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Gold, the Euro, and Sins of the Fuhrer

Guest post by: Michael Farrell

Article Overview: With or without hyperinflation, today’s welfare-state obligations, just like 1919’s war reparations, are simply too big to be paid, suggests Mike Farrell with aspenIbiz. Read this short post to understand why the Euro was to neuter the sins of the past.

Gold, the Euro, and Sins of the Fuhrer

What is the Eurozone's problem? In short, it is its history which is precisely what the single currency was supposed to fix.

Greece's still pending bailout has already cost a few lives in riots that occurred in Athen's a few months ago.

More bloodshed inside of Western Europe would make a horrific end for this single currency which is the, grandest of grand, post-war projects. It was to be the crowning achievement of Europe's longest-ever period of peacetime.

But thanks to history, and it is the very same history that built the Euro, Germany cannot inflate. And the rest of Europe cannot do anything else.

Sharing one printing press was always unwise and it is making former UK Prime Minister Gordon Brown look smart for staying outside and not adopting the Euro currency.

No single currency could ever reconcile history because Europe's monetary politics over the past 100 years has been divided right down the middle.

Germany initially suffered hyperinflation, with wheelbarrows overflowing with bank-notes, and then madness, with cattle-trucks packed full of people, before they were able to banish the shame they had by promising "Never again!" When the Germans look back, they see catastrophic inflation, followed by the sins of the Fuhrer, and finally by a five-decade boom built on sound money.

The rest of Europe, in contrast, and especially the PIIGS of the south got things the other way around. Deflation came first thanks to the Gold Standard. Later, devaluation worked its magic to rescue over-spent nations from ever settling their debts.

Greek, Spanish, and Italian civil servants fondly recall an insane and repeated scramble for cash over the past 50 years and the money was only made available by default and debasement of their currency.

The hyper-inflation of 1919-1923 is scorched onto Germany's collective conscience and Germany's alone. To the west of the Rhine and everywhere south of the Alps, a very different 20th century applies. Their only memory of tight money was the disaster of the Great Depression.

Come 1931, the world's monetary anchor, the international gold standard, was cut loose from the Great British Pound. This forced everyone else to do the same, sooner or later. Inflation worked and so did WWII.

Recently, the mayor of Athens made claims to the Eurozone bankers (specificially the European Central Bank) that "you owe us 70B Euros for the ruins you left behind." The Deputy Prime Minister of Greece cuts nearer to the heart of the matter by adding, "the Nazis took away the Greek gold that was in the Bank of Greece. They took away the Greek money and they never gave it back."

In short, they should cough up for the sins of the Fuhrer. Which is kind of correct since Hitler's greatest achievement today is a welfare state that neither the Allies or Axis could ever afford.

Denied a knock-out blow on the WWI battlefield, the French and British sought victory at Versailles with crushing demands for more money from Germany than existed in the form of gold bullion.

Today, the Greek civil servants are suffering because they, or their parents, voted themselves a cradle-to-grave welfare state that has not stopped paying ... such as demanding 16 months of wages for each year they work.

To date, the plan for bailing out Greece and thus preserving the Euro means giving Athens enough money to save Greece from having to ask the markets for funding until 2014.

Wheeling out the printing press in Frankfurt (home of the European Central Bank) to do what was done in 1920 means Europe can pay its pensioners the same way the Weimar Republic tried to pay Britain and France after Versailles; and the outcome will inevitably be the same.

Just like British and French pride in 1919, today's heroic welfare promises are just too expensive. Whether it happens sooner or later ... with or without hyperinflation ... trying to pay off the costs of the pensioners and civil servants, negotiated in the past, just can not be paid from tomorrow's money.

Their costs are just simply too big!

What should you do? Obtain more financial education and learn how to protect yourself during these trying times of massive money printing, fiat currency, and soon-to-be runaway inflation. Purchase precious metals, including gold, to hedge or protect your net worth against the decreasing value of the US Dollar, which is just paper money.

I favor a quote from Steve Forbes ... Forbes says that pursuing additional financial education and the resulting increase in our financial literacy will open our eyes to being savvy with our money and using alternative wealth creating strategies; this will be they key to resolving our financial crisis.

