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In-Reply-To: <002801c9e714$4353fe30$1181c67c@HomePC>
Hi William.
The German post WW1 inflation was known to have been deliberately
fomented. What was not generally realised before Galbraith blew the
whistle was that when it had done its work it was brought to an immediate
halt, overnight.
So the bogy man story we are all threatened with should have no further
effect, should it ?
Ken.
-------- Original Message --------
From: "William Hugh McGunnigle" <wmcgunn@maxnet.co.nz>
To: <socialcredit@elistas.com>
Date: Sun, 7 Jun 2009 14:04:10 +1200
HI William Ryan
I was interested to see your comments about the
inflation during the American Civil War, but fail to see any connection
between that and the Wiemar Republic's inflation of the early 1920's. The
latter, as far as I understand, was a deliberate and premeditated action
calculated to devalue the German mark so that the reperations demanded by
the treaty of Versaille could by paid off in worthless currency. in is it
was singularly successful but it destrroyed the savings of the thrifty
Germans and led to the political instability in Germany that was
brilliantly
exploited by Hitler and the Nazi party. The American Civil War inflation
was
an accidental product of the need for finance to prosecuted the war as far
as I can understand it. I do not believe it was a deliberate policy
intended
to happen unlike the German case. It is significant that all wars create
some form of monetary "inflation" simply because of the need to provide
the
necessary funding to prosecute the war, funding that is used to develope
the
industrial base to provide the weapons for that war. Those employed in
those
developing industries inflate the economy because thay have surplus money
to
spend. That inflation usually takes place after the war when the money
accumulated by those employed unable to be spent in war time becomes
available as peace takes hold and economies return to "normality" Correct
me
if I am wrong in these observations
Bill Mc Gunnigle
----- Original Message -----
From: <william_b_ryan@yahoo.com>
To: <socialcredit@elistas.com>
Sent: Saturday, May 30, 2009 9:11 AM
Subject: [socialcredit] Re: a "well-researched" article
Thank you for these numbers, Jamie, and the links to their source. £620.7
billion and £671.4 billion are both significantly greater than the number
Hutchinson uses, £454 billion. £300 billion per annum in gilts, accepting
this number as accurate, and I'm not prepared to accept it without
verification, is considerably less than fifty percent of spending, not the
sixty-five percent that Hutchinson claims. And the percentage of
"seigniorage" spending by Weimar was, according to Sennholz, was 99.2
percent, not the fifty percent that Hutchinson claims. It appears that
his
argument is way off base, when the actual numbers are considered, not the
numbers he apparently dreamed up. So Hutchinson's argument, and Ms.
Brown's
essay based on Hutchinson's argument, are just up there in La La Land.
I would like for someone to address both Schacht's and the Zimbabwe
Central
Bank's arguments that their respective hyperinlations were caused by
outsiders short selling their currencies, rather than their own respective
incompetences.
---------------------original message---------------------
Subject: Re: [socialcredit] a "well-researched" article
Date: Friday, May 29, 2009 08:13:17 (+0100)
From: Jamie Walton <eurojamie @.....com>
Hi all,
As I understand the 'quantitative easing' plan in the UK, - as I recall it
from reading the articles on it in the (UK) Financial Times that I bought
on
the day after it was agreed (I don't have the copy with me now) - the Bank
of England would create money to buy UK Treasury bonds (called 'gilts')
from
bondholders/bondsellers.
In this case, I would think that the money would go to the
bondholders/bondsellers, and what they do with it after that is up to them
(they may buy more UK Treasury bonds?). I'm not sure how this could be
funding the UK government's budget deficit (except perhaps indirectly,
through more taxation and borrowing).
I don't know where the figure of British government spending of £454
billion
comes from, the estimate for the current FY 2008-09 (budgeted) figure was
a
total of £620.7 billion (from page 238 of the report/page 246 of the file:
http://www.hm-treasury.gov.uk/d/Budget2009/bud09_completereport_2520.pdf),
and the projection for the next FY 2009-10 (budgeted) figure is a total of
£671.4 billion (from:
http://budget.treasury.gov.uk/where_taxpayers_money_is_spent.htm).
