Some have asked, so just to confirm, this is Episode 1 of a series on the Weimar Hyperinflation. This video covers the period from the pre-war to 1918, and the rest of the series will go from 1918 to 1923 (and beyond). Once I've done the Weimar Hyperinflation, I will do more on other economic topics, which is why I've called it "BankWars".
fiat currency is money. Money is defined by state power as a medium of exchange. It might be a money you hate, but it is one because it is a medium of exchange defined as such by state power. You might want to read what Aristotle and Plato have to say about money...
@@QuizmasterLaw "Money is defined by state power as a medium of exchange." Money existed before governments did. Money is commodities traded as a means of exchange. Currency is what fiat is. Fiat is not a money.
@@elLooto debt isn't created by the government, it's created by the central bank who is in control of the finances of the country. The Federal Reserve prints out whatever money it needs & charges the government interest on it. The United States owes nearly $30T to the Federal Reserve, a privately-owned bank entity.
@@assassinsrequiem Youre not wrong. Currency is created by loaning it into existence, as a consequence of the E = A - L double entry bookkeeping/accounting formula. The debtor (whether government, business, homeowners, or credit cards et al) is required to create the currency, not just the bank in question. As a further consequence, currency is destroyed by paying the principle of a debt. This is why government cannot pay off its debts; it would destroy the currency base that is the foundation of the private lending (ie home and business loans) credit markets, which is to say every dollar/mark/euro/ruble/yuan/whatever in circulation. The difference between government and the others mentioned, is the government absolutely knows of this relationship, since they create the legislation required to create the central bank that 'buys' their bonds in the first place. This is irrespective of whether the central bank is "private" or "public." This is why public debt is never repaid (just go to your local central bank website to see the graph of public debt with its positive slope almost without exception over the last century or so), and as a result we are still paying interest on debt created for (eg) WW1, over a century ago. Central banking creates lifelong debt slavery. This is why socialists have no problem with, and actively advocate for, central banking. I might have an economics degree, with a specialty in taxation (and its history) ;)
@@elLooto yeah, they know the relationship of the debt, but government did not create the central banks. Government was bought by the central banks, then laws & institutions were installed by the dark money to create this system of oppression to which they can control the flow & value of currency. There is a video (cartoonish) made to describe how old money created fiat currency & control nearly all the government in the world (save for Cuba, Iran, and North Korea). Before 2000, there were 6 counties that did not have a central bank, they included Libya, Syria, and Afghanistan as well... guess who the U.S. went to conflict/war with after 2000? ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-mII9NZ8MMVM.html
TIK just puts out an entire thesis every single video and it's some of the best researched stuff out there putting professors to shame. Outstanding work and dedication
One point missed, but insignificant to the larger point TiK is making, is that why Gold even became the standard. It's not, as the author he quoted said "because it's shiny and people like to make jewelry out of it" but because it has 0 loss. In ancient times it was one of only a couple known materials that could retain it's full weight, hence it's value, over time. No matter how many times you remelt it it remains the same. It does not rust or decay. Yes there were gems that also have 0 decay, but you cant melt it combine it with other gold and use it. Once you chip a diamond, it's always chipped. We now have "rare earth minerals' of which some of these newly discovered materials also have similar qualities, but to the ancients it was primarily gold. Silver also has and has been used in certain nations instead of gold, but because of it's abundance, doesn't have international value for trade that gold does. Nor does it have as many actual uses because simply a value holder. 0 loss is somewhat of a misnomer. Gold does have some loss when smelting, but it so so low it would take constant smelting over hundreds of years for that loss to significant enough to be noticeable. We are talking something like 0.000000~1%. Only extremely low low quality or Fools Gold has greater loss.
One important quality that gold has is that it is relatively rare and its production can't be ramped up quickly. That principle was violated when the Spanish plundered America in the 16th century. They flooded Europe with gold, which, as expected, led to an inflation. So, it's not that paper currency is fundamentally different from gold currency. Both will have inflation if the production increases faster than the rest of the economy (which is actually the key point that TIK missed). Printing fiat money when the economy is growing (more products in the market) does not lead to inflation but only negates deflation. By the way, if someone figured out a cheap way to mine a metal asteroid that contains massive amount of gold and other valuable metals, the price of them would immediately plummet.
"Money printing" isn't impossible with gold coins. There were debasement: government collecting the coins, melt it down, mix it with other metals, and inflate the numbers. People clip the edges, put them in a bag, shake them and get some of the gold dust loose. Yes, you can keep the "good" coins, but the end result is still mostly the same.
