Very enlightening article, thank you. It changed my perspective on current conditions... the fed could actually stoke hyperinflation because the oligarchs running our govt and fed stand to benefit tremendously and are morally bereft. I hadn’t fully appreciated their incentive
Hello Rudy, been a follower on twitter and now substack.
The biggest crime in our education is keeping the masses ignorant to what made Germany what it became, thank you for the text you brought, it really is eye popping.
I just want to comment on the podcast by Luke, I grew up in Israel during the inflation years, what Luke misses is that every worthy asset was priced in $, businesses, houses, land, rent, oil, no one priced their assets in local currency, having the $, allowed the local currency to float and allowed transactions of rare and expensive assets, otherwise, it would've been a total mess.
There was a good side of these years, we grew up appreciating the value of money, because it was hard currency, we were frugal, savers, and investors in local community businesses, I am raising children today in an era of easy currency and credit, and doesn't matter how hard I try, children can't learn that, and adults also can't, my friends who were bringing home cooked meals to college to not spend money on sandwitches, have 6 figure mortgages and car loans on depreciating asset.
We need to relearn the value of money and saving, I hope we can do it w/o a disaster.
In the ‘never let a crisis go to waste’ theory of events, there’s credible evidence that US and European industrialists financed Hitler’s rise to power - after the Tsars were assassinated the world’s wealthy feared the idea would spread and they’d be next - we know the wealthy play both sides to be sure they ultimately are on the winning side while profiting from both. It’s starting to be acknowledged - google did US industrialists finance Hitler.
Who knows what the future holds but no doubt the monied class will be making sure they survive intact at a minimum.
There are plenty of examples. Ask yourself, how do you think Hitler financed his war? Germany was bankrupt. Who built the roads, the trains, provided the military and built the concentrations camps.
Nonsense Henry Ford didn't like the undue influence of the jews in america. To go from that to say he helped build nazi jeeps is a gigantic leapt. Ford's contributions to the asssembly production were great but they were open to all countries use or copy not just Germany. Germany under Adolf Hitler made great strides in coming back from the mismanagement of her economy. Germany was an industrial giant before the deep state and under Hitler came out of the depression sooner and in better shape than america. Sulivan you have been drinking the kosher tea too much.Sober up.!
Ford wasn’t alone - there was a cabal of industrialists who got rich playing both sides. The Dulles Brothers had a hand in the drafting of the extremely severe Versailles Treaty paving the way. And of course there were bankers. Their love of fascism such that they even tried to overthrow the government only their officer Smedley Butler reported it to Roosevelt. But it was the depression and Roosevelt needed job creators. Too big to fail banks followed too big to jail industrialists. https://www.nytimes.com/1934/11/21/archives/gen-butler-bares-fascist-plot-to-seize-government-by-force-says.html
There’s loads of ugly in US history which helps one to understand what’s going on today - nothing’s really changed sadly. Already today’s banks and industrialists can’t wait to rebuild Ukraine.
Maybe you should try Dingle Bay Gin!
Anyway Google all that - there’s plenty of material on it.
I hope you are correct. The alternative is terrifying. Our society, as it is today, would become deadly on a scale that is unimaginable; especially in large cities.
Very common when I read accounts of Germany pre-hyperinflation. Everyone is quck to say, "There are many differences" - and there are - but many similarities too. "Dying of Money" is one of my favorite accounts.
Similarly, there is a book called "Only Yesterday" by Frederick Lewis Allen about the US in the 1920's (and "Since Yesterday" about the 1930's). Many passges would apply today.
"If there is a general European war we will be brought in if propaganda (think of how the radio will be used for this), greed, and the desire to increase the impaired health of the state can swing us in. Every move that is made now to deprive the people of their decision on all matters through their elected representatives and to delegate those powers to the executive brings us that much nearer war.
It removes the only possible check. No one man nor group of men incapable of fighting or exempt from fighting should in any way be given the power, no matter how gradually it is given them, to put this country or any country into war.
The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists."
The Nazis got under 3% of the vote in the 1928 elections, and were in power 4 years later after the centrist parties couldn't deal with the aftermath of the 1929 crash properly.
Can you feel the disillusionment with the centrist parties today? Something radical is coming this way, from one direction or another.
It reminds me of Yeat's poem The Second Coming:
Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.
Surely some revelation is at hand;
Surely the Second Coming is at hand.
