justin_o_guy2
Serious Thumper
Offline
What happened?
Posts: 55279
East Texas, 1/2 dallas/la.
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In 1914, before World War I, a loaf of bread in Germany cost the equivalent of 13 cents. Two years later it was 19 cents, and by 1919, after the war, that same loaf was 26 cents – doubling the prewar price in five years.
Bad, yes — but not alarming. But one year later a German loaf of bread cost $1.20. By mid-1922, it was $3.50. Just six months later, a loaf cost $700, and by the spring of 1923 it was $1,200. As of September, it cost $2 million to buy a loaf of bread. One month later, it cost $670 million, and the month after that $3 billion. Within weeks it was $100 billion, at which point the German mark completely collapsed.
The whole time the German government kept printing more money, so much so that people burned it in their fireplaces because it was cheaper than wood.
Why didn’t they just stop and try to stabilize the currency?
“When things began to disintegrate, no one dared to take away the punchbowl,” Cashin wrote in his report. ”They feared shutting off the monetary heroin would lead to riots, civil war, and, worst of all, communism. So, realizing that what they were doing was destructive, they kept doing it out of fear that stopping would be even more destructive.”
Cashin advises Americans to keep an eye on M2, a measure of the nation’s money supply, particularly how much money is in circulation. The government reports this number every week. A sudden spike could signal the start of hyperinflation in America.
And once people decide they’d rather spend their money as fast as possible, the so-called “velocity of money” – how quickly money changes hands – takes off. The faster it goes, the higher the rate of inflation.
While those holding our debt dont use it, just sit on it, then, its not inflationary. But, if they cash it in & spend it & it comes Home to circulate in our pool of dollars, each of our dollars will be smaller in comparison, swimming in the pool filled with dollars.
Theres a dance in the gym,,
2 guys standing in the gym in school. 1 girl walks in,, she gets Her pick.
2 guys, standing in the gym, 100 girls walk in. The guys get to pick,,
a loaf of bread, on a shelf, theres only a dollar in the community, that bread goes for a buck.
A loaf of bread on a shelf. Theres 20 BILLION dollars in the community,,
How much is that bread gonna cost? A LOT more than a dollar.
Understanding the mechanism that creates inflation isnt hard, at least not for me, if it just doesnt make sens to anyone here, then please look for explanations from the Mises institute, Lew Rockwell or G. Edward Griffin. If you look to anything from the fed to explain the damage done BY the fed, you mite not get a straight answer.
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