US Bankers Warn: Weimar Hyperinflation Is Coming To The U.S. - The roaring '20s!


Update (1815 ET): one day after the Weimar tweetstorm below, and shortly after our article came out, Burry tweeted the following:

People say I didn't warn last time. I did, but no one listened. So I warn this time. And still, no one listens. But I will have proof I warned.
Indeed he will.

* * *

One week ago, Bank of America hinted at the unthinkable: the tsunami of monetary and fiscal stimulus, coupled with the upcoming surge in monetary velocity as the world's economy emerges from lockdowns, would lead to unprecedented economic overheating... or rather precedented as BofA's CIO Michael Hartnett reflected back on the post-WW1 Germany which he said was the "most epic, extreme analog of surging velocity and inflation following end of war psychology, pent-up savings, lost confidence in currency & authorities" and specifically the Reichsbank’s monetization of debt, and extrapolated that this is similar to what is going on now.

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There is, of course, another name for that period: Weimar Germany, and because we all know what happened then, it is understandable why BofA does not want to mention that particular name.

Of course, others have been less shy - in 1974, Jens Parsson wrote a fascinating, in-depth historical analysis of the hyperinflationary collapse of Weimar Germany under the original money printer, Rudy von Havenstein, "Dying of Money: Lessons of the Great German and American Inflations" one which we periodically remind readers is absolutely critical reading in preparation for what comes next.

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Then overnight none other than the Big Short, Michael Burry, who has been rather busy making waves within the financial community with his hot takes (most recently, his slam of Robinhood and his bullish view on Uranium), picked up on the theme of Weimar Germany and specifically its hyperinflation, as the blueprint for what comes next in a lengthy tweetstorm cribbing generously from Parsson's seminal work. And while the details are familiar to most monetary historians, the fact is that now none other than the man who was made famous in the Big Short is calling for Weimar-style hyperinflation in the US. Below is an easily digestible repost of Burry's lengthy Saturday tweetstorm, which shows just how similar our world is to that prevalent in the years just before Weimar Germany saw the most explosive hyperinflation in history.

The US government is inviting inflation with its MMT-tinged policies. Brisk Debt/GDP, M2 increases while retail sales, PMI stage V recovery. Trillions more stimulus & re-opening to boost demand as employee and supply chain costs skyrocket. #ParadigmShift
The US government is inviting inflation with its MMT-tinged policies. Brisk Debt/GDP, M2 increases while retail sales, PMI stage V recovery. Trillions more stimulus & re-opening to boost demand as employee and supply chain costs skyrocket. #ParadigmShift https://t.co/kNT4memOVt pic.twitter.com/Bdw1CDn3Yf
— Cassandra (@michaeljburry) February 20, 2021
"The life of the inflation in its ripening stage was a paradox which had its own unmistakable characteristics. One was the great wealth, at least of those favored by the boom..Many great fortunes sprang up overnight...The cities, had an aimless and wanton youth"

"Prices in Germany were steady, and both business and the stock market were booming. The exchange rate of the mark against the dollar and other currencies actually rose for a time, and the mark was momentarily the strongest currency in the world" on inflation's eve.

"Side by side with the wealth were the pockets of poverty. Greater numbers of people remained on the outside of the easy money, looking in but not able to enter. The crime rate soared."

"Accounts of the time tell of a progressive demoralization which crept over the common people, compounded of their weariness with the breakneck pace, to no visible purpose, and their fears from watching their own precarious positions slip while others grew so conspicuously rich."

"Almost any kind of business could make money. Business failures and bankruptcies became few. The boom suspended the normal processes of natural selection by which the nonessential and ineffective otherwise would have been culled out."

"Speculation alone, while adding nothing to Germany's wealth, became one of its largest activities. The fever to join in turning a quick mark infected nearly all classes..Everyone from the elevator operator up was playing the market."