Well, actually they do lose weight over time to friction and dust, especially gold which is rarher soft. There's a famous story of an old time banker that'd count the gold over a napkin and would take it home, burn the napkins and extract some extra good to keep. But yeah, even with all the possible losses in melting and friction, the price would still be far more stable than government issued toilet paper. As someone said, gold and silver can also be 'faked' by government adding other metals in to increase the currency supply, as happened in Rome for example... But this also operates from the assumption that government would own the currency, which definitely shouldn't be the case. And I think by today we can even make machines that would be able to analyze the purity of coins and their exact weight, regardless of their shape, so we'd definitely be able to trade gold, silver and other metals pretty well as physical currency.
Another often overlooked factor is that you can find almost pure chunks of it. It is the most common metal to be found in nuggets. Silver, Copper and Platinum can also be found in nuggets, but Gold is by far the most common one to be found that way. For example, the biggest nugget ever found was found in Australia and weights 78kg, 73 of which are of pure gold. The ancients found a chunk of it, found it pretty and easy to shape, and that's probably how it became valuable.
I am totally obsessed with your content. You've taught me, in the most professional way, things I didn't even know I needed to know. You've provided new pieces to a puzzle I thought was already complete. It's bittersweet, to say the least.
One small thing that I figured I should mention - those books might be incorrectly named "Downfall of Money" instead of "Downfall of Currency" because authors often don't control the name or cover art for their books. Very often the publisher decides what the book will be called for the purpose of advertising, or what sounds best. Even if they did decide, they may have felt like "Money" was a more appealing word and would draw more readers, and named it accordingly.
In the US, in 1933, FDR also confiscated American’s gold by means of the Gold Reserve Act. FDR (and to some extent Hoover) turned an economic downturn into the Great Depression which lasted for about a decade. He was a true socialist, and largely responsible for steering the US towards socialism; but he also was a naturally born politician.
Considering how misunderstood inflation is in the modern times; I’m looking forward to more Bank Wars. Also I bought that Henry Hazlit book at your recommendation. Great read. Edit: I love how you call them komissars :)
Most Universities teach inflation as the Keynesian definition of "an increase in the general price level of the economy" which is, at best, a multivariant definition and thus more or less useless. Most of my professors didnt seem to appreciate that M2 money [currency] supply is a fantastic leading indicator of inflation. Almost all western counties have an M2 inflation about 7%. Which is, incidentally, about the rate of housing inflation.... wonder why ;)
The currency history of the US is interesting. Originally the US government used foreign coins especially Spanish dollars from which the term 2 bits for a quarter comes. In the 19th Century there was no central bank, so state and private banks issued banknotes. If you travelled from Boston to Florida Boston Bank notes became useless, so, like pre-Euro Europe it was necessary to change currency in each state [incurring loss during each transaction]. I've seen photos of shops in NYC with a signboard giving prices for various banknotes, a lot like the ones I saw in Europe in the 1970's. BTW if you have a demonetized US bill for $50 [Gold or silver] the Federal Reserve will redeem it for the face value. That would be foolish because a numismatist would probably pay more for it, as a collectable antique commodity. Ditto for old US coins, they are still legal tender at face value, even if the date and content would make them worth more.
It's still crazy how "recent" this era was and how we still learn something from it. My grandpa always talks alot about this era as he was born during the great depression, I still can't wrap around how crazy that inflation problem really was, I still struggle to explain this to others to the point that I've actually made someone cry because they couldn't understand why it happened.. With that said, great video as always!
Here's another lesson: whenever there's a big war in the offing, governments will take control of assets, both human and monetary. Look what's happening now, and think about what it means.
I admire how this video already starts with subtitles while it was uploaded, it shows that you really have time and patience for your detailed content. Good work!
@@TheImperatorKnight somehow in these very dangerous times i find it hard to make time to watch videos on War, yes even your great vids about the Stalingrad battle Tik, though i am a fan of your great work on it.. Your upcoming videos about this timely and very important subject is however Very welcome 👍 Hopefully it makes a Difference. Knowledge, True Knowledge and Understanding can make a difference. God bless you and your family Tik
(German) Economist and former civil servant of German central bank here, I have to say I enjoyed a very competent video, imho. Well done, respect. But when the definitions of inflation and deflation are discussed, well, historically you are more accurate, nevertheless it would be useless to fight the modern definitions as rising or falling prices that are by now all too well established and cemented in the public mind. From a Misean, Rothbardian perspective however your position on this is concise, agreed! PS: my much preferred Italien pizzeria here just recently raised most of his prices by 15 to 20%! 🥶
Mises and Rothbard were wrong about money creation. They both preached the debunked "Fractional Reserve" theory of banking. This nonsense theory was debunked in 2014 by Richard Werner who proved that banks create 100% new money when they issue loans with no need for prior deposits or reserves. Werner did this by studying a bank during the loan creation process. He observed that the money being lent was not transferred from any account inside or outside the bank. It was 100% new money created as a book-keeping entry in the bank's computer. The bogus "Fractional Reserve" model lied and said the money being lent by banks existed in an account somewhere prior to the borrower arriving. bankLIESdot ORG
This is odd, for just 15-20 years ago I still learned it as TIK explained... though not from school or parents. I can't even say where from, yet it was during a time I was still in school.
