Jul 24, 2007
In the early 1920’s, the Weimar Republic of Germany created an economic miracle in the eyes of some as it recovered from World War I. The stock markets surged, the economy started to recover late in 1919, and the imposition of the Versailles Treaty was seen as an “inconvenience” to the average citizen compared to the revolutionaries who espoused communism and other radical political ideals roaming the streets at the time. The average person saw their monies hold some valuation and the consumer goods started to re-appear in the markets to their relief. Sadly for those bleating souls, the reality soon hit home. The penalty imposed on the German people, besides the military and other humiliating penalties was that of a $636 billion reparation bill (in 2005 dollars) in German gold. To give one some pause, that’s about six hundred billion more in gold than we currently are rumored to have in the possession of our government.
The difference between now and then was that they could only print marks against the gold they held in reserve. To solve that problem, they simply changed the ratios to accommodate their political needs. Of course, as history has born out, it did not end all that well. Now, in our current day, the Federal Reserve and our wonderful government print dollars to do, “gasp”, just what the Weimar Republic did; pay off their debts with inflated currency. This of course did not work for Germany as they had to physically ship the gold but thankfully for the Fed, we do not have to do that.
What is amusing is what we have backing our currency; the full faith and credit of a government which lies to it’s own people, much less the rest of the world. The result will be and is, the birth of the United States of Weimarica. The dollar is considered an investment tool by the powers in charge and that scary concept should not escape the average person, but thanks to numerous VISA commercials and the dilution of our education system, it is nothing but a magnetic stripe to purchase a Super Duper Vende Triple Double Caramel Strawberry Mocha Latte at Starbucks (bleh, give me Maxwell House please). So why is this important? The average American citizen has abandoned his or her responsibility to invest wisely, save carefully and shop for the best price. The mentality of “the government will save me” has taken over, but let’s does some more numbers. Based on the current national debt, we will all have to pay a 90% income tax rate for 70 years to pay off and meet all obligations according to some “experts.” And that is assuming 5% GDP for those 70 years. Those numbers I’m throwing up are conservative, and I mean safe, compared to what David M. Walker, the U.S. Comptroller of the Currency has been stating. If we averaged just 1.5% GDP growth, it could take 200 years at a 90% tax rate (Give or take a trillion here or there). The disaster of our debt has yet to hit home. Let’s relate this back to Mr. and Mrs. Main Street America so all of us can take the fetal position together.
During the past two weeks, I’ve heard the typical local talk shows where people whined about four dollar a gallon milk. I snickered of course. It was not a laugh at them, but a laugh, a chuckle, a roaring gut ripping snort at history. FOUR DOLLARS? Try TWENTY FOUR DOLLARS and that might just be a valid price for one day! The communist government of Zimbabwe might be pointing to what we have to look forward too, but God help old baldy, Kudlow and his partner in crime, Kwazy Kramer, if they ever get it right on Bubblevision. The disaster is that the statement “it can’t happen here” is used much like it was on 9-10-01, the day before Katrina hit, and of course, October 16, 1987.
It can happen here and is happening as I type this. The Federal Reserve has finally been backed into the worst nightmare of all time. As of the date of this story, the dollar has broken support. No, not just technical support. No, not just a round number. No, it has broken through a historical support level.
This is the kind of stuff history books are going to point to and say “and this is the date the fertilizer hit the fan” (cleaned up for the children, they’ll figure it out before us old folks). This disaster of trying to monetize the debt in order to get out of debt is having a multiplier effect on the commercial paper and will soon obliterate the pension funds of millions of Americans. Come to think of it, it will soon wipe out the retirement of millions of Weimaricans. The promise that the government will save you is so sad, so pathetic, and so easy to dispel. After all, just how many illegals are here and how secure are our borders? Next question please…. With this, I say “Welcome to Weimarica”, the land of baseball, NFL football, apple pie and cheap gas at $19.995 per gallon in the near future. When coupons in your local Sunday paper are eight inches wide to accommodate all the zeroes, don’t email me and cry that you were not warned. This is the real deal folks and those who think the solution will be in higher interest rates obviously do not understand the despair we felt as a nation in 1933. The despair we felt then will be nothing compared to the hyperinflationary period we are about to enter. If your annual performance review is up soon, I would advise negotiating weekly pay increases or praying for government assistance (just too funny!).
If you can not get a weekly pay increase, well, just reflect on the condition of those poor Germans after World War I. And remember what happened in every vivid detail. No, not the Holocaust, although that is related to the big picture in more ways than you could ever imagine. Remember that we are no better prepared, no more advanced, no more superior than a fifty one year old woman pushing a wheelbarrow full of Weimar currency into a drug store to buy a bottle of aspirin. To live the experience properly, do yourself a favor; take your credit or debit card, drop ten pounds of weights into a wheelbarrow, and push it down to your local drug store. It’s an experience you will never forget. And one that the end of the good times will exemplify. Welcome to Weimarica. A future where everything will be numerically cost more but in reality worth less. And your life and mine, worth considerably less to the banksters and creators of this disaster.