Tuesday, June 1, 2010

The Weimar Parallels

Tyler Durden writes:

Thanks to our very own printing-historian hybrid, Ben Bernanke, all people who wish to understand the direction in which the economy is headed are now experts on the Great Depression. Yet more and more pundits claim that the true historical analog to our current tumultuous times are not the days after 1929, but the period between 1919 and 1923 in post WW I Germany, also known as the Weimar Republic. Attached is a summary presentation on the three critical pathways that shaped Germany in the interregnum, and set it off on a course to the Second World War. These three avenues were i)the infamous hyperinflation and associated meltdown, which even now is causing so much consternation for German politicians dealing with a suddenly printer-happy ECB, ii) the French invasion of the Ruhr, and iii) and the failed Munich Beerhall Putsch. As many see QE as a precursor to i) above, and ii) is currently playing out in various parts of the world to a lesser or greater extent, the question remains when will some disgruntled citizen rise out of the disenfranchised masses and replicate the so far missing iii). With recent developments within the tea party movement, and with the administration's plunging popularity rating, it is not a far stretch to see all three core Weimar "factors" replicated in our own back yard with a 90 year delay.
It should be noted that at present, as we have stated ad infinitum here at EPJ, there is no net new money  printing at present being orchestrated by either the Fed or the ECB, though that could change on the first signs of flight from the U.S. Treasury bond market. As for the restlessness of the masses, we do have that. The Weimar is not a direct overlay of the situation existing in the U.S., but there are enough parallels,and mirror-parallels,--no one is invading us, but we are invading others--and some may view Obama as a mirror leader--- that it is worth some study of the period.

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