@@widehotep9257 I respect Werner very much. That being said Mises and Rothbard pleaded for a Gold Backed monetary system which was and would be very different from the Fiat system we live in right now.
The mythological entity called "the State" is the key to understanding this. America was founded very explicitly as anti-State. But because we did not have clear mechanisms in place for the People to exercise authority over elected and appointed public officials, "the State" has emerged as the new master. This presentation is one of the few that directly calls out "the State" as the new/old for Brits, owner of the land etc. America's way forward, (I can only speak for America), is to castrate "the State" and its stranglehold on authority. The division of power among the various branches of government is no longer a sufficient check on state tyranny.
@@ikiyuz4344 no. In theory evrything is owned collectively by evryone. In fascism its owned by the state. That's the difference. Hatred is part of both in the sence or nationalism in the belief ones group is superior to others (not necessarily race) and in Hatred for the capitalist and people think differently.
Hi TIK, I`m from Serbia.As you already know,we had a very ugly civil war in Yugoslavia.Due to that civil war we in Serbia had hyper-inflation.Believe me,inflation in my country between 1990-94 was almost like in Germany 20`s.It was really madness and unthinkible.So,this excellent video is great lesson for anyone who didn`t live in hyper-inflation...greetings and all best I wish you in your life and work😉
@Ho Lee Fukk I'm assuming you're referring to Russia in the 1990s. But Russia also went through a hyperinflation during the Russian Civil War, and I'll be briefly mentioning this in this series because it's relevant to what happened in Germany at the time.
actually inflation in Yugoslavia, similar to Germany, started way before the 90s, in 1945 the USD to dinar exchange rate was 50.6, in 1965 it was 1250, arguably, socialist Yugoslavia was always hyper-inflating, it just that in the 80s it reached astronomic heights. Sadly people still today about it as golden times, while forgetting that the government was funding it's social programs through massive inflation. My dad grew up in a major steel-town and remembers workers waiting for their freshly printed wages to arrive by helicopter.
Yep, and in hindsight it is most interesting how the Yugoslav hyperinflation stopped - it was the government that decided to stop it at a certain point, when in fact some factors connected to the predominant narrative (like international embargo and the war) didn't cease to exist.
just before Germany started using the Euro, there were still commonly used silver coins of 5 Mark or 10 Mark. I still have quite a few of those. their "value" as compared to the exchange rate between German Mark and Euro is now WAY above what I would have gotten for them had I exchanged them at the bank when the Euro was newly introduced.
@@TheImperatorKnight They were supposed to be a kind of guarantee for later, which is why my whole family collected them, put them into folders and stored them since.
@@TheImperatorKnight gold, actually. and ofc real estate (to live in!) your video about depressions and recessions really makes me shy away from stocks at a time like this, tbh.
This dude has done more to flip the script on what people assumed about ww2 then anyone else imo. At least on youtube.I don't agree 100 of course but keep up the awesome work
I'm glad to hear that! Takes the sting off the fact that this is the worst performing video of mine out of the previous ten ☹️ I guess the majority of my viewers are here for tanks, not history
Not all of us are here for tanks. I’ll second Shiniqua and say more econ history please. It sets the context we don’t get at school or in documentaries on the telly.
@@TheImperatorKnight let's not fight amongst our selves and start kicking arse the ignorant Economists academics and Game CAcademics from Neoliberal institutions.
@@TheImperatorKnightYou present the most objective and honest videos that make distinctions where it’s important to do so, but your videos in economics are more crucial in the sense that it’s the least well-educated in most curriculums (probably deliberate) and to integrate that with history is a feat too important to ignore. Much appreciation TIK for what’s obviously a LOT of dedication and hard work.
This is, BY FAR, the most important video series I have ever watched, and I’m barely at the end of the second video in it. These 2 videos, are chillingly relevant, to the modern US. It’s absolutely terrifying, just how easily, you can replace their gold standard with modern fiat currency, and the propositions for central bank digital currencies with their fiat currency.
