Ron Paul says that we may end up like Germany

Ron Paul explaining what can happen with inflation and how quickly prices can rise...it is not a slow process...it's quick.

He said if inflation gets to high..we will be forced into another monetary system.

Which is what happened to Germany...and look at what happened there.

When will people listen to this man.

Edit: 1:58 is where he explains inflation led to the political destruction and the result was Nazism. He's not saying we'll be Nazi's obviously...but that is the kind of thing that happens when people become desperate.

[edit on 16-1-2009 by David9176]

what happened to germany?

(sorry i don't watch videos ... i don't have enough net-power to do it)

Seig Heil!!! NOT!!!!

The day the USA turns into anything like how Germany was..is the day the world has already gone POOF!!!



Cheers!!!!

Originally posted by David9176
When will people listen to this man.

In November 2008 when they elected him President of the United States...oh wait....that DIDNT happen, probably for a reason I bet.

Dorian Soran

reply to post by ll__raine__ll


Oh during the great depression Germany saw huge inflation of it's currency. I heard stories of people filling wheel barrows of money to buy a loaf of bread. That's what Ron Paul is showing is how quickly the money became devalued in Germany and the political repercussions of such.

I hope people at Washington are listening to him, but the way the government has pushed for more spending to fix our (spending) problem, I'm afraid we're going to see this to some degree, and possibly the emergence of a NAU.

[edit on 16-1-2009 by asmall89]

On Hyperinflation

Let's put this to rest right here and now.

"Hyperinflation", or even "Serious Inflation" (similar to what we had in the 1970s) is impossible without a means to transmit the rise in prices into wages.

In today's United States that simply cannot happen for two reasons:

* The union representation of workers has been eviscerated due to their own idiocy over the previous thirty years. In effect, they have no power to impact economic or labor policy - no matter what Gettlefinger thinks.
* Outsourcing of work to China, India, Mexico and other nations makes wage demands impossible for American workers to enforce. Such demands simply result in the loss of the job to overseas workers.

As a consequence a hyper-inflationary or even seriously-inflationary spiral is impossible to sustain.

Think about your associates, people who you know in the middle class.

Now consider that a 10% inflation rate (moderately bad "serious inflation" ala 1970s) goes on for four years.

This raises the cost of living for everyone by 46%.

How many people who you know are saving 46% of their income? How many will survive a 46% increase in their cost of living?

Such an outcome will result in half or more of America becoming immediately homeless, hungry, and as a consequence out of work. It will as a consequence crash GDP by 50% or more immediately which in turn will crash income tax receipts by a like amount at both state and federal levels.

This will in turn crash prices, but at that point it's too late as now the price crash in turn destroys what remains of the business community and further crashes tax receipts, while at the same time foreign bond investors throw up their hands and say "screw you!", cutting off all foreign capital inflows to the government.

Down that road lies immediate insurrection - that is, the violent overthrow of the government. You are delusional if you think the military could stop such a thing - 150 million Americans, maybe even 200 million of the 300 million in our population? Not a prayer in hell, even if all the Americans had was pitchforks, torches and a gallon of gasoline, and they don't - they have firearms, and lots of them. Even the Chinese, who are (by demonstrated act) willing to roll tanks over their own people would have no chance against 100 million of their citizens if hunger ever trumps fear.

This didn't happen in the 1970s because we had vastly more union work representation and they were able to force wages to keep pace for the average working man. While the pinch was bad (I grew up in it and remember it vividly) society never degenerated because the self-reinforcing crash of production, jobs and tax income never happened, and as a consequence the sort of mass-unemployment, disenfranchisement and loss of essential human needs did not come about.

Today the average working man works for WalMart or some other non-union shop and has no wage pricing power; ergo, there is absolutely no way to prevent the implosion from initiating.

The government must not engage in any sort of policy that could lead to this outcome. Absolute protection at the top levels of government must be put in place to prevent it, because if this occurs then everything - absolutely everything - that we know and love about America disappears.

This is where the Peter Schiffs and McHughs are wrong in their hyperinflation thesis and their "defensive" measures to try to do something about it (or worse, McHugh's belief that not only is this inevitable but that the government should intentionally cause it through something like a "money drop" to households.)

They are wrong because if this outcome occurs there will be no United States of America, your gold will be confiscated and/or rendered worthless by executive fiat, and at approximately the same time an angry marauding mob consisting of half the population of the country will literally loot and burn everything to the ground.

