In response to those who requested some more information on the many similarities I noted between the Germany hyperinflation and events in the US today, I offer the following. I apologize for the length, but I find the number of comparisons striking:

· Paper marks severed from gold in 1914. The hyperinflation ended in 1924. Our dollar was severed from gold in 1971. We have obviously taken longer to get to the end stage but it is coming.

· In Germany the money supply doubled from 1914 - 1918. The US is currently at a 16% M3 growth, which equates to doubling money supply every 4.5 years.

· In Germany there were several interventions by central banks in foreign exchange markets to try to stabilize the mark. This was fruitless because Germany was at the same time increasing its money supply rapidly. Both of these conflicting forces are happening in the US today.

· The German government only collected 1/8 of expenditures by taxation. This allowed the government and therefore citizens to live beyond their means. Including the US unfunded liabilities, we are doing the exact same thing today, living well beyond our means both as a government and as individuals.

· Inverting cause and effect, the German government blamed rising prices for inflation, instead of the other way around. You hear this every day from the FED and on CNBC.

· In Germany the poor and middle class demanded printing of new money to help with social problems. The resulting inflation hurt them the most. Rebate checks, social welfare, nationalized mortgage industry... it is the same here today, and the same classes calling for it will be hurt the most.

· From 1914 - 1918, internal prices increased less than increase in money supply. We are currently in this stage. After 1918, as the increase in money velocity occurred, internal prices increased exponentially faster than the increase in the money supply. This is still ahead of us in the US.

· The German press severely criticized the actions of speculators. Same rhetoric today, even though "speculation" today means exchanging dollars for real assets like precious metals or oil.

· The Germany government's interest in public debt did not increase as general prices did: this is good for government looking to get out of its obligations without formally having to default. This will also be a way the US government handles its unmanageable liabilities.

· A theory was proposed that the depreciation of the mark was beneficial to the economy because it stimulated exports. This belief held until the mark lost so much value as to cause complete atrophy of the internal business environment. The same rhetoric is around today, that the depreciation of the dollar is actually a good thing for exports. This will change when the dollar depreciates so much that we can no longer afford to import basic necessities.

Now some actual quotes from Turroni that I found amazing. My comments follow:

"Those who in Germany in the post-war years considerably increased their own fortunes or who became new possessors of huge fortunes, were mainly those men who understood before others the phenomenon of inflation, and who, foreseeing the continual depreciation of the German currency, used this knowledge in all their financial operations." (p.291)

"At certain times, as in October 1921, July and August 1922, and January 1923... the purchase of foreign exchange [back then the dollar was backed by gold so people purchased dollars; today no currency is backed by gold] by the public reached pathological proportions. The situation of the foreign exchange market then appeared completely dominated by the public, which were the results of the panic created by political events." (p 88).

This will be the mania phase in the gold bull market, driven by fear, that we have not yet entered.

"Under the influence of the inflation an increasing disorganization had been manifest in many branches of German industry. There was a mania for grandiosity, everyone being able to pay with a depreciated currency, which was the cause of frequent bubbles." (p. 389)

Compare with technology/NASDAQ industry in late 1990's, housing and banking industry in 2000's.

"Experiences in Germany in those years showed the obvious errors of those economists, politicians, and representatives of big industry who for a long time insisted that the stabilization of the value of the mark would be the consequence of recovery of the economic situation, and that, therefore, it was vain to think of monetary reform before the economic premises were established. In vain did Germany for years await the arrival of these "premises." In the meantime the disequilibrium produced in the Germany economy by monetary instability was more and more aggravated." (p. 391)

This is the attitude taken by the FED today. Let's first fix the financial system, then we will be able to deal with the inflation afterward (i.e. the dollar will strengthen if we print more to shore up the financial system).

"Many times I have pointed out in this volume psychological causes of the fall of the mark. Recent monetary history includes several cases in which confidence in a currency was re-established by the energetic declaration or measures of a Government and the process of depreciation stopped at once. One must observe, however, that the confidence based on such declarations and acting as a powerful support to the value of the currency , even diverting speculation from direct operations against it, is maintained and strengthened only if the public knows that the issues of money are strictly limited; if they are continued the wave of confidence is quickly broken."

At the beginning of the inflation, when the public still did not understand the phenomenon of monetary depreciation and attributed the rise in prices to other causes, confidence in the depreciated money was maintained for a time in spite of the rise of [note] issues; but in the later phase each new issue weakened confidence more and more." (p. 403)

Compare with current US rhetoric about a strong-dollar that has no fundamental policy backing.

Compare with the dollar rising as the FED prints money to bail out Bear Stearns, Fannie Mae, Freddie Mac, etc. At some point, when the general public understands that these actions are inflationary, the confidence will be broken, and each new printing of dollars will weaken the currency.

-Hysteria