@@TheImperatorKnight Hopefully in the future, when youtube finally wants to become television (and wipe out history channels of any kind for "potential problematic content"), you can loosen a bit with the modern controversial topics, like Brexit and the Armenian genocide.
Good to see TIK sticking to banks! Reading What has Government Done to Our Money was a huge eye-opening experience for me, so thank you for suggesting the book in one of the Q&A videos ages ago.
I would also recommend Rothbard's "America's Great Depression" which I think knocks the ball out of the park. It's available for free here mises.org/library/americas-great-depression
Rothbard was wrong about how banks function. He preached the debunked "Fractional Reserve" model. Richard Werner proved empirically in 2014 that banks create new currency when they issue loans with no prior need for reserves or deposits. Werner proved that over 95% of the currency supply is created by private banks issuing loans, NOT by the governments or central banks. The bogus "Fractional Reserve" model pretends that the money being lent exists in an account somewhere before the borrower arrives at the bank. Why would Rothbard and the Austrians push this nonsensical myth for decades without ever testing to see if it is true?
I have to comment again. You are %100 correct on the definition of inflation! This is an insanely good video on economics. Please do more. This is incredible. You are an Austrian economist. Spread the knowledge
Stellar stuff I kept telling my friends (without knowing what the people you mentioned said) that yes there is more money, but not more things. And we're in a very bad spot now (and setup to be in a bad spot) as consumers.
Especially since everybody else doesn't have more things either. The US has gotten away with printing IMHO because its denominator was not US GDP but world GDP. The party's over, folks.
Hell yeah, This is the stuff that catches my attention now. So much of WW2 and the Nazis gets covered but often the topics that are timeless are ignored. What I mean by that is the Nazis aren't coming back but the circumstances that created them will.
They might come back. Nazi raise to power isn’t just because economy is bad or nationalism is high. It’s undereducated fanatic slaves following an evil master. And trust me people are dumb these days. Nazis will come back, just under a different name.
@12:20 - Excellent presentation on inflation. Rising prices are not inflation, they are a symptom of inflation. This is because the currency supply is a commodity. If there is more currency (means of exchange) and the same level of demand (available tangible commodities) the 'value' of the means of exchange decreases. Anyone in the USA needs to understand this. The reason we are experiencing inflation is because of runaway government spending over the past 3-4 years. That spending has been done through the issuance of new debt. That issuance of new debt expands the currency supply (aka monetary supply). Enjoying this discussion.
Currently it has 3,117 likes and 90 dislikes, so that's a 97.2% like to dislike ratio. RU-vid still allows creators to view the dislikes, and I wish there was an option to show dislikes again because I prefer them to be public
Anyone that lives in the US and has not made the connection between the government distributing checks directly to the populace with no concomitant increase in production (in fact, a contraction) and the surge in prices just will never get it.
@@Edax_Royeaux as TIK mentioned in the video and as does anyone with any background in economics is aware, inflationary effects take time to impact. And in the context of a global crisis where global demand is certain to plummet the one commodity which drives all economic activity for transpiring physical goods AND requires significant storage AND with the cost of incremental production close to zero (due to the low ratio of la or to capital) then it is quite obvious that a short term inflationary effect would not exist. Oil prices are also impacted by so many other factors not related to governments directly distributing checks to citizens such as hostility to the production of said commodity va alternatives and the political relationship to the largest global producers (I.e. Saudi Arabia). No one with any sense expected a rise in prices for consumption commodities to occur until economic activity started to recover. But please do tell how the stock markets and the crypto currency markets reacted to the expansion of the money supply in a time frame of < 3 months? I can tell you that is where the checks I received went to and I am sure I was not the only person doing this.
@@Edax_Royeaux It should also be noted that there were governmental actions taken that had an effect on stabilizing prices where the normal reaction would be for prices to rise. For example, it is kind of difficult for a landlord to raise rent to a tenant that has the option to forgo paying any rent without suffering any consequences. Large supermarket chains are at risk of not only angering their customers, but drawing the ire of the media and government regulators by increasing prices in response to demand (hence the shortages of specific items during the early stages of the pandemic). The perishable nature of many essential commodities inhibits consumers from storing large quantities otherwise it is likely we would have seen hoarding of foodstuffs and other perishables or any other items that require a lot of storage space. Because of the economically irrational laws against "price gouging", there is no rational basis for hoarding at the commercial level (see the story of the man in the US who went across several states to purchase essentials with the idea of re-selling him and the governmental reaction to these actions).
