Tuesday, November 13, 2007

The Economy

Today I read about the fall of the German economy. I shall take this time to write some of the interesting facts pointed out in the book.

"The Mark, as we have seen, had begun to slide in 1921, when it dropped to 75 to the dollar; the next year it fell to 400 and by the beginning of 1923 to 7000."

"The stangulation of Germany's economy hastened the final plung of the mark. On the occupation of the Ruhr in Jan. 1923, it fell to 18,000 to the dollar; by July 1 it had dropped to 160,000; by August1 to a million. By November, when Hitler thought his hour had struck, it took four billion marks to buy a dollar, and thereafter the figures became trillions. German currency had become utterly worthless. The life savings of the middle classes and the working classes were wiped out."

"The inflation could have been halted by merely balancing the budget--a difficult but not impossible feat. Adequate taxation might have achieved this, but the new government did not dare to tax adequatley. After all, the cost of the war (WWI)-164 billion marks-had been met not even in part by direct taxation but 93 billions of it by war loans, 29 billions out of Treasury bills and the rest by increasing the issue of paper money."

"From the on, goaded by the big industrialists and landloards, who stood to gain through the masses of the people were financially ruined, the government deliberately let the mark tumble in order to free the state of its public debts, to escape from paying reparations and to sabatoge the French in Ruhr. Moreover, the destruction of the currency enabled German heavy industry to wipe out its indebtedness by refunding its obligations in worthless marks. The General Staff, disguised as the Office of Troops to evade the peace treaty which supposedly had outlawed it, took notice that the fall of the mark wiped out the war debts and thus left Germany financially unencumbered for a new war."

I find this point of history particularly interesting, given our present economic situation, because the government and the mass media outlets do not make it known why we are losing ground to the Euro. The US dollar is currently worth the least it ever has been and there are no reasons as to what is going on. Gas prices are continuing to soar and the reason given is because of lackluster oil productions and "terrorism". The real reason that it is costing more is because the value of the dollar is plummeting.

Interesting similarities can be made here and I hope you can point out those I have missed.

Good day,