With regard to the North's 'Greenbacks'; that period was during a war, and
as far as I know the general rule is that wars are inflationary. I'm not
sure if it's possible for an 11% portion of government expenditure (maybe
6%
of total 'national' expenditure at the time??) to be the cause of the 75%
inflation rate stated. I would think other factors would have a greater
effect. I understand that $450 million were authorised, and slightly less
than $450 million were ever issued (except for replacements of worn
'notes'), and this was later limited to $300 million authorised to be
outstanding and in circulation at any one time.
With regard to the South's 'Greenbacks' (obviously also during a period of
war), I understand that these were issued as promises to pay (with
interest)
later (after the war), not issued to pay now (like the North's
'Greenbacks'), and that about $1,550 million (more than 3.4 times more) of
these promises were issued, with no limit (there may have been
counterfeits
as well?). I have heard that the Southern States were not all happy
families; they did not co-operate very effectively and tried to compete
with
each other, even when they were supposed to be allies.
The comparisons with Weimar Germany seem unfortunate, and I'm not sure if
there are any parallels between what happened then and what's happening
now
(or what happened during the American Civil War). I think that to do that
question justice would take many months of research and end up being a
book,
and who has time to do that? - not me!
-
2009/5/28 <william_b_ryan@yahoo.com>
Ellen Brown's recent essay, "Another look at the Weimar Hyperinflation" is
archived at
http://www.geocities.com/new_economics/brown-05-19-09.txt and elsewhere on
the Internet.
I think it would be interesting for us to discuss some points in the essay.
The first I would to discuss is this assertion, which she attributes to a
"well-researched article" by Martin Hutchinson. Now, the article may in
fact be "well-researched," but Hutchinson supplies absolutely no sources
or
references for any of the assertions in the article, which is archived at
http://www.geocities.com/new_economics/hutchinson-04-09-09.txt so we must
take as a matter of faith that it is "well researched". We must give
complete credence to what this goldbug marketer of "investment advice" has
to say.
According to Huntchinson, "The really chilling parallel is that the United
States, Britain and Japan have now taken to funding their budget deficits
through seigniorage. In the United States, the Fed is buying $300 billion
worth of U.S. Treasury bonds (T-bonds) over a six-month period, a rate of
$600 billion per annum, 15% of federal spending of $4 trillion. In
Britain,
the Bank of England (BOE) is buying 75 billion pounds of gilts over three
months. That's 300 billion pounds per annum, 65% of British government
spending of 454 billion pounds. Thus, while the United States is
approaching
Weimar German policy (50% of spending) quite rapidly, Britain has already
overtaken it!"
Ms. Brown informs us that "seigniorage" means that government is
effectively
printing and spending money.
I do not find it astounding that some 15% of federal spending is being
effectively printed and spent. We do have some precedent. The Greenbacks
that were famously printed and spent during the Civil War represented only
about 11% of federal spending during that time. My source for this number
is a book published in 2004, *An Empire of Wealth,* by John Steele Gordon,
page 196. During that time the annual inflation rate was about 75%, which
Gordon described as being "manageable," which it was, certainly in
comparison to the contemporary experience in the Confederacy. The
Confederacy printed and spent, through their central and state
governments,
more than half of their budgets, in a much higher rate of inflation,
approaching hyperinflation in the later stages of the war. The
Greenbackers
are silent on the experience of the Confederacy's "greenbacks."
What I do find astounding is the assertion that Britain is currently
funding
65% of its spending through the printing of money, rather than
conventionally, through taxation and borrowing.
I do not reject this remarkable assertion out of hand, but I do expect to
see some proof that it is in fact occurring. I would like to see the
actual
numbers in their original sources. Any help in this regard from our list
members would be welcomed.