Sadly that's most! They dont even understand what Fiat means. They dont understand the thing they love more then anything else, they worship fake money, and they're to stupid to understand its worthless. Heck they think the Government prints the currency. Smdh
@@Edax_Royeaux That's the thing, there is a tipping point with Fiat currency. Once it goes over this waterfall, the value falls faster than it can be exchanged. The challenge is understanding the forces(besides rampant printing) that lead to it's loss of efficacy as a medium and store of value. Populace sentiment is probably theost important factor.
There is no better time to make this series as the one we live in right now. Funny how many people think printing money has nothing but benefits and inflation is a right wing mith. Nice job Tik
I agree, it is good timing. Part of the reason I wanted to do this was because I personally wanted to figure out if what we hear about inflation (from both sides) is true or false. If we're going to suffer under inflationary pressure, then we need to be as informed as we can be about the situation, and you can't learn from history if the history is giving you the wrong information.
@@Edax_Royeaux BIG Government increases the debt. And the more 'free' stuff they promise the bigger will be the debt. But most people vote for those who promise the most free stuff. And then they wonder how they lost their Free dom.
@@Edax_Royeaux So they lose freedoms because they are attacked by a violent big government, that doesn't seem to make big government all that appealing. Not to mention that Britain was pretty authoritarian and shitty to its colonies.
@@Edax_Royeaux I wouldn't use Jonestown as an example of people trying to escape big government as they had socialist politics and weren't killed by nature but a mass suicide pact out of some delusional belief that they were fighting fascisms. Small governments or flexible planning has given way to some impressive military victories. You don't need to have a large military while sacrificing individual liberties. militaries Also didn't Denmark have a central planned economy at the time of Nazi invasion.
Excellent! I wasn´t expecting something like this. Beyond being innovative, this is a quite good opportunity to dispell a series of economic myths that is reproduced by the mainstream, but that you are immune to when you study more profoundly the economic history topic - myths such as those who appoints the Keynesianism as the responsible for taking out USA off the Great Depression.
(From me, guy at Columbia School of Economics) To be money, it must have three things: It must be a unit of account, a means of exchange, and a store of value. Secondly, inflation is an inflation of the money supply, as this guy says. We have seen a massive rise in the money supply in just a few short years. In about three years we inflated the money supply in America by about a third.
TIK, when I was in university, the only "positive" that the instructor could give for inflation is encouraging people to spend money since you'll get nothing if it sits in the bank.
Yeah it’s supposed to prevent hoarding and therefore force people with capital to invest in businesses and the like so as to not have the money lose value. A tiny bit of inflation isn’t bad. I haven’t watched the video yet though so we’ll see if I change my mind
@@TheImperatorKnight What do you think of Islam’s solution to the issue via the Zakat system? Use real money but instead of debasing the currency via inflation to force people to invest their money, everyone above a certain level of wealth in certain forms - but mainly in hard cash (the system is a bit more complicated than that though) - pays a yearly 2.5% wealth tax that goes almost exclusively towards the poor.
In the Eurozone savings kept increasing even though there was some inflation and no bonus for the savings. People don't spend but start saving even more to make up for uncertainty.
@@overdose8329 That's the party line; I don't believe it. They never hit their inflation "targets" anyway. US inflation avg is about 3.75%, not the target 2% (or aspirational 0% of Alan Greenspan) and that's with use of the increasingly manipulated CPI (consumer price index).
The best explanation for why inflation is "valuable" I've ever heard is that in the process of devaluing the currency, it ALSO devalues existing debts. Someone who invests in commodities, and who thus retains more of the overall total value of their wealth, can wait until their outstanding debts devalue to whatever they feel is comfortable, then cash out some or all of their commodities in order to pay off their debts at a MUCH cheaper rate than if there had been no inflation at all.
A house is still worth a house after hyperinflation and a bar of gold is still worth a bar of gold. Only the currency is percived as worth nothing after hyperinflation.
That's why the rich are not paying taxes, they all barrow aginst their equity in stocks to buy more equity. They are actually shorting the dollar and making the assumption that inflation will make debt aquired today irelivent tomorrow. Musk is borrowing against Tesla to build Space X and Starlink. In the end he will own all three companies and the debt will be gone. They are all doing it, Bezos, Gates, and all the Billionaires you never heard of.
