Saturday, March 28, 2009

Fiat Currencies-America in 2009 too similar to Weimar Republic

The talk is that the US is heading for inflation or hyper inflation due to the massive printing to pay for the US debts. The Weimar Republic is noted in history as the time when post WWI Germany, in financial ruin printed so much money that people were hauling wheelbarrows of money to buy a loaf of bread.

This is a comprehensive piece on the situation.

I'm loosely pulling together comparisons to show similarities are probably a general additude in human behavior reflected in politics during a time of crisis and need.

Germany lost and owed debts and reparations after WWI. Germany depended heavily on American loans as the Great Depression hit. The US today is borrowing excessively from China and other foreign creditors as we spend quite a bit of money due to the War in Iraq and Afghanistan and who knows what else. The Wyanmar Republic did not have the strong economy that the US has enjoyed, but they also didn't suffer issues such as massive trade deficits and credit crisis' as well.

During times of economic hardship, as a trend the votes swing to the left.
The Election of 1928 in Germany resulted in just that. The Social Democrats were only six seats shy of an absolute majority. This is again quite comparable to the democratic majority on Capitol Hill as of now. The Democrats in America hold the majority in the Senate and the Congress, along with a liberal POTUS. At this time, the NAZI's were seen as a minor radical group.

In 1930, the Nazis increased their number of Parlimentary seats from 12 to 107 due to the proportional representation provision. The right and left extremists had a larger combined proportion than the Social Democrat.

Again, I see this trend occuring in the US. Due to human nature. Americans tend to be centrists in their views, but when faced with hardships people turn further away from the center believing that it's a failed strategy.

Today, people are calling out for more socialism in our governmnet and communism has been praised.

Again, the Parliament (like the US today) added several taxes, yet programs had to be cut. Obama just spent over $3 trillion on stimulus and bailouts alone. America is already bankrupt. Which is beyond a disaster knowing how rich America really is. No other country has been able to create and build wealth and improve the quality of life at the rate America's freedoms and capitalism has allowed us to in the last 200 years.

The demand for gold has gone up in the last 10 years. The spikes in price/demand for gold mimic the spikes during the Savings and Loan Crisis. ETFs are manipulated and oh, mutual funds and mainstream brokerages such as Charles Shwab are now selling ETF's. However, the Fed does manipulate the price of gold, and there is probably not enough gold to represent the net worth in America. Other precious metals are enjoying a high demand, such as Platinum and Palladium (those seem to resist volatility in market fluctuations). Silver is a metal, yet it doesn't rise the way gold does. But may be more accessible for those who don't yet have $900 to invest in an ounce.

The fiat currency is in question. On April 2nd, the US will attend a G-20 meeting in London. The Chinese have already requested a global currency as a mixed bag of international currencies to hold as a reserve currency.

Okay, this is a personal note from myself. China is an inexperienced player in the global markets. China only thrives because of the trade surplus they received from America (as they impose protectionist barriers against the US in trade), which is enforced by the WTO. China did not create or innovate their own wealth. China has not had the long standing political structure that allows their people to do exactly that. As a result, THe only way they can compete in the global market is not through products of competative quality but through currency manipulation. The only benefit of China is their population of a billion, which is seen as an opportunity through the world if their leaders allow imports. bfd. India too has a population of a billion people, they're bright people who enjoy a low cost of living and have not caused deficits in other countries. Why is China entitled to make demands... if India is able to handle the fluctuations on it's own? There is no perfect country. But I'd rather do business with Indians than with the Chinese under their radical governments.

So exactly why do the Chinese get the soapbox to make such demands? The bill for a global currency (as a reserve) has already been introduced to Congress. I trust Congress less than I trust our enemies.

Our politicians are just incompetant sellouts who should be banned altogether from enacting any fiscal (esp. spending) legislation, regulations in the markets, federal reserve policy, proposals made by the treasury secretary, trade policies or strategic moves to our economy. These measures would probably be better off if voted on directly by the American citizens, we understand it better than they do. My late dog understands this better than they do. And it's only because we care, they don't.

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