I have been directed to an essay, "Hyperinflation in Germany, 1914-1923,"
by
Hans Sennholz, which is archived at
http://www.geocities.com/new_economics/sennholz-2006.txt ,
which has numbers that are quite contrary to the numbers presented by Mr.
Hutchinson:
"While government expenditures rose by leaps and bounds, the revenue
suffered a gradual decline until, in October 1923, only 0.8 percent of
government expenses were covered by tax revenues. For the period from 1914
to 1923 scarcely fifteen percent of the expenses were covered by means of
taxes. In the final phase of the inflation the German government
experienced
a complete atrophy of the fiscal system."
So, according to Sennholz, in October 1923, only 0.8% of government
expenses
were covered by tax revenues, which means that 99.2% were not. I would
presume that most if not all of that 99.2% was covered by the printing of
money rather than conventional borrowing. In any case that would be far
greater that the 50% that Huntchinson claims was "Weimar policy."
And would put the lie to the premise to Ms. Brown's question:
"If Britain is already meeting a larger percentage of its budget deficit
by
seigniorage than Germany did at the height of its hyperinflation, why is
the
pound now worth about as much on foreign exchange markets as it was nine
years ago...?"
-
The second point I would like to discuss is the assertion that Weimar's
hyperinflation was caused by the short selling of the mark:
"What actually drove the wartime inflation into hyperinflation, said
Schacht, was speculation by foreign investors, who would bet on the mark's
decreasing value by selling it short."
In this Ms. Brown is quoting Stephen Zarlenga who is supposedly sourcing
Hjalmar Schacht's 1967 book, *The Magic of Money.* Now, I don't know if
Schacht said that or not in his book. The University of Houston Anderson
Library has the book, which I plan to consult shortly. If Schacht indeed
did say it, I would be inclined to believe it was self-serving, inasmuch
as
he was very much involved with the German central bank during the time of
the hyperinflation. It would be a way of shifting blame away from himself
and his colleagues.
While I find it believable that short selling of the currency may have
been
involved during a time of hyperinflation, I find it difficult to
understand
how it could be the cause of the hyperinflation.
I would welcome anyone explaining to me how this could be the case.
-
I find it ludicrous that Ms. Brown refers to Henry C. K. Liu as an
"economist." He is by educational and professional background an
architect,
who runs an investment fund out of New York. He can barely put together a
coherent sentence in English, as is evidenced by various postings to the
old
Post Keynesian list, but employs teams of researchers who put together
quite
literate multi-thousand word essays that he posts under his name all over
the Internet. I've found that they are predominantly cut and paste
efforts
from other people's work. Whatever they are, they can hardly be
considered
to be authoritative on any subject.
He has for years pushed Warren Mosler's "State Theory of Money" theory to
the Chinese Communist regime. I've called, for good reason, Mosler's
theory
to be warmed over Nazism. There's nothing original in it, though in the
beginning Mosler thought he was a genius who discovered something new.
Mosler's and Liu's presentation of Hitler as being a Lincoln Greenbacker
is
not mere apologetic for Nazism, but for Greenbackerism, which, in its very
essence, certainly large aspects of it, is Nazism in disguise.
And, finally, Zimbabwe. Now, that unfortunate land, is experiencing the
worst hyperinlation in the history of the world. Ms. Brown attributes
this
not to the incompetence of the Zimbabwean authorities, but takes--lock,
stock and barrel--the statement from the Zimbabwean central bank that:
"the hyperinflation was caused by speculators who manipulated the
foreign-exchange market, charging exorbitant rates for U.S. dollars,
causing
a drastic devaluation of the Zimbabwe currency."
It is more reasonable to believe that the crisis was precipitated in 2001,
with the confiscation of the white-owned farms. The farms were handed
over
to Mugabe's cronies, who knew nothing and cared little about farming. And
the farms' employees were not loyal to their new overseers. Farm
production
and exports plummeted, which were the main source of foreign exchange.
Tax
revenues declined significantly. It is reasonable to suppose that Mugabe
tried to keep things going by printing and spending money, and things
continued to spiral out of control from that point onward.
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