"The volumes of turnover in securities on the Berlin Bourse became so high that the financial industry could not keep up with the paperwork...and the Bourse was obliged to close several days a week to work off the backlog" #robinhooddown

"all the marks that existed in the world in the summer of 1922 were not worth enough, by November of 1923, to buy a single newspaper or a tram ticket. That was the spectacular part of the collapse, but most of the real loss in money wealth had been suffered much earlier."

"Throughout these years the structure was quietly building itself up for the blow. Germany's #inflationcycle ran not for a year but for nine years, representing eight years of gestation and only one year of #collapse."

His punchline: the above was "written in 1974 re: 1914-1923" and then makes the ominous extrapolation that "2010-2021: Gestation" adding that "when dollars might as well be falling from the sky...management teams get creative and ultimately take more risk.. paying out debt-financed dividends to investors or investing in risky growth opportunities has beaten a frugal mentality hands down."

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We are there now. The only question is when do we enter the exponential currency collapse phase.




What's old is new again.
 
This will completely fuck us, since virtually every other world currency had hyperinflated (or at least inflated to an insane degree) at one point or another and the only reason the dollar has value is that it had avoided hyperinflating up to now.
 
I have a degree in finance. I took enough economics classes to make your ears bleed.

The financial policy that Trump, and now the Biden administration, has adopted is absolutely ludicrous. Josh mentioned today on MATI that Biden is walking back the stimulus checks, and he makes that out as if that's a symbol that Biden is two faced. No, that is absolutely not true. Biden is not giving out massive stimulus checks because he doesn't want to (you know he does), he's not giving out stimulus checks because even he isn't that retarded. Money literally only has one purpose. To be a representation of value. When you boost the money supply dramatically through government programs, like we've seen since early 2020, without increasing economic output (or reversing Economic output by shutting down """Non-essential""" businesses), then you're going to get inflation. Under normal circumstances, increasing the money supply to respond to a recession is fine, because inflation usually comes with a temporary boost to output before returning to normal output at inflated prices. We didn't have that boosted output though because governors like Whitmer, Newsom, and Cuomo kept their states shutdown. If we continue issuing stimulus checks right now without boosting output by ending the lockdowns, then we're going to literally dig ourserves into a pit that we can't get out of.

The Trump administration's monetary policies were retarded, but not entirely his fault. His plan was to get out stimulus checks, and have the economy reopened so people could spend those checks and boost output. On the federal level, this monetary policy was no different from usual responses to recessions. On the state level though, officials refused to open their economies because "If lockdowns save even one life, it will be worth it" and they knew any economic fallout would be blamed on Trump. What we saw this past year was essentially the same thing as the Titanic's first mate purposely plowing into an iceberg because he knew the captain would take all the blame for the ship sinking. That is why Republicans responded so harshly to lockdowns last year.

Biden's policies are literally retarded beyond belief. He's doing what Trump did with the stimulus checks while at the same time exporting industry abroad by removing Trump's economic sanctions/protections, and he's further pushing to limit domestic production by telling governors to strengthen their lockdowns. If I can give him anything though, he's at least not so absolutely retarded that he's sending out 2k checks every month like people like Sanders and AOC wanted. At least now that the vaccine is out, production should hopefully return to normal soon, but the longer we stay inflating the money supply without returning production to the usual level, the worse the inflationary effects will be when they finally hit the economy.

The worst part is """They""" (both the elites, politicians, and whoever else you're thinking of) already know about this. I regularly brush shoulders with people who are a magnitude smarter than me, who are industry leaders. Everyone knows this is going to happen and we're going to spiral into massive inflation, if not hyper inflation. They don't particularly care though. They've already off loaded their assets into inflation proof investments like gold and real estate. In fact, they have a term for it. I forget it off the top of my head, so if anyone knows it please share it, but it's essentially "If the government can print money to pay its bills, it should. It should not have to rely on tax payers to fund its projects". I hope you can see why this is absolutely retarded, but there are many, many people out there who believe that the government should be kept afloat solely by their ability to print money. Just writing this makes me mad. How can a man save and better himself if his earnings are worth half after a month? Some inflation is good because it pushes us to work harder and not just rest on our laurels, but the fact that there are unironically people out their that believe Weismar levels of hyper inflation is not only a good thing, but should also be monetary policy, is absolutely absurd.
 
