Could the Weimar Hyperinflation Happen Again in America?

[Atilla]

Retired people are really taking the sharp end of the hit, in that their savings are not paying much in the way of interest. There is a big grey vote and the pollies know it.

Plus everyone surmises that most of the top pollies are buddies of the bankers etc. They may not get that invite to a nice warm island somewhere if they don't play ball !!

Dont let them sell you the idea that they are doing it for " the people ". They are filling their own boots as usual !!

Quite right. This inflation is deliberate policy imho. Government has a mixed up policy objectives of trying to stimulate aggregate demand whislt maintaining illusion of trying to contain inflation. Talk of deflation remains in fancy theory only.

Even in US inflation falls from 1.8 to 1.6 and they call that deflation... Excluding food and fuel ofcourse. Food, fuel and housing is precisely what people spend most of their disposable income on. Especially more so in these depression times - I doubt many people are splashing out on durable white goods or furniture...

Deflation to me would be continued falls in price from say -1.6% to -1.8%. But hey it's only my understanding of deflation not the bright sparks in government. When did ever a fall in inflation become deflation I'll never understand.

Price increases slowing is deflation... :cheesy: Crazy whackos... You guys get all this stuff do you? I wouldn't mind a heads up on your rational.

Moreover, in these depression times who would have thought oil would hit $80 and food prices going up... I still wonder what the price of oil and food stuffs will be when we have to good ol swinging boom times back in town.

From a basic eoconomics text book theory all this money awash in the system and we are playing games with words and statistics. One can pick any measure of money and sooner or later all those billions spent by governments all over the world will feed into the 'real' economy.

I've yet to understand Banks who have been lent billions by governments to prop up their reserves continue to pay bonuses.

I simply do not understand why they do not switch bonuses into topping up their reserves.

We are recycling the same old debates but I think evidence is increasingly pointing to inflation on both sides of the continents for UK and US. Just as there was no Recession or Depression there is no Inflation but in fact we are in Deflation is being branded about. That is very funny indeed.

 

[N Rothschild]

Atillia i serisouly think you do not understand how the money system works. read my post.

 

[Atilla]

i suggest you all read this. http://upload.wikimedia.org/wikipedia/commons/4/4a/Modern_Money_Mechanics.pdf so you know how money really works.

When you consider that all money is debt, All money is not debt? Please explain. My savings in a bank are not debt. How so?the interest to be paid on this debt does not actually exist. I do get interest on my savings as small as it may be never the less it is positive interest.The amount of money in the money supply will always be less than the total debt+interest. So what happens when a country has surplus budget and surplus BoP? The only way this interest can be paid, is the by constant creation of new debt(credit) in order to service the already existing debt. How about producing more goods and services? (like someone withdrawing cash from there credit card in order to pay the same credit card). The other way is through bankruptcy.

When the money supply and amount of debt gets to much, the system crashes (credit crunch) and causes a recession. When the system crashes, it means no new debt is being taken on by the economy in order to service the existing debt. Hence contraction in GDP and consumer credit as money is leached from the money supply in order to service the interest on all the debt in the system (remember there is not enough money without the creation of more debt to pay this interest)

When the system crashes like this, the fed steps in and lowers the federal funds rate meaning money is cheap to borrow in order to stimulate the process of creating new credit to prop up the system. the system NEEDS this money so it doesn't completely implode. The level of money being pumped into the economy which many refer to as printing the money etc (which is a joke as all debt in the system is created out of thin air which you will know if you have any clue about the fractional reserve banking system, see the link) by the fed is a TINY amount of money compared to the levels of money created normally within the system. This is quantitative easing, the attempt to stop the system from exploding..proving emergency funds to keep the cycle going. The idea that the fed's efforts could cause hyperinflation is laughable as its entire purpose is to try (and fail) at stopping a massive bone crushing deflationary cycle. Which is actually unavoidable in the banking system UNLESS the cycle of credit creation continues.

How ever this cycle is not continuing. This recession wasn't just the housing market bubble bursting. it was the fiat currency cycle bubble bursting. (see many of George soros books) It was the end of the super cycle. Banks are not lending, people are not borrowing..this is indisputable. Banks are hording cash and not lending all the toxic **** derivatives they are hiding on there books. People are no longer borrowing, they borrowed to much..and have perhaps learnt there lesson (for now, will be soon forgotten) the record contraction in consumer credit shows this nicely.