Vengence inevitably follows when justice is denied for a long enough or in an egregious enough fashion. We have seen this with Rodney King and now with the apparent BART assasination of a suspect in Oakland, and that was one man who was abused at the hands of government. Make the abuse half the population and there is a zero chance that civil and political order is maintained.

Pray that our nation's leaders aren't stupid enough to set in motion such a course of action either by accident or under the foolish belief that they can "keep the outcome under control".

Time is running out to demand and obtain justice folks. America's clock is literally ticking towards zero.

Reprosted in Full with permission from Karl Denninger - author

I'm with ya on the no net power for the video, but I know what Paul is talking about.

Summary: After WWI the Allied nations laid heavy penalties on the Wehmar Republic (Germany), which caused their economy to plummet. Their government didn't have ability to rebuild their country (or make improvements) since most of their gold reserves and loan capabilities were tied up in these penalties and no one would help them (the other nations in Europe wanted a weak Germany so that they wouldn't repeat the horrors of WWI).

With the economy in freefall, the Wehmar government started to print money to flood the market as they tried to pay for programs. This caused inflation to skyrocket. It got so bad that there were days where you would get paid 2-3 times a day since during the day your pay would become so devalued (I think the top inflation rate was near 500%, dont' quote me on that though). This inflation only hurt the ecnomy further and caused the German economy to fall into depression.

This is the time in which Adolf Hitler began speaking and organizing the Nazi party. Since so many of the people were wanting the "good ol' times" of a strong Germany (ecnomically, though militarily can be argued to accepted lightly) where the currency was stable and food was easily put on the table. Hitler started shifting blame on certain parties (among these groups that were later included in the Holocaust like the Jews and Gypsies). This blame stuck with most people and propelled Hitler into power in 1933.

Hitler started rebuilding the economy (and military) almost immidiately as the rest of the world was in the throws of the Great Depression. This gave him the ability to push around the former allied nations to begin his conquest of Europe (Taking back the Rheinland for example). These nations were dealing with their own problems and couldn't afford to wage war on him until it was inevitable.
------------------------------

Now with that said. If you sit down and compare some things, you'll see some similarities (or at least some interesting points)

1) Reparations--While the US isn't being punished for a war, we are spending billions on nation building, which is taxing our nation's government and is usually spent through deficit spending (printing treasury bills and dollars)

2) Political volatility-- During the last election, I saw a report that said that this is one of the best times for a third party to start rising up do to the fact that many Americans are dissatisfied with the Government. Great Oratory skills added (Obama is an example of this, though just with the wrong message for the time to take this in)

3) Global Economic Depression--Watch the news, we're not in good shape now, and if it gets any worse it could be set up for an interesting 20 years. Though it would be interesting to see how globalization has changed this since the 1920's.

Likely what Paul means is that if we continue to print money (through continuously running deficits and basically just charging it to the credit card) is that we will eventually reach the point where a freefall will occurr due to the fact that inflation will skyrocket, setting up a position where the US will no longer be able to maintain her superpower status in the world (cause eventually no one will want to support the debt and you need money to run a military), and will fall into a stats much like Russia is now. Able to fire a punch if needed, but not able to project power like we can now.

The KEY to understanding the Weimar hyperinflation:

I found an interesting NY Times article from 1922.

There was big inflation during WWI, with wages and prices rising across the board due to a shortage of manpower for factories and a demand for armaments This was true across Europe.

Price and wage deflation hit immediately after the war in Britain.

But for Germany: "where employers and workers are strongly organized, wages are generally fixed by local or national collective agreements...Wage rates, being based on the cost of living which is constantly changing, are generally valid for short periods only. During 1921 there was a continual rise in the cost of living with a corresponding increase of wage rates accompanied by a steady depreciation of the Mark."

Independent of the Weimar debt payments, this shows there was an underlying mechanism for huge inflation in Germany: organized labor's wages were tied to the officially noticed cost of living. This is the same situation we had in the US in the 1970's.

It was certainly in the best interests of Germany to depreciate the Mark in order to make war reparations more manageable, but this was tied directly back into wage inflation by the nature of labor organization in Germany.

We have no such mechanism in modern America.

reply to post by redhatty


True we don't have such a control mechanism in place on the union level, but what of the action of some states to tie in their minimum wage laws to the changes in the costs of living?

Missouri for example passed this law I think back in 2006, since then I've gotten a 20 cent and this year a 40 cent raise in my minimum wage job. This has trickled up through to my other job as well for a 40 cent raise.