The Second Coming! Hardly are those words out
When a vast image out of Spiritus Mundi
Troubles my sight: somewhere in sands of the desert
A shape with lion body and the head of a man,
A gaze blank and pitiless as the sun,
Is moving its slow thighs, while all about it
Reel shadows of the indignant desert birds.
The darkness drops again; but now I know
That twenty centuries of stony sleep
Were vexed to nightmare by a rocking cradle,
And what rough beast, its hour come round at last,
I’ve just read Matt Taibbi’s article on the Blinken Morrell scandal and he finishes by referencing Yeats and things falling apart. As an adoptive Irish citizen, nobody does the lament better than the Irish (and with cause) - I just wish we could leave studying it to the classroom rather than have lived experience!
Inflation could be much, much worse in the USA than people presently imagine.
Not only was M1 expanded in 2020 by 5x, from approx $4T to $20T, Yellen has stated it will go to $50T. Price inflation will be felt strongly, many of us expect prices to double again this year.
The big disaster is of course when all the worthless dollars now overseas return to the USA. Don't forget to count the $20T China counterfeited and spent overseas. 2024 or 2025. Best solution is to repudiate the fake money debt and create new legal currency. based on land and labor or gold (gold has its problems, too).
Otherwise, there is a good chance for Hitler II and the same group that you can't name who run the banking system will get punished again.
Curious what you think of TIPS and I Bonds as inflation protection. I know your views on CPI understating inflation (which I agree with), but there are limits to the BS during normal times to the point where CPI at least is an understated measure of inflation.
But all bets might be off in a true hyper inflationary collapse of the currency, although the societal collapse that would accompany such a catastrophe may make most of my financial concerns pale in comparison...
I own some I-bonds I bought in the early 2000's (current yield on those, 9.5%!), but other than that, no bonds.
I'd much rather be in stocks. Volatility has never bothered me much, but permanent loss of capital does.
Porter Stansberry recently made a comment that sums up my views:
"The idea that as a retired investor you should have a substantial investment in bonds, in my opinion, is ridiculous, in a world of paper money and negative real yields. Absolutely horrible advice."
I still have the I Bonds I bought in October 2001 - 3% "real" return. But I've also bought some more I Bonds more recently and have some TIPS for five years of projected expenses. I hate owning fixed income but also the idea of having to sell stocks in a crash. I did take out a 2.75% 30 year mortgage in 2021 so that is kind of an offset against my fixed income. Definitely no perfect solution for those of us relying on investments for living expenses.
I am relying on investments too, I'm just used to not investing like a sane person. I'm not diversified, I often buy more of something I like when it goes down, I always have too much cash, I avoid debt - all sorts of classic "mistakes" - but I still did well, even with two 50% $SPX crashes in 2001-2003 and 2008-2009 (and the hiccup in 2022). I think my portfolio is very weird, but robust, as Taleb would say.
Taleb's barbell approach is interesting. My stock allocation is the vast majority of my portfolio, mostly Berkshire, but knowing that I don't need to sell any for several years promotes good sleep. In addition to our domestic policy issues, geopolitical situation is absolutely insane these days with Taiwan the most serious concern aside from full blown nuclear war.
The rise in interest rates by the Fed is bringing dollars here to earn higher interest. It's also a war on the euro and pound that the euro is likely to lose.
I'm sure I would survive ok, but many I know would not, so I'd prefer it not happen. I agree, be prepared. I'm just trying to warn of a possible outcome.
Very enlightening article, thank you. It changed my perspective on current conditions... the fed could actually stoke hyperinflation because the oligarchs running our govt and fed stand to benefit tremendously and are morally bereft. I hadn’t fully appreciated their incentive
Great letter as usual!
I think the text is only available in one or two places, so I wanted to make it available.
My wife couldn’t figure out why why I was so quiet at dinner. I feel terrible for my children.
Let's hope it doesn't come to this.
Bad currency begets societal collapse.
Hello Rudy, been a follower on twitter and now substack.
The biggest crime in our education is keeping the masses ignorant to what made Germany what it became, thank you for the text you brought, it really is eye popping.
I just want to comment on the podcast by Luke, I grew up in Israel during the inflation years, what Luke misses is that every worthy asset was priced in $, businesses, houses, land, rent, oil, no one priced their assets in local currency, having the $, allowed the local currency to float and allowed transactions of rare and expensive assets, otherwise, it would've been a total mess.
