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Forum Post: Is Weimar-style hyperinflation around the corner?

Posted 6 years ago on June 7, 2012, 9:23 p.m. EST by arturo (3169) from Shanghai, Shanghai
This content is user submitted and not an official statement

Speaking before students at the Collegio di Milano yesterday, former Italian Economics Minister Giulio Tremonti called for bank separation à la Glass-Steagall as part of his proposal for an "emergency exit" from the crisis. Tremonti also said that Weimar-style hyperinflation is around the corner.

Reporting on the meeting, Il Giornale quoted Tremonti as saying, "They said that to save the system you must save the banks, but they did not think that banks included speculation, and instead, governments bailed the banks out unconditionally." Conclusion: "Two years later, the banking system attacks states with money received from states." The worst is not behind us, but in front of the blind eyes of many: "Weimar is a scenario much closer than one could imagine," describing the 1923 scenario of destruction of money and political nightmares.

Tremonti showed "an impressive chart" depicting "the relationship between real activity based on production, and derivatives, so to speak bets on what will occur. It is one to twelve... at this point, [Tremonti] evokes Weimar. One among the solutions is the same one President Franklin Delano Roosevelt found, after the 1929 crisis: Separating investment banks from deposit banks. Those regulations were in place until recently. 'Clinton repealed them in the U.S.A., Draghi cancelled them in Italy in the '90s.'"

Tremonti also called for Eurobonds, but not as a European federal debt; rather, as bonds tied to concrete projects.

According to another media report, Tremonti said that Greece has received EU400 billion from the EU, which went to the banks. Had the Greeks used this for the economy, there would be a boom in Greece today.

Tremonti had a "Plan B" for Italy to exit from the euro, said economist Paolo Savona yesterday, in an interview with La7 television network. Italy must have a Plan B, he said. When he was Economy Minister, Tremonti told me he had one. I am sure that the Banca d'Italia people have one. They must have one.




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[-] 1 points by geo (2638) from Concord, NC 6 years ago

No, it's not happening. The Weimar Republic was under far different financial constraints than the US. The most notable being that it was burdened with a great deal of foreign debt that was payable in foreign currency. We have debt to foreign countries as well, but they are payable in US dollars... big difference.

US spending went to 125% GDP in 1945... there was no hyperinflation in the late 40's or 50's.

[-] 1 points by toukarin (488) 6 years ago

Just one more reason to own bullion, not certs.

[-] 1 points by geo (2638) from Concord, NC 6 years ago

There is no intrinsic value in gold.

[-] 1 points by JoeW (109) 6 years ago

You can't eat metal. Can't always trade it either. What you need is money no matter what way you look at it, but yeah, rooted in something real.

In olden days money was issued for grain deposits, backed by food. That is a money that won't inflate or deflate too easy (so long as the rats don't get to it).

[-] 1 points by toukarin (488) 6 years ago

Excuse me? Gold has been traded for all other kinds of goods and services for centuries and is accepted universally in every country. Gold is real. Grain is too, but gold is far easier to store.

You cant eat money either. Whether it is rooted in something real or not.

Decide what you are talking about first. Hyperinflation or global famine. There is no one I know who would not trade their goods or services for gold, should the situation come to that (Hyperinflation).

[-] 2 points by geo (2638) from Concord, NC 6 years ago

You're kidding yourself. If the fiat currency spun out of control, local commerce would be settled with barter first. No one would know how to value any gold that was out there, there would be no reference, therefore it wouldn't be accepted but by a few who may think of holding on to it for the future when the economy reset.

The only people who would use gold to any extent would be the wealthy who had stores of it already and they would trade with their wealthy friends.

[-] 1 points by toukarin (488) 6 years ago

By the same reasoning, there would be no way to value anything. Who is to say what a pound of meat should cost anyway?

As long as someone wants gold, people will trade for it... even if it is just because that someone probably has other things that they want to trade for... Also... it is easier to store gold than perishables...

[-] 1 points by geo (2638) from Concord, NC 6 years ago

By the same reasoning, there would be no way to value anything. Who is to say what a pound of meat should cost anyway?

Not true. The seller of a product, say a milk farmer who knows what the milk is worth to him in terms of someone painting his barn... each deal will be negotiated for its own merits.

In barter the seller and buyer can work that out. With gold, there is the tie in to other global currencies which will confuse its value. Gold is a fallacy. During the Great Depression barter is what took the place of money when people had no money but had products or skills.

Most won't want gold, but will devise their own currency, as say the coupon system in the town of Ithica NY is doing now, to facilitate trade.

[-] 1 points by JoeW (109) 6 years ago

Not saying that if the dollar collapsed you wouldn't be able to trade your gold away (probably you could), but if the biosphere collapsed I doubt you would be getting much for it.

So I suppose thats true, in the case of hyperinflation you could still very likely trade gold. But what you would really want to trade would be something more like the Terra Trade Reference Currency. Redeemable for any national currency OR real useful commodities.

[-] 1 points by hchc (3297) from Tampa, FL 6 years ago

The thing about Wienmar is that there were other currencies that were deemed more valuable and readily available.

Im not sure what hte next step after the dollar is.

[-] 0 points by arturo (3169) from Shanghai, Shanghai 6 years ago

WW2 followed Weimar. If WW3 follows today, there may be no further need for currency.

[-] 1 points by Nevada1 (5843) 6 years ago

$1000 for a loaf of bread. It could happen.

[-] 2 points by Builder (4202) 6 years ago

It (hyperinflation) could only happen if the majority of the money was in the hands of minor investors.

We all know that is not the case. There has been (for the last decade, maybe more) a concerted effort by the reserve banks to stem inflation, simply because those who hold all the cards (money) lose value on their holdings if it (inflation) continues unabated.

If, on the other hand, they have a measure of control over inflation through lending money at a higher rate of return, then inflation is part of their equations, and therefore, acceptable.

[-] 0 points by treasure (-81) 6 years ago

No, of course not.