posted on Oct, 30 2011 @ 03:47 PM
That is an interesting question. A more accurate question would be "are we following the path of the Wiemar Republic?" Let's examine that for a
moment.
WG:Government deficit in 1914 was 1.5 billion, about -16% of the total budget.
US: Government (unaudited) surplus in 2001 was $128 billion, about +7% of the total budget.
WG:Government deficit in 1918 near war's end was over 15 billion, about -34% of the total budget.
US: Government (unaudited) deficit in 2004 was $412 billion, about -21% of the total budget.
WG: Bank interest rate - 5% in 1914
US: Home mortgage rate varies between 5.5-7% in 2004
WG: German stock market average at 126 1914 - 1918
US: Dow Jones stock average - about 10,500 2001 - 2004
WG 1919-1921:
Bank interest rate - still 5%
German stock market at 97 in January 1919, 166 in January 1920, 278 in January 1921 and 731 in December 1921.
The general price level has doubled since 1914.
Most of the rest of the world allows their money supplies to contract as a "war withdrawal" effect, and goes into recession or depression
(general prices fell 16% in the U.S. in 1921). Germany keeps creating or printing money, and the government deficits continue to increase.
Newspapers and many financial folk are very confused by the continual price increases. Its blamed somewhat on the Versailles Treaty and France but
mostly on speculators and "foreigners" inside Germany (an ominous sign and similarity to what's ahead with Hitler and the Holocaust, etc.).
In other countries, its blamed on the German government deficit. But the real problem is that too much money is being created by the
German banks.
Government has currency controls, one couldn't buy foreign currency to help protect one's assets.
Many foreign companies have large foreign currency gains, due to the falling value of the mark.
August 1920, Germany starts to buy significant amounts of foreign currency.
Ocober 1920, Germany's national debt - 287,800 million marks (Britain's was about 8,000 million pounds).
The mark varies between 152 and 1040 to the British pound during 1920, ending at about 750.
By February 1921, the stock market had dropped about 50% but was still above December 1920 values.
Since 1913, bread prices had risen 13x, meat 17x, sugar & milk & pork about 25x and butter about 33x - officially.
Unemployment in 1921 - 3%
US 2005:
Home mortgage rate averages 5.5-6%
Dow Jones stock average - about 10,000
Home prices, health insurance, energy and many other costs have roughly doubled or more in the previous 4-6 years.
As of mid/late 2005, there are strong indications that the world economy has topped and is slowing down.
Newspapers and many financial folk are very confused by the continual price increases. It 'must be' greedy businessmen, housing speculators, mid
eastern oil owners trying to stick it to the U.S., interest rates have been raised too much by the Fed, war spending is too high, terrorism, etc.
In other countries and per the International Monetary Fund and others, its blamed on the U.S. government deficit. But the real problem is that too
much money is being created by the Federal Reserve Central Bank and other banks or financial institutions.
Some currency controls do exist as of mid 2005. All money transfers above $10,000 are required to be reported to the government and there are many
other requirements in the Patriot Act.
Many foreign companies have foreign currency gains, due to the falling value of the dollar and hedging operations.
WG 1922
Bank interest rate still 5% as it was in 1914
Bank interest rate rises to 7% in August, 12% in November.
German stock market at 743 in January and rose to 8981 in December.
From 1914-1922, the stock market rose about 89x (from about 100 to 8900), the dollar rose 1525x and coal rose 1250x.
March 1922, 1400 marks per British pound.
The general price level over doubles in the first five months.
Average cost of living in April was increasing at about 50% per month.
On June 24, 1922, right-wing fanatics assassinated Walter Rathenauer, the moderate foreign minister who was in favor of adhering to the Treaty of
Versailles, and also assured the population that Germany was not 'printing' too much money. From here on, inflation and social unrest, etc. really
took off. Within a week, the mark was at 2200 per pound.
Confidence in the mark is waning, the German people begin to demand foreign currency such as US dollars for trade and tend to not use marks.
Speculation is rampant, whether a stock boy or housewife or weathly persons.
Many foreign companies have large foreign currency gains, due to the falling value of the mark.