2 lessons from history that will make you feel better about your stack

I picked up a few things recently, mostly curiosities rather than anything to collect. Anyhow, amongst the group of notes were a few remnants that will likely make your decision to stack seem like a pretty good idea. I'm sure there are lessons here somewhere.

first: a Weimar republic (German) 500 mark note from October 1922. That was a big note at the time, people were a little concerned about government money printing being carried out to pay off the national debt but it wasn't a crisis yet.

Source: the phrenzy collection


second: blink and you'd miss it, 10 months later in august 1923 this is the sort of thing you might see blowing around in the streets and being used in massive piles to pay for a loaf of bread, a 100 million mark note. People with Mark denominated debt (particularly for hard assets like home loans) did well as did people who had precious metals, hard currency and export businesses. People with savings were wiped out as was anyone on a fixed income (even people on floating incomes denominated in marks were pretty badly screwed).

Source:the phrenzy collection

The lesson here is that the value of fiat is determined only by two things, the value other people believe it has and the value of the paper it's printed on. Don't assume the former will always be more than the latter.


Next is something interesting from a little earlier, 5 and 10 ruble gold certificates/bonds from before the first world war. The size and scope of the war was a shock to everyone and just 5 years before it broke out I don't think you could find many people in Russia with enough money to buy gold that would have thoght that there wouldn't be a Russian empire in 10 years time. These bearer certificates were as good as gold in 1909, you could have traded them for gold.

Source: the phrenzy collection


Source: the phrenzy collection

The lesson? If it isn't in your hand then you don't own gold, you own a promise for gold that's only as worthwhile as the person issuing the promise. The Romanovs had ruled russia for centuries and appeared as legitimate and secure in their power as any ruling family in Europe.

The person who bought those gold certificates could have had one of these for the same price. Guess which one would have served him better in the next few years?

Source: not the phrenzy collection


Fiat VS gold and paper gold VS bullion aren't exactly new concepts, there are thousands of websites and threads repeating these ideas, but it puts it into sharp focus to hold the proof of their validity in your hands. Real people who handled and used these notes learned those lessons the very hard way.



I'm not an end is neigh kind of guy but if there is one thing I've learned studying history it's that sooner or later something historic is going to happen where and when you live. I stack because I like the hobby and I think there's some money to be made in the long run but it's nice to know that if the rubber ever really hits the road your stack comes built in with a little insurance against history catching up with you.

 

Very nice thoughts here phrenzy

 

,
post of the week.....


those who forget history are condemned to repeat it...
the bits of paper are very pretty. ........ but they are just bits of paper.


thanks for the post.

 

I read one "flyer", "short book" and started reading "book" from Bernard Von NotHaus, mastermind behind NORFED. I didn't know before that some time after Independece War USA had huuuuuuge inflation. They stopped it by guess what?

Going back to gold standard.

Btw: I like a lot some of the old, Imperial, Russian coins. I also have one old Russian note, I think a little bit before WW I.

 

the countries involved in the war all cut ties from their currency to the gold.
after the war the deutsch mark fiasco happend.. a few years afterwards the british, churchill and montagu, decided they should tie the pound to the gold once again. it turned out to be a total mistake and the economy was out of whack.

what is there to say that we should switch back to the gold standard

 

I have some Hungarian notes that illustrate it even better - over a period of months they progress from hundreds of pengo through to the same numbers but in milpengo (millions of pengo) then progress through to B-pengo (billions of pengo.
In the Australian Coin Review (I think) there was an article during the late '70s on the inflation period in Germany and they cited people taking their daily wages home in a wheelbarrow (seems improbable that it was worth printing the stuff) but also of a lady selling a block of flats and using the proceeds some weeks later to buy a pair of shoes.
In China in the same period they stopped putting denominations on postage stamps but showed pictures of the service you got for that stamp, and the stamp was sold at the going rate for the day
The only reason that I can see that a return to a gold standard doesn't work is that we are addicted to debt, primarily through borrowing off the future. We need to spend within our means, both personally and as a nation.
I see being a stacker as, at least partially, being financially responsible.

 

I have a Szazmillio-B Pengo note, 100,000,000,000,000,000,000 Pengos, I am not sure if the note was too small or maybe they didn't have the guts to write it out in full but it is only written in words not numbers.

I have one of the Egymilliard-B Pengo (an extra zero) but I will have to check that it is genuine, I got it from eBay.

 

So, how do you as a Govt. Crony recover from a hyperinflation and everyone has lost faith in paper currency but you have no gold or (more likely what's coming) don't want your citizens to use gold?

Google "Rentonmark"

I reckon this is a scheme that governments will try .... afterwards.

 

The thing is that there is good debt and bad debt. If your borrowing 5 billion dollars to develop has fields that will generate 50 billion in economic activity then that's good debt.

I think any form of saving in the current climate of no money down interest free culture is a good thing, stacking doubly so. Of course the economy negs a certain level of spending and too much saving, particularly saving without investing, isn't good either but when we become a nation of debters as well as a nation with debts then more people than not, including those fishing for votes, have reasons to wipe the value of debts through inflation at the expense of the responsible savers.

I think part of the problem is that Australians and Americans have been massively sheltered from all sorts of things. War, famine, economic chaos and political turmoil are things that happen in other places. I don't think everyone needs to go doomsday prepper but I don't think everyone should walk around with a "never ever" and "never" here mindset, particularly on a national level. It doesn't have to be an obsession and I don't think we're facing anything imminently awful but an ounce of prevention is always a good idea.

 

Bimetallism for the win.

J/k

 

"...If 10:1 was the actual supply ratio of the two metals, as of the mid-1980's; this provides further ammunition for those commentators arguing that the actual above-ground ratio of the two metals is now roughly equal. In turn; this supplies much more emphatic support for the conclusions of a recent commentary: $1000/Oz For Silver (Today), A Starting Point.

The long-term, historic price ratio (15:1) mirrors the actual supply-ratio of the two metals in the Earth's crust: 17:1. This means that humanity has always had an equal preference for the two metals, subject to their level of availability. When silver was available in 17:1 quantities; it was (historically) always priced that way.

Now, with existing stockpiles for the two metals roughly parallel today; this dictates parallel prices today. Indeed, with silver being so vitally important in numerous commercial/industrial applications; this strongly suggests that it should now be priced at some premium in relation to the price of gold.

It should be highly interesting to silver investors (in particular) and anyone interested in preserving their wealth (in general) that a $1,000/oz starting price for the price of silver today has been produced through two, totally separate avenues of analysis. Meanwhile, as just explained; the suicidal race-to-implosion by the banksters themselves in this market must be close to its ultimate, inevitable end, no matter what "secret stockpile" of silver they have amassed previously, or what crimes they commit in this market.

The re-pricing of silver is an imminent, inevitable event, one that the One Bank is pushing us towards, at an accelerating rate. The fact that such re-pricing must be a "radical" move higher in the current, phony price is simply a function of the extreme level of price-perversion in these markets as evidenced by the difference between our legal price ratio between gold and silver, versus the (manipulated) market price ratio."

For entire article " Legal Tender Coins Shed Clues On Bullion Racket, Part II " :

http://bullionbullscanada.com/silve...er-coins-shed-clues-on-bullion-racket-part-ii