy, it was time for von Havenstein to get his money printer into gear.
In truth, he didn’t have much of a choice. When Goldmark was replaced by Papermark, the limits of fiscal and monetary prudence were surpassed. A change in direction now would have resulted in immediate economic and social collapse.
When trust is lost
Faced with a choice between post-war recession and inflation, Von Havenstein chose the easier, more flexible option. He regarded inflation as the lesser of two evils. Moreover, it would lighten Germany’s war debt.
At first, the consequences of the Reichsbank’s money supply inflation seemed limited. As real inflation-adjusted wages have declined, unemployment has actually fallen to record lows. But alas, a real McCoy cracking boom was underway.
As Papermark’s value continued to decline, its wage earners continued to be shredded. To combat the increasing destruction to wage earners, the German government introduced mandatory wage indexation.
This government intervention had predictable results. Unemployment rates soared immediately. It went from an all-time low to an all-time high in just two years.
At the same time, the decline in Papermark’s purchasing power and external value accelerated until, for all practical purposes, the currency ceased to function as a viable medium of exchange.
Printing money can be stressful. But printing huge amounts of money can be completely terminal in every way.
By the time von Havenstein died of a myocardial infarction in late November 1923, the German central bank had printed 500 quintillion marks. Moderate inflation has turned into hyperinflation. In December 1923, one dollar was worth 4.2 trillion marks.
Moreover, the destruction of the mark brought about the destruction of society and the rise of National Socialism. When trust is lost and the public believes nothing, they will believe anything.
The political repercussions of this economic disaster soon swept across the world.
Second wave of massive inflation in the 2020s
To be clear, the consequences of the money printing and currency devaluation that occurred in 2020-22 to deal with the coronavirus crisis are not going away anytime soon. It doesn’t take deep depression to make money precious.
In other words, we have already entered the second wave of massive inflation in the 2020s.
Bitcoin, gold, and the S&P 500 have all recently hit record highs. Even silver, a forgotten numismatic metal, received some love.
These rising asset prices also indicate a fall in the value of the dollar, as more and more dollars are needed to buy Bitcoin, gold, and stocks.
But the dollar index somehow got above 100. Why is that so?
You’ve probably heard the tired analogy of a dollar being the cleanest shirt in the dirty laundry basket to explain this phenomenon. Perhaps the euro, Japanese yen, pound and other dollar index currencies are in worse shape. Perhaps the petrodollar will help maintain the value of the dollar against these other currencies.
All of this may be true. But we also think there’s more to the story. In other words, the US dollar is a mirage that lives off of its past glories.
If this is true, and there is every reason to believe so given the fundamentals, the dollar would be at increased risk of a sudden and widespread devaluation. But what are you against?
The US dollar is a digital/paper currency. And the same goes for international currency competitors. In times of inflation, all countries and currency blocs devalue their currencies at the same time.
Therefore, a devaluation of the dollar may not occur in the dollar index. However, this does not mean that devaluations do not occur equally. Even at this very moment, it is happening in a radical way. As mentioned above, this is happening with alternative currency options and financial assets.
And as devaluation continues, we could face $10 coffees and $25 McDonald’s Big Mac meals by the end of 2010. Don’t be surprised if this happens.
Did you purchase BRRR?
Remember that inflation begins with inflation of the money supply. It is not always clear where and when it will take place. A few years ago, the coronavirus fiasco sent consumer prices and residential real estate crashing.
Before that, it ran into speculative technology stocks. Now, after a 2022 reprieve and a compelling AI story, speculative tech stocks are again the vehicle of choice for speculators. Bitcoin and gold are also being explored as means of protection.
Indeed, the massive inflation of the 2020s will continue to play out in an almost predictable way that will always be obvious in retrospect.
A few years ago, when the Federal Reserve was busy adding $5 trillion to its balance sheet, there was an interesting demonstration of how art imitates life. A creative colleague developed the website. Money Printer Go BRRRThis is where memes of the Fed’s central bankers go crazy as they fire up the printing presses.
Over the past 24 months, the Federal Reserve has been cutting interest rates. balance sheet That’s almost $1.5 trillion. Nonetheless, its balance sheet is still $3.5 trillion higher than it was at the start of the coronavirus madness. The Federal Reserve also raised the federal funds rate from nearly 0% to 5.5%.
These measures have been taken to curb consumer price inflation. Nonetheless, the U.S. government’s fiscal policies are still causing runaway inflation.
In particular, the US national debt is increasing at the following rate. $1 trillion every 100 days. Bank of America investment strategist Michael Hartnett believes this pattern will continue. This is extreme inflation.
Accordingly, in a resurgence of art imitating life, a new Bitcoin ETF was born under the ticker on January 10th. BRRR. The purpose of this fund is to hold Bitcoin. In less than two months, the price of Bitcoin has already risen by more than 54%.
Are you tempted?
Come on, now! With a name like BRRR, shouldn’t you have one?
Joking aside, the real meaning here is that money is dying, like Papermark Germany in the early 1920s.
So why not buy a BRRR and have a little fun on the way to the junkyard?
[Editor’s note: It really is amazing how just a few simple contrary decisions can lead to life-changing wealth. And right now, at this very moment, I’m preparing to make a contrary decision once again. >> And I’d like to show you how you can too.]
thank you,
minnesota gordon
for economic prism
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