The money creation process in the Weimar republic was controlled by 1) Privately-owned "loan banks", and 2) The privately-owned Reichsbank. The Government printed the banknotes, but ONLY private banks issued these into circulation. Since hyper-inflation is caused by excess money, and only private banks created the Weimar money, ONLY private banks were responsible for the Weimar hyperinflation. Here's a passage from page 5 of Adam Ferguson's book, "When Money Dies": "(the money creation system) was contrived by setting up loan banks whose funds were to be provided simply by printing them. The loan banks would give credits to business, to the Federal states, to the municipalities and to the new war corporations; and, moreover, they were to advance money for war bond subscriptions. Loan bank notes, whose denominations ranged from one to 50 marks, were to be regarded as legal tender; and those not taken up by the Reichsbank were put into immediate circulation." The Reichsbank was 100% privately-owned, and wasn't nationalized until 1939 by you-know-who.
14:22 100% absolutely right. It is the expansion of the money supply NOT the rising prices that is "The Inflation". I can't tell you how many times I've had people tell me it's just semantics or that it's flat out wrong. That redefinition has made it so very easy for the CBs to hide actual inflation via the hackery of CPIs. Instantly subscribed.
In the convict jail period of early Australia , the currency was Rum the supply was a monopoly provided by the mess of the local regiment guarding the convicts , which was quickly called "the Rum corps" it was a perfect medium , having an intrinsic value and a natural shrinking preventing inflation
If I haven't misunderstood the first part of this video and given the intrinsic value/use you have outlined, within said early Australian context, that rum would more accurately be described as money (though, given it was a medium of exchange, I do believe it would also qualify as currency as well... unless I'm getting currency's definition wrong).
In the USA we never blame capitalists for inflation. We blame the government printing new money faster than productivity. Generally the US president gets blamed.
TIK, you sir speak the truth and go places many historians are afraid to go! The complexity behind Germany's economic situation from 1911(or 1918 in this case) through to the Cold War is a lot to wrap one's head around when one examines the details. For you to stand up to the plate and take a swing at explaining this topic instantly puts you ahead of the majority of these so called "Historians" on the internet. I loved that you showed us the actual bank notes too. Thank you for your work sir!
Living in Brazil in the 80s we have a lot of inertial inflation. In 1990 they tried dry the amount of money and did not work. Only in 1993/94 when they created a index based on dollar value and transited the currency for this index value the inflation stopped. There was other economic factors of course, but the inertial pressure was a big thing.
I do enjoy when your narration slowly or even quickly increases in the passion of delivery. It's easy to see you love history as much as I do. I never understood it whenever my school peers said they hated history.
Fantastic topic. I just read about the Pengő hyperinflation in Hungary after WW2. With its roots in WW1, WW2, first the German, than Soviet occupation. Its stunning how sh** really can hit the fan and everything just spirals completely out of control. Within a single year, the economy was just devastated and no longer existing.
That's pretty much it. I actually think this will take more work than the typical Stalingrad video... which means I must be insane to even start this series right now!
Your work is very appreciated. There are events discussed here that I must confess I’ve never even heard mentioned before . Thank you for shedding some light on this subject . I understand that people may think these videos are long winded but without the detail you go into the overall view would be deficient.
Released in the wake of a 39 year high inflation in the US at 6.8% (of course the real inflation is higher, around 15%), this is well timed. Thanks Tik.
Remember that 6.8% is Keynesian inflation (ie "an increase in the general price level of the economy") If you want a leading indicator of inflation look at the M2 money supply [speaking as an economist] because it closely matches housing prices in the long run.
I agree that house prices are a good indicator of inflation. I would also suggest that we measure prices in terms of gold pricedingold.com/uk-house-prices/
The fluctuation in gold prices as you described me reminded me of what happened to silver when the US stimulus checks started arriving - it went up to around $18, then tanked to a low of $12-ish. Then doubled. Currently riding around $22, $23/TrOz. I do silversmithing, so it's something I regularly follow.
Brilliant presentation. By the way, a few days ago french president Macron stated "We have entered into a wartime economy", rings a bell. A look at the M1/M2 fiat currency aggregates in the US and Eurozone shows the exact same pattern.
Fascinating series. I was surprised when you mentioned Mises. I'm a member of the Institute. In college, in the US, I minored in economics. All I heard was Keynes. Strange, I didn't buy it. Maybe if real economics had been taught, I might have majored in the subject. Also, I have always had doubts about the history of the wars. It would be interesting for you to address how you became "an outsider."
My father was a young man during the Great Depression and one of things he said about it he was nobody had any money. Wages were low because workers were a dime a dozen and the stuff we think was cheap back then wasn't so cheap when you adjust for inflation. It was his mother and 8 kids in rural CT on a farm which kept them fed them well enough, but no one had money for new shoes, and paying the property tax each year was a real nail biter.
