Year 9-6
Adolf Hitler, on September 23 1933, shortly after he became Germany’s “Fuehrer”, attired in brightly polished knee boots and wearing an immaculate military uniform with a swastika armband, stepped on a small hill, scooped up some dirt, and symbolically started Germany’s economic stimulus plan. His massive highway construction project paved the way for the Volkswagen – the Peoples’ Car –, opened up a million jobs, and caused the First Depression to by-pass Germany. President Eisenhower, another military man, initiated in the early 1950’s, the US Interstate Highway system, which did miracles for the then Three Auto Giants. Eisenhower paid cash for this infrastructure venture at the start of America’s greatest financial boom: then the entire world owed money to the USA: America was rich beyond imagination.
Hitler had no money, so he financed the building of Germany’s Autobahnen and the war machinery by simply issuing paper obligations of the German Reich to its gullible public. As James Buchan in his book “Frozen Desire” states: At Hitler’s death – a dozen years later – the Germans possessed 70 billion Reichsmarks in worthless coins and banknotes and 380 billion in obligations of a regime which no longer existed….Germany had been converted into money and destroyed. … A whole nation fell prey to the monetary delusion in its most extreme form”. What a fitting description of today’s monetary mess!
The 1947 US Marshall Plan, the first international Bailout, doled out free cash to Germany and other devastated European countries, and successfully revived their war-torn economies. They did so well because, as their industrial plants were bombed flat, they had to re-invent themselves.
Today, sixty years later, Bailouts are back in. But this time there is a big difference. In today’s version the banks and automotive sector still have their bureaucracy, their failing structures and their outmoded practices, all of which got them into deep trouble in the first place, boding ill for their future.
Now the world as a whole now is on the same path Hitler started in 1933, when he financed his Reich with paper promises, unlike in 1947 when the USA rescued Europe with hard dollars. Europe was indeed fortunate to have rich uncle America put them back on track. Now America itself needs a Savior. At the end of World War 2 Germany’s net worth was zero. The USA, having fought two costly and disastrous wars, Vietnam and Iraq, and still engaged in Afghanistan, has seen its net worth turn negative, thanks to its immense debt. The U.S. Government Accountability Office (GAO) estimated last year that the unfunded obligations for Medicare and Social Security totalled $41 trillion. Add the current national debt of $10 trillion and each the 116 million households there carries a debt of $439,000, not even considering personal and mortgage debt, which would increase the total to well over $500,000.
Obama says – and economist Paul Krugman, recently awarded the Nobel Prize, concurs – that this is not the time to worry about deficits. Eisenhower ran a surplus. Hitler governed a police state, enforced strict price controls, used millions of slave laborers from occupied countries while diverting wealth from Jews and the rest of Europe – $24 billion from Holland alone – to pay for his conquests, and even then was dead broke in 1945.
Where will Obama get his money, or Britain or the rest of the world? They all are doing it the Hitler way, issuing paper promises to posterity. No wonder the GEAB – the Global European Anticipation Bulletin – a think tank specializing in economic forecasting and accurately predicting this fall’s banking bust – believes that the US dollar will collapse before July 2009, a mere 6 months from now, reducing its value to close to nothing. Jeremy Clarkson, a columnist for The London Times – a respectable paper, I believe – writes that: “I have spoken to a couple of pretty senior bankers in the past couple of weeks and their story is rather different. They don’t refer to the looming problems as being like 1992 or even 1929. They talk about a total financial meltdown. They talk about the End of Days.”
John Maynard Keynes, the architect of our post-war financial system predicted that, as the volume of money increased, and its interest rate would fall, “money would abolish itself.” Is that now coming true? Today the interest rate on US bonds is zero percent, while the global volume of money has become an avalanche, as everywhere governments are pouring funds – dollars, pounds, euros, yens – into their economies, threatening the value of money.
Here’s something to ponder: how prepared are we to carry on our life without money?