MODERN TIMES – THE WEIMAR REPUBLIC

The modern world had been on and off the gold standard, which was the backing of currency with gold. Just after World War I, Germany had already ceased backing its currency with gold and had run up enormous deficits. Germany printed its money during the war at a fevered pace and quadrupled the number of German Marks in circulation. Prices lagged the printing during the war and no inflation was felt.  No one was spending in the amounts equal to the currency being printed.

By the time the war ended, confidence began to return to the consumer, and they began increasing the velocity of the currency.ie. They began placing the horded cash back into the system at greater numbers which reflected the enormous amounts printed. At the end of the war, the exchange rate for one once. rose 20 times. Any savings a German had found that he had lost 90 percent of his value.

By 1921, with war reparations to pay, prices started to rise higher and in July 1922, prices had risen 700 percent.

Psychology changed and people realized that holding on to currency meant losing value, so they began spending everything they had.  No one wanted to hold their currency. The German government continued to print money to pay its war debts. Public confidence and faith failed and increased the downward spiral.  By October 1923, a pair of shoes that cost 12 marks before the war, now cost 30 TRILLION MARKS. A loaf of bread went from half a mark to 200 BILLION MARKS.

The German Stock Market went from 88 points at the end of the war to 26,890,000,000, but the actual purchasing value of the market had fallen by 97 percent.

Gold and silver were the only shields of protection for the Germans. The price of gold had gone from 100 marks per once to 87 TRILLION marks per once. The purchasing power of gold had gone up exponentially. During this height of hyperinflation, a city block of commercial real estate in downtown Berlin could be purchased for 25 ounces of gold ($500). Those who held their wealth in currency became poorer as purchasing power was destroyed by government.  Those who held their wealth in gold saw their purchasing power increase exponentially as they were able to purchase what others could not.

During financial upheaval, a market pop, a market crash, a depression or a currency crisis, wealth is not destroyed, it is merely transferred.

Those who held onto currency were robbed of their complete purchasing power, while those who held gold and silver were saved from the ravages of government hooligans and scoundrels. Gold and silver saved those wise enough to keep it.

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