"Consumer credit decreased at an annual rate of 4-3/4 percent in the fourth quarter of 2009. Revolving credit decreased at an annual rate
of 13 percent, and nonrevolving credit was unchanged on net." Fed

http://www.federalreserve.gov/releases/g19/Current/ (pretty easy to see for yourself what has happend in consumer credit since the recession) And dont remember a huge part of the economy is the consumer..but the consumer has no money as it isnt borrowing any? hmm interesting.

So banks arnt lending, people arnt borrowing it anyway. So what does that mean? It means no new credit, no new credit to pay the interest on the outstanding debt in the system..while the fed desperately tries to make the titanic water tight with some duck tape.

This means that the longer the cycle is broken, the more and more money is leached from the system as world de-leverages from this orgry of debt. (DEFLATION). Deflation is a dirty word in economics, hence few people talk about it. Banking, governments, economists LOVE inflation. but its all a lie. It is just not possible while the cycle is broken. You will struggle to find this sort of explanation and theory in your newspapers as it goes agasint the "machine" and is the true nightmare scenario that people don't want to admit to. "deny till you die"

I seriously suggest reading the pdf along with this post.

I hope this helps some people who have been struggling to understand. If anyone comes back and says what i have written is wrong and we are about to see hyperinflation. You are an idiot.

I can't open the pdf it is coming up with an error.

However, this analysis of yours is very weak on opening assumptions.

Money is a commodity and interest rates is a cost of that money over a period of time. You have real interest rates less inflation and nominal rates of interets etc. If you are creditor you get interest. If you a debtor you pay interest. The supply and demand for money determines cost of money between savers and borrowers.

Basic economics but sure doesn't tally up with your assumptions which need serious explaining.

 

[Atilla]

Atillia i serisouly think you do not understand how the money system works. read my post.

Strange as I was thinking the same about you? I have a degree in Economics that says otherwise. What are your credentials???

 

[N Rothschild]

you really have no idea of the fractional reserve system do you? money is not a commodity..you cannot call something you create out of thin air a commodity, which you then have to pay interest on.

if you want me to explain the fractional reserve system i gladly will.

 

[N Rothschild]

sorry but a degree in economics holds no weight when it comes to understanding the banking system. try again.

 

[N Rothschild]

you do know the entire banking system is designed for people not to understand? looks like you are one of those people.

"The supply and demand for money determines cost of money between savers and borrowers. " that makes me giggle.

you think money is something that is past between savers and borrowers? dear god...

 

[N Rothschild]

What are your credentials???

my credetials are i can read, and understand. That document i posted isnt just some random pdf..it was made by the federal reserve on exactly how the banking system works. try reading it. (if you had you woudldnt be desputing my post because you have a degree in economics lol)

 

[Atilla]

you really have no idea of the fractional reserve system do you? money is not a commodity..you cannot call something you create out of thin air a commodity, which you then have to pay interest on.

if you want me to explain the fractional reserve system i gladly will.

I do know how banks work.

Money is a commodity. In fact everything can be termed a commodity.

Water is a commodity. You can go upto a mountain and fill up a bottle and sell it as spring water. Water is so abundant in supply it can virtually be termed a free commodity.


The problem with economics is it is termed a normative science. It is not pure positive science where 1kg is the same one can mathematically determine That is everyone has an opinion not necessarily correct one.

Everyone listens to Soros but he is not always right. Just more right than wrong.

You think it through and if it makes sense to you then that's fine.

If you understand what you have written instead of telling me I don't understand the fractional reserve system can you please explain your assumptions and answer my contra-statements against them. That would be productive. It will show if you really understand what you believe in and if it stands up to scrutiny of an alternative perspective. :idea:

 

[N Rothschild]

they arnt assumptions. seriously read the pdf it might take the blinkers off. and i dont see any contra statements?

i lvoe how you are claiming you know how banks work...yet desupting what im saying (and what the fed says funilly enough) so err..you clearly...dont?

and soros has nothing to do with my explanation of the banking system, that was only in regards to the "super bubble"

 

[N Rothschild]

honestly, have a leaf threw it..i will wait. and while i wait i will ask this...very simple question.. (hopefully will switch the light bulb on)

There is 1 billion dollars in the banking system. Banks turn that 1 billion into an extra 900 million (its actually more) in NEW money by creating credit threw the frac reserve system.