This was a popular notion among some groups of people the last time raising the minimum wage was discussed at the Federal level. If it were passed the next time the wage was adjusted, then we'd have something close to the situation you described (at least I think so...I'm a history buff, not an economics major:lol wouldn't it?

reply to post by Sir Solomon


20 and 40 cents is hardly enough to cause inflation, much less hyperinflation. If you see the minimum wage going to say - $20/hr THEN hyperinflation may be a reality.

As it is, the Federal Minimum Wage is still below the real minimum wage values.

$6.55 (federal min. wage) still puts people below poverty level and eligible for food stamps/welfare.

See that chart, and you will see that min. wage increases currently do not even keep up with the level of inflation now - we are still at a stagflation/deflationary period.

It will take more "gunpower" than the US has in it's arsenal to create a hyperinflationary situation here.

interesting discussion and good points by Redhatty and Sir solomon

One final point is that The Gov't Manipulates the CPI data to the downside. This is not a theory.......it is a FACT...check out John williams shadow stats. As many authors have explained many of the gov'ts liabilitys are tied to the increasing cost of living (oft measured by the CPI) so they can cut gov't costs. (big time) ..by skewing these measures and re-weighting them and redefining the components that are measured.

so minimum wages tied to CPI data would never keep pace w/ living standards during highly inflationary times because CPI is understated.....this would make a prolonged period of high inflationary living ......to destabalizing to gov't........at least in my opinion and make hyperinflation unrealistic.

(although perhaps with a rapid growth in the prison system and a slow-boil type of constant yet high inflation.........there would be just enough room for the social unrest to be herded into prison while the standard of living crumbled w/o the gov't being overly concerned about revolution) .....but no hyperinflation -germany style.

Ron paul is not a financial expert, but he is a patriotic congressman.....a even rarer breed.



[edit on 17-1-2009 by cpdaman]

[edit on 17-1-2009 by cpdaman]

reply to post by redhatty


Well if hyper-inflation isn't going to then what is?

How can they add trillions dollars to the money supply and have nothing bad happen. Each dollar will become worth less and less ...

That being said and you believe that hyper-inflation is not possible, then the only thing that will happen is food shortages. What happens when no one can afford anything because they won't have any money.

What happens to this scenario when say China de-couples from the dollar and/or the global economy loses confidence in the dollar.

Either way there's going to be riots ...

Originally posted by Anonymous ATS
reply to post by redhatty

 

Well if hyper-inflation isn't going to then what is?

One of 2 choices


A or L

A = Argentina = Depflation (Inflationary Depression).

L = Japan = Deflation.

As we enter a depression there seem to be one of two paths that we can travel. One path accepts that there has been a debt bubble, that this is the cause of the depression. The other path does not accept there was a debt bubble and that it will be policy responses that will stop a depression: Bernanke is a master of the the 30s and Japan’s slump, his wisdom will save us from a depression.

If you accept the L then you accept that it is better to let the market find it is price and not bailout the badly run businesses. You go cold turkey. You do not run up massive debts on the Government’s balance sheet, which only leads to higher taxes. You want people to save. You want the Government to cut it’s cloth, to face the new reality that the high tax take from the debt bubble is not coming back. The delusion is dead. You want the Government to restore business regulations and cut taxes. You want all your focus on nurturing wealth creating industries that can sell their goods and services globally. You give grants to such companies.

If you accept the A then you accept that you can manipulate the price in the market and bailout badly run businesses. You put off the day of reckoning. You run massive debts on the Government’s balance sheet. You want people to borrow and spend. You want the Government to expand and you expect the pre-bubble days to reappear like magic. The delusion lives on. You continue to under regulate and tax business. You want all your focus on spending and piling up debt. You give money to the profligate who ran up too much debt, you start "printing" money.

Life in the L is like hell. Many lose their jobs and GDP collapses.

Life in the A is horrible. Many lose their jobs and GDP collapses.

L lasts three to ten years as the economy is re-engineered to sustainable wealth creating industries. House prices fall 50%+ from peak to trough, with little chance of rising for many, many, years. People start saving. Money is sound and the Dollar holds up relatively well, considering the situation. With sound money the populace is able to clothe and feed themselves, the lights stay on. The Government supports those in trouble. It invests in retraining.

