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View Full Version : Re: The Weimar Solution ( Pat Buchanan )


March 26th 09, 12:30 AM
On Wed, 25 Mar 2009 21:38:06 GMT, (-) wrote:

>
>http://70.87.245.212/story.php?id=6806
>
> The Weimar Solution
>Economy; Posted on: 2009-03-24
> [ Printer friendly / Instant flyer ]
>
> “The best way to destroy the capitalist system is to debauch the currency,”
>said Lord Keynes.
>
>
>by Pat Buchanan
>
>
>Ben Bernanke disagrees. A student of the Depression, the Fed chair appears far
>more fearful of deflation — a vicious cycle of falling prices, debt defaults,
>home foreclosures and rising unemployment.
>
>Deflation is what America underwent in the 1930s. A Fed-created bubble burst,
>causing margin calls to go out to stockholders, who ran to their banks that,
>besieged, collapsed, wiping out a third of our money. As Milton Friedman, who
>won a Nobel for his thesis that the Federal Reserve caused the Great
>Depression, told PBS in 2000:
>
>“For every $100 in paper money, in deposits, in cash, in currency, in
>existence in 1929, by the time you got to 1933 there was only about $65, $66
>left. And that extraordinary collapse in the banking system, with about a
>third of the banks failing … with millions of people having their savings
>essentially washed out, that decline was utterly unnecessary.
>
>“(T)he Federal Reserve had the power and the knowledge to have stopped that.
>And there were people at the time who were … urging them to do that. So it was
>… clearly a mistake of policy that led to the Great Depression.”
>
>Is Bernanke fighting the war of 1929 in 2009? Surely, today, with the
>explosion in M1, the basic money supply, there is no shortage of dollars out
>there, even if they are not circulating fast enough.
>
>To end our recession, Bernanke may be running an even greater risk:
>hyper-inflation. This has destroyed more nations than deflation or even
>depression.
>
>
>
>Recall: It was French military intervention in the Ruhr in 1923, to force
>payment of war reparations, and Weimar’s decision to let the currency fall and
>pay the French in cheap marks that led to the wipeout of the German middle
>class, the discrediting of that democratic republic and the Munich beer-hall
>putsch of Adolf Hitler.
>
>“The first panacea for a mismanaged nation,” said Ernest Hemingway, “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.”
>
>Which brings us to last week’s shocker.
>
>The Fed will buy up $300 billion in long-term Treasury bonds and spend $750
>billion more buying sub-prime mortgages to remove them from the balance sheets
>of ailing big banks, to get the banks lending again.
>
>Bernanke is printing money to buy U.S. bonds.
>
>This new gusher from the Fed, after the $700 billion TARP bailout, comes on
>top of a Congressional Budget Office estimate that this year’s deficit will be
>$1.85 trillion, 13.1 percent of gross domestic product, more than twice the
>share of the U.S. economy of the largest previous postwar deficit.
>
>
>
>Concluding the dollar is being abandoned in a frantic Fed effort to stop the
>recession, markets reacted instantly. The dollar plunge was the steepest since
>the Plaza Agreement of 1985. Gold shot up to $950 an ounce. Silver had a 12
>percent run-up, the sharpest ever. Oil prices surged above $50 a barrel.
>Commodity markets advanced.
>
>The Fed seems to have confirmed the fears of Premier Wen Jiabao, who said that
>China is “definitely a little worried” about the value of the U.S. bonds
>Beijing has purchased with the dollars piled up from her trade surpluses with
>the United States.
>
>Can one blame the Chinese? They have already been burned on their U.S.
>investments. And if the defense of the dollar against its ancient enemy
>inflation is being abandoned, and protecting the dollar is to take a back seat
>to the Fed’s fight to avoid deflation, than it is indeed time to get out of
>the dollar and dollar-denominated assets.
>
>
>
>For inflation is theft. It make liars and cheats of governments. By eroding
>the value of a currency, inflation punishes savers and creditors and rewards
>debtors. And what nation is the biggest debtor of them all? The United States
>of America.
>
>Insidiously, inflation consumes the value of cash, savings, municipal bonds,
>corporate bonds, Treasury bonds and T-bills. Friends who lent America money,
>who bought our debt in good faith, are robbed and made fools of, while
>speculators who bet against America by shorting the dollar in the currency
>markets are vastly rewarded.
>
>Given the $3.6 trillion budget Obama plans, the $1.8 trillion in red ink he
>will run by Oct. 1 and the trillions the Fed is pumping into the economy,
>gross domestic product should spike, as it did after the far smaller stimulus
>package of 2008.
>
>We will feel a healthy glow, and folks will begin to sing, “Happy Days Are
>Here Again.”
>
>Yet, one senses that we are doing again exactly what we have done before in
>this generation. Rather than endure the pain and accept the sacrifices to cure
>us of our addiction, we are going back to the heroin. And this time, with Dr.
>Bernanke handling the needle, we may just overdose.
>
>
>Source, Human Events
>http://www.humanevents.com/article.php?fc_c=1385839x2925452x147459758&id=31188
>
>
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>Mr. Buchanan is a nationally syndicated columnist and author of Churchill,
>Hitler, and "The Unnecessary War": How Britain Lost Its Empire and the West
>Lost the World, "The Death of the West,", "The Great Betrayal," "A Republic,
>Not an Empire" and "Where the Right Went Wrong."
>
>News Source: human events
>
>
>
>
>2007-2008 European Americans United.