Small bit of trivia, but gold isn't only created in the hearts of stars, but also in neutron star collisions, and in small amounts through various other celestial processes, as well as through radioactive decay. In addition, it is possible to create gold artificially using particle colliders, but it's very expensive, and, if you're not careful, the gold you create this way will end up being radioactive.
@@hermitoldguy6312 Well, yes. That's the point. Gold's existence and value are fully based in reality. It follows the laws of nature, and as a result there are real tangible reasons for us to desire it. It's not just some piece of fancy paper that we are told has value. Acquiring it takes effort, and there are good reasons for us to expend that effort.
Pretty crazy how many countries started using less precious metal in coins during and after the war. I have a half crown from 1920 and it only has 50 percent silver content. Before 1919 they were 92.5 percent silver. In comparison to my pre-1965 US quarters with 90 percent silver.
Magnificent, TIK. Your postings are probably the most intelligent, well researched and well thought out historical blogs on RU-vid. Thia video has been an excellent education on economics, at this point I like to think I understand where you are going with respect to hyperinflation and Hitler’s strategy with regards to geographical expansion and the ultimate outbreak of WW2. But I am sure you will prove me wrong and demonstrate a more subtle evolution and outcome of the post WW1 situation. Thank you so much for going to the effort of producing these videos, they are fantastic.
To be honest, neither do I! RU-vid is telling me that most of my viewers aren't interested in this topic, so it'll probably get ignored by those who really need to see it. Won't stop me from making more though.
I still do not understand why people are obsessed with gold, if there were a complete economic collapse and the world currencies were worthless, gold would also be worthless. If you have stockpiles of gold waiting to use it because you believe that "it always has value" you are going to have a golden pile of metal that no one wants or needs.
People need to eat. When society collapses and the currency is worthless, food will still have value. Well, the same applies to gold, silver, other metals, wood, concrete, bricks, water, and every commodity under the sun. The point is that gold was traditionally used as money because it's the best commodity to do that (for numerous reasons I won't get into here). That's why, despite the collapse of society and the currency in Venezuela, Venezuelans have started turning to gold to purchase things www.bloomberg.com/news/articles/2021-10-20/venezuelans-break-off-flakes-of-gold-to-pay-for-meals-haircuts
A mistake you made early on: the 10 pound note has value because some guy in the tax department of the UK government said that they won't send their enforcers to your home to take you away and put you in a metal box for years if you give them enough of the 10 pound notes. (That's the actual basis in value for most fiat currencies, and certainly for ones like the British pound.) And I think you will agree that not having the government's enforcers show up to your house to lock you in a cage for years is, indeed, valuable to you.
Caroll Quigley writes in his book “Tragedy and Hope” that the “boom-bust” cycle is not only deliberate, but controllable through a set of variables. I recommend his books if you have not yet dug into them, especially “Tragedy and Hope” and “The Anglo-American Establishment”. Fantastic video, learned a lot.
Just wanted to point out that coins DO have value in the form of the metals from which they are made, presuming you could develop or find someone with the skills to process it. Notice coin shortage.
True, but when the coins are made of base metals, you'd need a lot to make it worth melting them down. Thanks to the recent economic issues, the price of copper went up by 300%, and the same with other metals, which is probably why they've begun to disappear because it may now be worth it to melt them down. It's also more difficult to pay for things with pennies, since the price of things have gone up, making pennies less valuable. I actually have a small stack of pennies on my desk simply because they're not worth carrying in my pocket when I go to the shops. I don't want to be stood there counting out all the pennies and holding up the queue!
The other reason for the coin shortage is as acceptance of inflation. When a family expenses have grown from $250 in 2019 to $350 in 2021, this is not 5% inflation. Pennies, dimes, nickels and quarters are not keeping value, and a person will notice it faster if they are paying with coins. So the banks are under instruction to decrease the amounts available (by central banks "requesting" the coins "due to shortages elsewhere"). The banks change the coins with either paper or electronic currency and less coins remain in the system.
@@TheImperatorKnight as a person who's worked several years in Brazil, economies crashing and massive devaluation of currency are things that we think of... And then they wonder why almost none of my savings is in fiat currency. Oh sure they tell me that Bitcoin investment is meaningless if the power and everything goes out, but if we are in that level of collapse it becomes a game of my eggs Trump your hundred dollar bill.