To gain the necessary financial education, it is best to pursue association with, access to, and membership in, a wealth creation community. As a result, you will learn about alternative wealth creating strategies and consider investments in non-dollar denominated assets ... perhaps emerging markets ... perhaps energy assets that are inherently useful like oil rigs, hydropower, or methanol plants ... perhaps precious metals, rare earths, water rights, oil, natural gas, potash mines, or gold mines ... things hard to build, difficult to replace, and costly to substitute ... definitely not financial stocks, definitely not retail stocks, definitely not commercial property.

For those wanting protection of their purchasing power in gold, there are several ways that may be appropriate to obtain this protection. These include direct ownership in minted coins, use of gold exchange traded funds, gold mutual funds, and junior gold stocks. Many are investigating having part of their IRAs in gold, silver, precious metals, and non-dollar denominated currencies.

In addition, for those that truly believe default of sovereign debt is the greatest risk we all face, it is wise to learn how to implement a multiple flag strategy to diversify this risk or provide protection against higher taxes, capital controls, hyperinflation, civil unrest, erosion of personal liberty, and the rise of a police state. With a multiple flag system, you consider taking preparations like, but not limited to, establishing a foreign bank account, purchasing some real estate overseas, seeking alternate sources of income, dual citizenship, and carrying multiple passports.

I will continue to provide examples of things we need to learn, the secrets of the insiders, as part of being savvy with our money, and introduce alternative wealth creating strategies, in future articles and updates at my blog over the next few weeks.

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Article Tags: Alternative Wealth Creation, Euro Currency, European Central Bank, Financial Education, Global Economy, Gold Standard, Great Depression, Greek Crisis, Mike Farrell aspenIbiz, PIIGS



Related Forum Posts
Re: When something's suffered damage it becomes more beautiful. - This one is for David and all. David lives in Japan I have traveled, lived or worked in over 55 countries, and while we continue to remember the history and barbaric nature of war brought on by few then and now, our various cultures, religions, etc, I find the real beauty is not in the Gold, but in the majority of the people. who ever they are and from where ever they come. Our Japanese craftsman in this piece, showed his beauty to us through his work through the use of Gold to mend this dish. I am further reminded of the power of God with the recent earthquake and tsunami that hit Japan. I was truly amazed at how the beauty of the people came through the crisis. Lines and lines of people all organized waiting their turn; there was no shoving, pushing, do you know who I am mentality, or me first. The sick, disabled and the elderly were given priority not by the organizer by the people I wrote of this discipline in a article for Ezine, but it wasn't accepted. I guess it fell outside my declared resources Our maker gives us beauty, and it may be destroyed by the maker as a reminder, or perhaps by 1 or more of us through war after war, the beauty of the majority must survive and bring back the beauty for all to see .
Congratulations - Hi Shri, Congratulations to your win. Next time you will go for the 'Gold Medal'. This does not happen everyday. All the hard work is paying you off. We wish you well for future projects you have in mind. Be encouraged! Kindest Regards Beat "Unlock People's Potentials!"
Starting New Business Venture would like some tips - Hello I am new to this website and just want to say its awesome!! currently I am involved in a new business venture, I am new to the business world and I would like some extra help on this subject. Our company specializes in Custom Gold Foil Printed Ribbon, and Personalized Products (Napkins, Buttons Etc). so if anyone has any ideas of where to go, who to contact, or even if your looking for these types of products yourself, let me know and any tips to help me out it would be greatly appreciated.
Re: Customer protection or sales loss? - Hi Beat, I prefer to buy online to save money or obtain discontinued/rare items. For instance, I recently bought a demo Prince Speedport Gold tennis racquet for $157.51 USD (including shipping to my friend's condo) on eBay, while another seller had previously turned me down because he/she insisted that the PayPal account's address match the shipping address. That same racquet retails in Canada for $305.04 CAD after taxes. A lot of my friends don't have PayPal accounts and don't like giving their credit card number to "smaller" online vendors, so I'm often limited as to where I can shop.
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