Great Depression Online Archive Issue:

Review of Great Depression Online Seven Day Course

Day 7 of 7 - Seven Day Course

Inside Day 7 You will Review…

*** The U.S. Trade Deficit
*** Central Banks and Hyperinflation
*** Why the Stage is Now Set for Hyperinflation in America
*** And More

Review…

"History does not repeat itself, but it does rhyme."  Mark Twain.

"If you would understand anything, observe its beginning and its development."  Aristotle.

Here, let’s take a moment to review some of the main themes we’ve been covering…

The U.S. Trade Deficit

First off, we’ll take a look at the U.S. Trade Deficit.

Today’s economy is dangerously imbalanced, as America imports more goods and products than it exports.  In fact, the U.S. trade deficit rose 10% for the month of March 2007 to nearly $64 billion -- $64,000,000,000.  In other words, Americans spent $2 billion more per day than they made on a global basis.  Of course, the difference was made up with debt: corporate debt, government debt, and private debt.

Central Banks and Hyperinflation

Throughout history central banking has brought with it rapidly increasing money supplies, encouraged swelling levels of debt, and a devaluing currency.  However, when a currency is backed by gold a limit is ultimately reached where citizens become privy to the money supply expansion and begin redeeming their paper money for gold.

Since the creation of the Federal Reserve, the dollar in 2007 has an equivalent values in purchasing terms of what could be bought with a mere $0.05 in 1913.  In other words, it has lost 95 percent of its value.

In 1971, President Richard Nixon officially severed the dollars backing by gold making the dollar an unbacked fiat (paper) currency.  Without this restraint on the money supply, the Federal Reserve could create – out of thin air – an endless amount of dollars.

And since 1971 the dollar has lost 80 percent of its value.

Whenever a central bank has managed a fiat currency, the result has always been hyperinflation.  This is the eventual gift of central banking and happens when the money supply has been increased beyond what the economy can consume.

Hyperinflation has happened in the United States before – during the Revolutionary War and again during the Civil War. It nearly happened again in the late 1970’s and early 1980’s.

Other instances of hyperinflation have occurred throughout history.  It happened in Germany’s Weimar Republic following World War I when they opted to try and inflate their way out of debt.

But the most remarkable of all was the government induced hyperinflation in France during the French Revolution.

In short, it was the greatest attempt ever made in the history of the world (until now) by a government to create an inconvertible paper currency, and to maintain its circulation at various levels of value.

The results were disastrous.  The nation was plunged into financial ruin.  Left in its wake was a legacy of moral and material desolation and woe.

Why the Stage is Now Set for Hyperinflation in America

In America today, the stage has been set for hyperinflation.  There are many factors contributing to the developing hyperinflation. 

Some of these include ballooning entitlement program costs, an out of control trade deficit, and a Federal Reserve Governor that is on record saying that the U.S. Government can “…produce as many U.S. dollars as it wishes at essentially no cost.”  And don’t forget the “bail out” that occurred in August 2007, by the major central banks of the world, to protect the banks from blowing up as a result of the mortgage meltdown.

The list can go on and on.  But, in the end, it will get out of hand, and paper currencies (including the dollar) will rapidly devalue, and could become absolutely worthless.

To find out how to survive the coming hyperinflationary depression go to: www.thenextgreatdepression.com.

Sincerely,

M.N. Gordon
Great Depression Online

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