Lessons lessons learned 100 years after Weimar’s hyperinflation

This year marks the 100th anniversary of Germany’s economic nightmare, which was forced to pay reparations under the Treaty of Versailles, in addition to already having high levels of national debt during the war.

This was the beginning of a debt-based system that unleashed huge sovereign debt and led to the rapid devaluation of Mark.

As a result, hyperinflation occurred, and by the latter half of 1923, the price of a loaf of bread was about 200 trillion marks.

Most people who have studied history at school will remember the story of this time in Germany, where people abandoned wheelbarrows and went to stores and bartered instead.

1923 was the beginning of a debt-based system that continued to threaten instability and the impending economic collapse, but unfortunately it was not the end.

According to a recent report by the IMF, the pandemic has significantly lengthened the list of defaulting developing and emerging economies and increased default rates, increasing the need for debt restructuring. ..

Due to events such as World War I and the current pandemic, the economy is heavily dependent on borrowing and creating volatility.

Unless we recognize the flaws inherent in this system, we are destined to fall into the same hyperinflation traps that the Weimar Republic faces.

Already in the “post-covid” reality, inflation in the United States is over 5%, but prices continue to rise globally.

As upward pressure on prices foresaw an increasingly dark situation, it was time to ignore the status quo and act now before inflation goes out of control.

We have to look at the armor of the economy, the fiat currency gap.

The launch of a huge pandemic-responsive stimulus package and ongoing quantitative easing policies expose fiat money as inflationary and volatile, not to mention the looming threat to negative real interest rate cash savers. I’m continuing.

In addition, the fiat base itself is beginning to collapse as national debt surges and governments remain trapped in the perpetual debt cycle.

With fiat currencies leaking value and the threat of hyperinflation imminent, many companies may begin to actively seek alternatives to store wealth that do not decline so rapidly. ..

Bitcoin is moving in the right direction.

It is finite and decentralized, contributing to its growing popularity as a high-value, non-compulsory alternative asset.

But from the German instinct of the 1920s, you can learn to barter tangible assets.

As always, gold reigns as the most stable, inflation-resistant, debt-free financial system.

Over the five years of Weimar’s hyperinflation, the purchasing power of gold holders has almost doubled.

Historically, the obstacles to using precious metals have been the practicality and logistics of exchanging grams of material.

However, technology, especially blockchain technology, means that certain weights of precious metals can be exchanged in exchange for goods and services of equal value.

The inherent value of gold and other precious metals, and their stable supply and universal valuation, make them the most resilient wealth stores, eliminate the risk of hyperinflation, and seek to repay debt. The final crisis that will stop the continuous cycle. In the words of Elon Musk, “only fools will not see elsewhere.”

Trick me once and shame you. It’s embarrassing to deceive me twice.

Thomas Coughlin is CEO of Kinesis Money

Lessons lessons learned 100 years after Weimar’s hyperinflation

Source link Lessons lessons learned 100 years after Weimar’s hyperinflation

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