There was a good side of these years, we grew up appreciating the value of money, because it was hard currency, we were frugal, savers, and investors in local community businesses, I am raising children today in an era of easy currency and credit, and doesn't matter how hard I try, children can't learn that, and adults also can't, my friends who were bringing home cooked meals to college to not spend money on sandwitches, have 6 figure mortgages and car loans on depreciating asset.
We need to relearn the value of money and saving, I hope we can do it w/o a disaster.
Great points! The use of the dollar is a hugely important point he never mentioned.
In the ‘never let a crisis go to waste’ theory of events, there’s credible evidence that US and European industrialists financed Hitler’s rise to power - after the Tsars were assassinated the world’s wealthy feared the idea would spread and they’d be next - we know the wealthy play both sides to be sure they ultimately are on the winning side while profiting from both. It’s starting to be acknowledged - google did US industrialists finance Hitler.
Who knows what the future holds but no doubt the monied class will be making sure they survive intact at a minimum.
No industrialist helped hitler
Google it. This is one of many articles https://www.theguardian.com/world/2004/sep/25/usa.secondworldwar.
Here’s Ford receiving the highest medal of honour from the Nazi’s for his work providing engines for Nazi jeeps. https://rarehistoricalphotos.com/henry-ford-grand-cross-1938/
There are plenty of examples. Ask yourself, how do you think Hitler financed his war? Germany was bankrupt. Who built the roads, the trains, provided the military and built the concentrations camps.
The deep state started a long time ago.
Nonsense Henry Ford didn't like the undue influence of the jews in america. To go from that to say he helped build nazi jeeps is a gigantic leapt. Ford's contributions to the asssembly production were great but they were open to all countries use or copy not just Germany. Germany under Adolf Hitler made great strides in coming back from the mismanagement of her economy. Germany was an industrial giant before the deep state and under Hitler came out of the depression sooner and in better shape than america. Sulivan you have been drinking the kosher tea too much.Sober up.!
Hitler was helped to power by the deep state(corporates and bankers) Sometimes the truth hurts. https://www.thenation.com/article/archive/ford-and-fuhrer/
https://www.amazon.com/Wall-Street-Rise-Hitler-Astonishing/dp/1905570279#:~:text=But%20what%20I%20wasn't,the%20implementation%20of%20economic%20fascism.
Ford wasn’t alone - there was a cabal of industrialists who got rich playing both sides. The Dulles Brothers had a hand in the drafting of the extremely severe Versailles Treaty paving the way. And of course there were bankers. Their love of fascism such that they even tried to overthrow the government only their officer Smedley Butler reported it to Roosevelt. But it was the depression and Roosevelt needed job creators. Too big to fail banks followed too big to jail industrialists. https://www.nytimes.com/1934/11/21/archives/gen-butler-bares-fascist-plot-to-seize-government-by-force-says.html
There’s loads of ugly in US history which helps one to understand what’s going on today - nothing’s really changed sadly. Already today’s banks and industrialists can’t wait to rebuild Ukraine.
Maybe you should try Dingle Bay Gin!
Anyway Google all that - there’s plenty of material on it.
100% correct.
Among other Nazi regime collaborators are IBM, Coca-Cola, Goodyear tires, Chase, Dearborn, MGM, General Motors, DuPont, Associated Press.
I hope you are correct. The alternative is terrifying. Our society, as it is today, would become deadly on a scale that is unimaginable; especially in large cities.
Even Luke talks like it wouldn't be a big deal. "The bondholders would get hurt". I just shake my head.
this article is so ..... (can't find words to describe it), it rhymes with the present in a deep, striking, eye opening and dark way.
Very common when I read accounts of Germany pre-hyperinflation. Everyone is quck to say, "There are many differences" - and there are - but many similarities too. "Dying of Money" is one of my favorite accounts.
Similarly, there is a book called "Only Yesterday" by Frederick Lewis Allen about the US in the 1920's (and "Since Yesterday" about the 1930's). Many passges would apply today.
Government wants war. It is great for more inflation, all for a righteous cause.
Hemingway:
"If there is a general European war we will be brought in if propaganda (think of how the radio will be used for this), greed, and the desire to increase the impaired health of the state can swing us in. Every move that is made now to deprive the people of their decision on all matters through their elected representatives and to delegate those powers to the executive brings us that much nearer war.
It removes the only possible check. No one man nor group of men incapable of fighting or exempt from fighting should in any way be given the power, no matter how gradually it is given them, to put this country or any country into war.
The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists."