Money in economy..1 billion, 900 million dollars (of credit at say..ooo 4%)

The money is then repaid, all 900 milion dolalrs of freshly printed frc server notes. meaning there is once again 1 billion dollars in the banking system. but hang on...you had to pay 4% interest did you? But that would mean there would be less money in the system than when you started...err that cant be right can it?

 

[Atilla]

honestly, have a leaf threw it..i will wait.

Can't open it. Getting some (9) error. I click on yes to ignor errors and still doesn't open.

Can you paste it on here please...

 

[N Rothschild]

there u go

 

[N Rothschild]

lets tally up some debt figures here..

us national debt..13 tril give or take.

us mortgages (this data is HARD to find) closest ive come up with is about 10 trillion.

us consumer debt. 2 trillion dollars.

so thats 25 trillion dollars so far and its a HELL of alot more than that when you include corporate debts etc, forig debt in us dollars..the figre is gona be about 50 trillion i reckon. prolly more.

so 50 trillion.. + intrest.

m1 supply, 1.6 trillion $

wait that cant be right..

money isnt money, money is debt. it is stuff that is created out of thin air as DEBT.


you still think money is a comodity between savers and borrowers?

as i said earlier..the money in the system is not enough to cover the debt+interest. unless the cycle (which i have explained) continues rinsing those dollars to meet interest payments.

tell me im wrong again..it turns me on

 

[Atilla]

lets tally up some debt figures here..

us national debt..13 tril give or take. National Assets???

us mortgages (this data is HARD to find) closest ive come up with is about 10 trillion. Value of houses

us consumer debt. 2 trillion dollars. Value of savings or deposits what ever.

so thats 25 trillion dollars so far and its a HELL of alot more than that when you include corporate debts etc, forig debt in us dollars..the figre is gona be about 50 trillion i reckon. prolly more.

so 50 trillion.. + intrest.

m3 money supply.. 10 trillion?

wait that cant be right..


you still think money is a comodity between savers and borrowers? Yes absolutely. It is a measure of value whether one is a saver or borrower it measures commodity value. Houses, books food whatever. As money is a commodity it also has value. That is why the dollar is falling in value. As a commodity the dollar is losing value.

as i said earlier..the money in the system is not enough to cover the debt+interest. unless the cycle (which i have explained) continues rinsing those dollars to meet interest payments.

tell me im wrong again..it turns me on

Ok I agree with you there but you are only looking at one side of the balance sheet.

What about the other side...

That difference between assets and liabilities is made up with loans - ie sale and purchase of treasury bills.

Books must always balance.

Issue is what happens when the books don't balance due to the crash as asset valuations no longer in proportion to monies loaned out. Government steps in and bails risky insititutions failed debts out with no corresponding output to balance the books.

 

[N Rothschild]

but the books dont balance? thats the whole point.. why?

step outside the box my friend..

 

[N Rothschild]

and im not tlaking about asset vs liabilitys etc. im talking about dollars in the system, simple as. dollars that exist only as debt.

 

[N Rothschild]

http://video.google.com/videoplay?docid=7065205277695921912#

watch this..basic explanation.. (first 20mins) but it is all 100% fact.

 

[Atilla]

i suggest you all read this. http://upload.wikimedia.org/wikipedia/commons/4/4a/Modern_Money_Mechanics.pdf so you know how money really works.

When you consider that all money is debt, the interest to be paid on this debt does not actually exist. The amount of money in the money supply will always be less than the total debt+interest. The only way this interest can be paid, is the by constant creation of new debt(credit) in order to service the already existing debt. (like someone withdrawing cash from there credit card in order to pay the same credit card). The other way is through bankruptcy.