A leads to a collapse in the Dollar as the markets realise that the country can never repay interest and principal. This leads to unsound money and rising inflation as import prices explode. Interest rates need to rise but this will gut the debtors. Wage policies are enacted and a spiral of inflation takes hold. This leads to hardcore poverty for millions as the Middle Class sees it’s wealth vanish. With a collapsed currency few are able to holiday abroad. The IMF are called in and Government spending is slashed.

Both A and L lead to a drop in living standards for the populace. The key plus for L is that once the pain is out of the way a new base for growth and prosperity can be engineered. The balance sheet is strong enough.

With A the balance sheet is wrecked and the Middle Class has been devaGovernmented. Argentina is a prime example of what happens when the wealth of the Middle Class is squandered.

In the L one gets a sharp painful deflationary depression.

In the A one gets a multi decade long depression that could lead to inflation = Depflation. The country becomes an Undeveloping Nation.

Our ruling elite and most of the punditocracy are taking us to A.

How can they add trillions dollars to the money supply and have nothing bad happen. Each dollar will become worth less and less ...

The actual money in circulation has not significantly increased. These "bailouts" are nothing but 1's and 0's in a computer. As long as it stays like that, and as long as there is no way to balance wages with inflation, we cannot go hyper-inflationary.

Will we experience inflation? You betcha, but we won't go the way of Weimar or Zimbabwe.

That being said and you believe that hyper-inflation is not possible, then the only thing that will happen is food shortages. What happens when no one can afford anything because they won't have any money.

See Great Depression for reference. We either help each other out & learn how to grow food & build small self-sustaining communities or we possibly go mad-max. I prefer small communities. It's worked in the past.

What happens to this scenario when say China de-couples from the dollar and/or the global economy loses confidence in the dollar.

Then we cease to be a sovereign nation, not only will our economy collapse, so will our government.

Either way there's going to be riots ...

Maybe if we had more people willing to peacefully protest right now, it wouldn't have to come to that.

Very well said redhatty. We basically have the choice of taking the chemo therapy for our economy to get rid of the tumor (scenario L of red's post), or just sit there and die (Scenario A). The problem with how this will play out is what are the politicians going to go and already have gone for?

Lol, can't believe I'm in in my 20's and I'm already wishing for my childhood days when things were better than they will be in the future.

Originally posted by RFBurns
Seig Heil!!! NOT!!!!

The day the USA turns into anything like how Germany was..is the day the world has already gone POOF!!!

I've got news for you. The nazis are responsible for about 45 million deaths. The democrat party in the U.S. is responsible for the brutal extermination of more than 50 million unborn children over the past 35 years, according to the 2008 U.S. Statistical Abstract. And the similarities between American liberalism and nazism go even deeper than that. They just didn't fire up the gas chambers and incinerators, yet!

Also, President Government was elected in a way that is eerily similar too the way Hitler was elected...by a desperate and uninformed electorate.

So I would have to say Paul is correct on those grounds along, not to mention the fact that President Government's spend-a-thon is going to guarantee the death of the dollar and the destruction of us all.

Somebody needs to tell that moron (o-boy) that you don’t put a fire out by spraying it with gasoline!

Originally posted by David9176
When will people listen to this man.

He'll only be appreciated in the distant future, after he's dead and buried. THEN is when people will listen to what he said and they will marvel at his wisdom in many things. And they will wonder what could have been if only he had been elected ....

reply to post by FlyersFan


Hopefully his younger supporters will retain his ideals and beliefs in what our government should be and help shape a better future for us all. He does seem to have quite a following and i'm amazed that i didn't know much about him until the actual election started which by then was too late.

Since I first heard of Ron Paul I'll admit that many of my political ideology has changed towards him, but what was more important was that he caused me to have the confidence to say and actually feel what I want to, not conform to one party or another (or pick the "lesser of 2 evils" at the voting booth).

Unlike many people in my college I've taken to carrying a copy of the Constitution and the Declaration of Independence in my backpack. I wonder if we were to make our politicians sit for a day, and read them over and over again if it would help fight this slide away from the ideals our country was built on. Maybe put in a pop quiz to make sure they understand what they are supposed to do.

(oh, btw, President would have to do it for 3 days a year on C-SPAN)

I am one of those young people, but so few of my generation (or of my college friends) actually seem to think over the issues completely. They either base it off their friends or their parents' views then work to stridently keep in line with them. Makes me worry so much about when I am Obama's age, and my peers are in power.

I heard stories of people filling wheel barrows of money to buy a loaf of bread

Good thing I went to culinary school....I'll make my own damn bread.

And

Good thing I own guns...I'll steal the flour and yeast.