And pandemic can also be substituted for war. But for only 14 days. Any more than that would be excessive. ;)
This was fantastic. Thank you.
Very enlightening and fascinating. I knew this but hadn't seen it articulated so well. Thanks
The Nazis got under 3% of the vote in the 1928 elections, and were in power 4 years later after the centrist parties couldn't deal with the aftermath of the 1929 crash properly.
Can you feel the disillusionment with the centrist parties today? Something radical is coming this way, from one direction or another.
It reminds me of Yeat's poem The Second Coming:
Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.
Surely some revelation is at hand;
Surely the Second Coming is at hand.
The Second Coming! Hardly are those words out
When a vast image out of Spiritus Mundi
Troubles my sight: somewhere in sands of the desert
A shape with lion body and the head of a man,
A gaze blank and pitiless as the sun,
Is moving its slow thighs, while all about it
Reel shadows of the indignant desert birds.
The darkness drops again; but now I know
That twenty centuries of stony sleep
Were vexed to nightmare by a rocking cradle,
And what rough beast, its hour come round at last,
Slouches towards Bethlehem to be born?
I said in 2016 that Trump was a symptom, not a cause. Maybe the next symptom is worse.
I’ve just read Matt Taibbi’s article on the Blinken Morrell scandal and he finishes by referencing Yeats and things falling apart. As an adoptive Irish citizen, nobody does the lament better than the Irish (and with cause) - I just wish we could leave studying it to the classroom rather than have lived experience!
Do you read Ben Hunt and the gang @ Epsilon theory? That’s what he writes about including many other things...
Yes, we go way back
Inflation could be much, much worse in the USA than people presently imagine.
Not only was M1 expanded in 2020 by 5x, from approx $4T to $20T, Yellen has stated it will go to $50T. Price inflation will be felt strongly, many of us expect prices to double again this year.
The big disaster is of course when all the worthless dollars now overseas return to the USA. Don't forget to count the $20T China counterfeited and spent overseas. 2024 or 2025. Best solution is to repudiate the fake money debt and create new legal currency. based on land and labor or gold (gold has its problems, too).
Otherwise, there is a good chance for Hitler II and the same group that you can't name who run the banking system will get punished again.
Curious what you think of TIPS and I Bonds as inflation protection. I know your views on CPI understating inflation (which I agree with), but there are limits to the BS during normal times to the point where CPI at least is an understated measure of inflation.
But all bets might be off in a true hyper inflationary collapse of the currency, although the societal collapse that would accompany such a catastrophe may make most of my financial concerns pale in comparison...
I own some I-bonds I bought in the early 2000's (current yield on those, 9.5%!), but other than that, no bonds.
I'd much rather be in stocks. Volatility has never bothered me much, but permanent loss of capital does.
Porter Stansberry recently made a comment that sums up my views:
"The idea that as a retired investor you should have a substantial investment in bonds, in my opinion, is ridiculous, in a world of paper money and negative real yields. Absolutely horrible advice."
https://www.youtube.com/watch?v=Yk2EiBP-eFc
I still have the I Bonds I bought in October 2001 - 3% "real" return. But I've also bought some more I Bonds more recently and have some TIPS for five years of projected expenses. I hate owning fixed income but also the idea of having to sell stocks in a crash. I did take out a 2.75% 30 year mortgage in 2021 so that is kind of an offset against my fixed income. Definitely no perfect solution for those of us relying on investments for living expenses.
A 2.75% 30-year mortgage is a gift!
I am relying on investments too, I'm just used to not investing like a sane person. I'm not diversified, I often buy more of something I like when it goes down, I always have too much cash, I avoid debt - all sorts of classic "mistakes" - but I still did well, even with two 50% $SPX crashes in 2001-2003 and 2008-2009 (and the hiccup in 2022). I think my portfolio is very weird, but robust, as Taleb would say.
Taleb's barbell approach is interesting. My stock allocation is the vast majority of my portfolio, mostly Berkshire, but knowing that I don't need to sell any for several years promotes good sleep. In addition to our domestic policy issues, geopolitical situation is absolutely insane these days with Taiwan the most serious concern aside from full blown nuclear war.
The rise in interest rates by the Fed is bringing dollars here to earn higher interest. It's also a war on the euro and pound that the euro is likely to lose.
I replied I didn't see it? So get lost punk
Are you ok?
I'm sure I would survive ok, but many I know would not, so I'd prefer it not happen. I agree, be prepared. I'm just trying to warn of a possible outcome.