When the money supply and amount of debt gets to much, the system crashes (credit crunch) and causes a recession. When the system crashes, it means no new debt is being taken on by the economy in order to service the existing debt. Hence contraction in GDP and consumer credit as money is leached from the money supply in order to service the interest on all the debt in the system (remember there is not enough money without the creation of more debt to pay this interest)

When the system crashes like this, the fed steps in and lowers the federal funds rate meaning money is cheap to borrow in order to stimulate the process of creating new credit to prop up the system. the system NEEDS this money so it doesn't completely implode. The level of money being pumped into the economy which many refer to as printing the money etc (which is a joke as all debt in the system is created out of thin air which you will know if you have any clue about the fractional reserve banking system, see the link) by the fed is a TINY amount of money compared to the levels of money created normally within the system. This is quantitative easing, the attempt to stop the system from exploding..proving emergency funds to keep the cycle going. The idea that the fed's efforts could cause hyperinflation is laughable as its entire purpose is to try (and fail) at stopping a massive bone crushing deflationary cycle. Which is actually unavoidable in the banking system UNLESS the cycle of credit creation continues.

How ever this cycle is not continuing. This recession wasn't just the housing market bubble bursting. it was the fiat currency cycle bubble bursting. (see many of George soros books) It was the end of the super cycle. Banks are not lending, people are not borrowing..this is indisputable. Banks are hording cash and not lending all the toxic **** derivatives they are hiding on there books. People are no longer borrowing, they borrowed to much..and have perhaps learnt there lesson (for now, will be soon forgotten) the record contraction in consumer credit shows this nicely.

"Consumer credit decreased at an annual rate of 4-3/4 percent in the fourth quarter of 2009. Revolving credit decreased at an annual rate
of 13 percent, and nonrevolving credit was unchanged on net." Fed

http://www.federalreserve.gov/releases/g19/Current/ (pretty easy to see for yourself what has happend in consumer credit since the recession) And dont remember a huge part of the economy is the consumer..but the consumer has no money as it isnt borrowing any? hmm interesting.

So banks arnt lending, people arnt borrowing it anyway. So what does that mean? It means no new credit, no new credit to pay the interest on the outstanding debt in the system..while the fed desperately tries to make the titanic water tight with some duck tape.

This means that the longer the cycle is broken, the more and more money is leached from the system as world de-leverages from this orgry of debt. (DEFLATION). Deflation is a dirty word in economics, hence few people talk about it. Banking, governments, economists LOVE inflation. but its all a lie. It is just not possible while the cycle is broken. You will struggle to find this sort of explanation and theory in your newspapers as it goes agasint the "machine" and is the true nightmare scenario that people don't want to admit to. "deny till you die"

I seriously suggest reading the pdf along with this post.

I hope this helps some people who have been struggling to understand. If anyone comes back and says what i have written is wrong and we are about to see hyperinflation. You are an idiot.

Look I've started reading about 4-6 pages and I haven't read anything I don't know.

Please explain your assumptions. They are not in pdf.

You can't make sweeping statements like this

When you consider that all money is debt, the interest to be paid on this debt does not actually exist.[/COLOR] The amount of money in the money supply will always be less than the total debt+interest. The only way this interest can be paid, is the by constant creation of new debt(credit) in order to service the already existing debt. (like someone withdrawing cash from there credit card in order to pay the same credit card). The other way is through bankruptcy.

And then post some pdf on fractional reserve system justifying your arguement.

Yes you can pay debt by producing a product and selling it for a higher price adding value and productivity to the economy. You then take your profit and pay back your debt. This is normal business day in day out.

Money and the frequency of exchange finances trade as opposed to bartering sheep and eggs.


So other than posting a pdf for the fractional reserve system you have not explained how we are in deflationary period despite inflation being at 1.6% excluding fuel and food stuff. You have not explained your assumptions.

You have made lost of allegations about me not understanding the creation of money.

You see I can read and think too. I have the ability to question and analyse what is fed to me. I have also been trained in the dark art of suggesting assumptions without foundations.

 

[N Rothschild]

Look I've started reading about 4-6 pages .... might be your problem there?

did you get to the bit where new loans are created from reserves? 10% kept in resrves, lend out 90% of newly created frc money..so 1 bil becomes 1.9bil..all money is created this way. so please tell me where the interest comes from?

ok so, you make a product and sell it for a higher price to pay back your debt, where does that money come from?

you really cant graps this idea of money being created as debt can you? im not sure you are as clever as you like to think you are... and im sure you could say the same to me..least i post up theory and not just sit there denying everything like some1 in denial coz they cant accept they might not actually know as much as they think they do