@@leechowning2712 Get yourself a set of solar panels if you live in a place with decent sunlight, a diesel or other form of generator, and keep a few months worth of food at all times at home. If the state allows you to own guns then get some as well. You can also buy or print out a few books or PDFs for how-to’s for important things. If you’re quite well off buy a cottage a few hours drive away from civilization and store all that stuff there
I love this video, thanks for the great work here. I really like your presentation and all the Mises and Rothbard quotes along with other authors makes my day :) Thank you for the hard work. One extremely small detail. At 1:00:42 approximately you mention the gold reserves of the Reichsbank. The source is Bresciani Turroni but the page should have been 448 not 438 (if you have the third edition anyway - from your sources list it seems like this is what you have). The number in 1914 is correct but in 1918 you say 2,626.2 million gold marks but the table says 2,262.2. Sorry for bringing up this very small point. I had the book on my shelf and could not resist looking up the source.
I hate Marx, but I feel people try to misread him. His big issue is he was floating around in a sea of economic thought, so he is often 'right'. Where he goes wrong is his predictions and predicting the future. Historical Materialism has a lot of weight to it, but its easier to look back at the collapse of the Roman Economy and guess why, than to look 50-200 years in the future and know exactly how the ideal society will be. Maybe a good video idea would be to 'defend' some chunks of Marx (y'know, the stuff he took from smarter people).
There's also the issue that a lot of people do not see the world with the same eyes as Marx, that is to say, from a society that was brutally ravaged by early industrialization, urbanization and low living standards. Add the ideological bias and the frustration of a loser by that time's standards and there you have it.
The term capitalism was coined by 18th century socialist to describe the social changes during that time period. It's a anti-concept that means a variety of contradicting things to different people, generally is used to vaguely describe the current economic system. For this reason many individualist libertarian's have decided to stop labeling themselves as capitalist.
I can understand why they would do that. People use their "hearts" rather than their heads, and the term "Capitalism" conjures up demons that don't actually exist. So many anti-capitalists in the comments criticize "capitalism" for things that capitalism doesn't do, simply because they hate it so much that they can't bring themselves to pick up books on it (e.g. Hazlitt's "Economics in One Lesson"). If they put their emotions away and actually looked into it properly, they'd soon change their tune. The trick is to try and get them to realize that they have to look into this stuff.
@@hermitoldguy6312 BOOM! Profit is about energy. Wealth is retained energy. A species must be more profitable than any individual entity, in order to spend enough energy to create the next generation; thus *all species must be profit seeking or become extinct* A literal law on nature :)
@@TheImperatorKnight Here in Colombia during one of its civil wars the central bank actually ran out of paper from printing money and resorted to using chocolate wrappings to print more money
You can always tell you find a good channel when once the video is over RU-vid does everything possible to avoid playing another video from the same series. Yt dont like people talking.
I'm 5 minutes deep and you got my sub. I'm sad you didn't mention Peter Schiff 😔. Since his stance on bitcoin he has become more known than Rothbard. Happy new year thanks for the content sir
I did reference him though! I was actually tempted to copy into this video his video on the changed definition of inflation because it's fantastic ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-K0VKzNtZupA.html
That ice cream example was great, though also keep in mind that the ice cream truck in addition to increasing prices, also increases his demand to where he buys his ice cream from and they need to hire more people to satisfy demand or pay more to avoid losing his people and attract others. Inflation has positives and negatives but the negatives become so magnified that your economy collapses when driven too far. In a heavily indebted population for instance inflation acts as a relief to them as much as it does the government, but as always the middle class is hit the hardest where they have substantial savings and not a huge amount of debt.
I used to collect postage stamps, including German stamps off mail my grandparents had from way back when, and the denominations on the stamps were huge due to Weimar hyperinflation. Probably a good argument could be made that the Weimar hyperinflation led to Adolf and everything that followed from that. Sobering thoughts ... another sobering thought is that widespread acceptance of your points could cause worldwide collapse of fiat currencies yet even though you plainly speak the truth, most people will simply continue their lives as if nothing has changed.
The more I hear about communism and everything they say and what Tich says the more the Communists just seemed like what they call capitalism in other words they are what they think capitalism is and say capitalism is otherwise hypocrites
Economics for beginners: It's not just the money supply that matters, but the (money supply * velocity of money). Hence when the money supply is increased by the central bank, but the velocity of money decreases by the same factor, nothing changes and inflation does not pick up. As an example: if the central bank prints money and distributes it evenly among the citizens, and every citizen puts that extra banknotes under his mattress, then the increase has zero effect because the average circulation speed of a bank not will decrease (the new cash under the mattress has zero circulation, weighting on the average). The crucial fact here is that the central bank does control the money supply, but has no control over the velocity of money. Hence the central bank has no direct control over inflation, and TIKs explanations fall apart.