The rampart degeneracy and financial fuckery all blatantly Jewish backed one way or the other on top of an incredibly demoralized population looking for anyone strong with a shred of charisma to lead them really makes me believe the 4th Reich may seriously end up as more than just a meme. History does seem to be repeating itself.
 
I have a degree in finance. I took enough economics classes to make your ears bleed.

The financial policy that Trump, and now the Biden administration, has adopted is absolutely ludicrous. Josh mentioned today on MATI that Biden is walking back the stimulus checks, and he makes that out as if that's a symbol that Biden is two faced. No, that is absolutely not true. Biden is not giving out massive stimulus checks because he doesn't want to (you know he does), he's not giving out stimulus checks because even he isn't that retarded. Money literally only has one purpose. To be a representation of value. When you boost the money supply dramatically through government programs, like we've seen since early 2020, without increasing economic output (or reversing Economic output by shutting down """Non-essential""" businesses), then you're going to get inflation. Under normal circumstances, increasing the money supply to respond to a recession is fine, because inflation usually comes with a temporary boost to output before returning to normal output at inflated prices. We didn't have that boosted output though because governors like Whitmer, Newsom, and Cuomo kept their states shutdown. If we continue issuing stimulus checks right now without boosting output by ending the lockdowns, then we're going to literally dig ourserves into a pit that we can't get out of.

The Trump administration's monetary policies were retarded, but not entirely his fault. His plan was to get out stimulus checks, and have the economy reopened so people could spend those checks and boost output. On the federal level, this monetary policy was no different from usual responses to recessions. On the state level though, officials refused to open their economies because "If lockdowns save even one life, it will be worth it" and they knew any economic fallout would be blamed on Trump. What we saw this past year was essentially the same thing as the Titanic's first mate purposely plowing into an iceberg because he knew the captain would take all the blame for the ship sinking. That is why Republicans responded so harshly to lockdowns last year.

Biden's policies are literally retarded beyond belief. He's doing what Trump did with the stimulus checks while at the same time exporting industry abroad by removing Trump's economic sanctions/protections, and he's further pushing to limit domestic production by telling governors to strengthen their lockdowns. If I can give him anything though, he's at least not so absolutely retarded that he's sending out 2k checks every month like people like Sanders and AOC wanted. At least now that the vaccine is out, production should hopefully return to normal soon, but the longer we stay inflating the money supply without returning production to the usual level, the worse the inflationary effects will be when they finally hit the economy.

The worst part is """They""" (both the elites, politicians, and whoever else you're thinking of) already know about this. I regularly brush shoulders with people who are a magnitude smarter than me, who are industry leaders. Everyone knows this is going to happen and we're going to spiral into massive inflation, if not hyper inflation. They don't particularly care though. They've already off loaded their assets into inflation proof investments like gold and real estate. In fact, they have a term for it. I forget it off the top of my head, so if anyone knows it please share it, but it's essentially "If the government can print money to pay its bills, it should. It should not have to rely on tax payers to fund its projects". I hope you can see why this is absolutely retarded, but there are many, many people out there who believe that the government should be kept afloat solely by their ability to print money. Just writing this makes me mad. How can a man save and better himself if his earnings are worth half after a month? Some inflation is good because it pushes us to work harder and not just rest on our laurels, but the fact that there are unironically people out their that believe Weismar levels of hyper inflation is not only a good thing, but should also be monetary policy, is absolutely absurd.
People have been saying we were on the road to this point once the "quantitative easing" BS was being implemented.
It was only a matter of time.
Thanks, Nixon. Getting us off the gold standard was stupid beyond belief.
 
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