Throughout world history currencies have come and gone. In fact, absolutely no currencies from ancient history have survived and as time goes on, the length of time currencies survive and continue is getting shorter and shorter; the average life span of a currency to is currently 30 years.
The current U.S. dollar currency has been around for over 100 years. So the current U.S. currency has far surpassed the life expectancy of the average currency. However, some economists think that the U.S. currency started over again when the U.S. currency was taken off the gold standard in 1971.
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Prior to 1971 the U.S. dollar was backed by gold and now all the U.S. dollar is backed by is the "good faith and credit of the United States." And most people right now, with good reason, are questioning the "good faith and credit" of the U.S.
And just like the Weimer Republic, if the U.S. continues with its current fiscal policy of debasing the currency to pay for public works, social programs, and wars that it can't afford, if the U.S. continues to follow the same destructive path as the Weimer Republic, the U.S. will meet with the same outcome as the Weimer Republic.
At the beginning of World War I, Germany went off the gold standard and suspended the right of its citizens to redeem their currency (the mark) for gold and silver. Like all wars, World War I was a war of and by the printing press.
The number of marks in circulation in Germany quadrupled during the war. Prices, however, had not kept up with the inflation of the currency supply. So the effects of this inflation were not felt.
The reason for this peculiar phenomenon was because of times of uncertainty people have a tendency to save money. World War I was definitely a time of uncertainty. So even though the German government was pumping tons of currency into the system, no one was spending it---yet.
But by war's end, confidence flooded back along with the currency that had been on the sidelines, and the ravaging effects worked their way through the country as prices rose to catch up with the previous monetary inflation.
Just before the end of the war, the exchange rate between gold and the mark was about 100 marks per ounce. But by 1920 it was fluctuating between 1,000 and 2,000 marks per ounce. Retail prices shortly followed suit, rising 10 to 20 times.
Anyone who still had the savings they had accumulated during the war was accumulated the war was bewildered when they found it could only buy 10 percent or less of what it could just a year or two earlier.
Then, all through the rest of 1920 and the first half of 1921, inflation slowed, and on the surface the future was beginning to look a little brighter. The economy recovering, business and industrial production up.
But now there were war reparations to pay, so the government never stopped printing currency. In the summer of 1921 prices started rising and by July of 1922 prices had risen another 700 percent. This was the breaking point.
And what broke was people's confidence in their economy and their currency. Having watched the purchasing power of their savings fall by 90 percent in 1919, they knew better this time around. They were smarter; they had been here before.
All at once, the entire country's attitude toward currency changed. People knew that if they held on to their currency for any period of time they'd get burned...the rising prices would wipe out their purchasing power.
Suddenly everybody started to spend their currency as soon as they got it. The currency became a hot potato, and no one wanted to hang on to it for a second.
The government was caught in a downward economic spiral. A point of no return had been passed. No matter how many marks the government printed, the value fell quicker than the new currency could enter into circulation. So the government had no choice but to keep printing more and more and more.
By late October and early November 1923, the German financial system was breaking down. 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. A single egg went from 0.08 mark to 80 billion marks.
The German stock market went from 88 points at the end of the war to 26,890,000,000, but its purchasing value had fallen by more than 97 percent.
Only gold and silver outpaced inflation. The price of gold had gone from around 100 marks to 87 million marks per ounce, an 87 trillion percent increase in price. But it is not price, but value, that matters, and the purchasing power of gold and silver had gone up exponentially.
When Germany's hyperinflation finally came to an end in November 1923, the currency supply had grown from 29.2 billion marks at the beginning of 1919 to 497 quintillion marks (yes, that's a real number), an increase of the currency supply, however, had dropped 97.7 percent against gold.
The poor were so before the crisis, so they were the least affected. The rich, at least the smart ones, got a whole lot richer. But it was the middle-class that was hurt the most. In fact, it was all but obliterated.
But there were a few exceptions. Those who quickly adapted to a world they had never seen before, a world turned upside down, prospered. It didn't matter what class they came from, poor or middle-class, if they could adapt, and adapt well, they could become wealthy in a matter of months.
At this time, an entire city block of commercial real estate in Berlin could be purchased for just 25 ounces of gold (0). The reason for this was that those who held their wealth in the form of currency became poorer and poorer as they watched their purchasing power destroyed by the government.
On the flip side, those who held their wealth in the form of gold watched their purchasing power increase exponentially as they became wealthy by comparison.
Here is the important lesson: During financial upheaval, a bubble popping, a market crash, a depression, or a currency crisis, wealth is not destroyed. It is merely transferred.
Therefore, those who hold onto "real money" (gold and silver), instead of currency (the mark, dollar, etc.), will and have reaped the rewards many times over.
US Economy - History Proves the US Dollar Will Fail 12 OUNCES EQUALS
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