Weimar Germany or Ephesus

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We are currently having a debate in this country. On one side we have the Republicans saying that we must institute a strict austerity program or else we will leave our children a crippling debt. On the other side we have (largely) Democrats that emphasize the need to provide for our children by protecting our environment and transitioning our energy system, etc. for the future. Who is right? I think we can get some lessons from history.

Weimar Germany

As you all likely know, Weimar Germany is the poster child for run-away hyperinflation. It started in 1921 and was a traumatic time for Germany in which its economy was devastated. Some say that it led to the accession of Hitler to power. I think that is a bit overstated and that the Versailles Treaty and the 30’s depression were bigger factors. But the Weimar hyperinflation was an undoubted economic disaster.

Ephesus

Ephesus was a once thriving port city in Asia Minor. Bible readers should recognize it from the bible book Ephesians written by St. Paul to the city’s Christians in the first century AD.

At that time it was a thriving Roman city with amphitheaters, baths, a large port, libraries, temples, and a large Christian community. During the Byzantine Empire, the formerly beautiful port was silted up due to environmentally disastrous activity of its residents. It is thought that the deforestation of the surrounding hills caused erosion. The eroded soil filled the port’s bay with silt.

They repeatedly dredged the bay, but all for naught. The silt now fills the bay to 5Km from the original port. This killed Ephesus and it is now a ruin that is visited only by tourists.

The Lesson From History

So, how is this instructive for the 21st century? Both Weimer Germany and Ephesus represent disastrous examples from history. But look at the regions now. Germany is a thriving economy and in many ways better off than the US which did not suffer a hyperinflation. It did suffer in the early part of the 20th century, but it recovered.

But Ephesus has not recovered. It destroyed a resource that it depended on for its success, namely its port. It has collapsed essentially forever.

The lesson seems clear to me. The Weimar-Germany example was a problem with a fiat currency. Fiat currency is by definition just a legal device to make money and this money is not wealth. The Ephesus example shows what happens when you destroy something which provides real wealth, namely the environment. You do not recover. A destroyed environment is forever.

I am not suggesting that we have a hyperinflation. I am saying that protecting the environment and preparing for a future without less fossil fuels is much more important that a balanced budget. Let’s work for a sustainable future.

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olenzekm
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Comments

Well, The Weimar hyper-inflation was more than just printing money. It printed money in quantities that exceeded the stuff being produced to buy with it. The "stuff' was shipped abroad to pay for war reparations.

England once had a fiat currency" called "chits". Notched sticks. It prospered for centuries with it.

As long as the money supply is equivalent to goods being produced, fiat currency is fine.

Spain once used gold coins. Too many gold coins....too few goods to buy with them. Inflation was staggering!

Money represents claims on real stuff. Without "stuff" to have a claim on, it becomes worthless.

Retired Monk - "Ideology is a disease"

polycarp2
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Jul. 31, 2007 4:01 pm

The point of the essay is that we have more to fear from a destroyed environment than from a destroyed currency. Currency is, as you said, a “claim.” Claims can be ignored. But we need the environment every day and if our children are to survive they will need it tomorrow. We cannot ignore the state of the environment.

If the dollar disappears but the environment is intact, our children will still be able to survive. But if the environment is destroyed, the state of the dollar will be of little importance.

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olenzekm
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Oct. 26, 2010 11:01 am

Two other examples: Easter Island - I don't think we know what they did once they ran out of trees to make rollers out of for their big stone heads, but I assume they just moved to other islands and forgot about the big stone head nonsense. And China - Once the starvation and COPD and cholera epidemics get rolling and all they have are the guns and fighter planes and submarines and nuclear bombs they've spent our t-bills on what are they going to do?

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doh1304
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Dec. 6, 2010 10:49 am

It's the old chicken or the egg. Currency is totally worthless in an unliveable environment. A stable environment is essential with or without currency. If you don't invest in your surroundings first you are a fool. What good is a rich man on a dead planet? The environment is finite whereas currency is not. If you run out of a liveable environment there's no place to go. If you run out of currency you can just make more.

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Bush_Wacker
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Jun. 25, 2011 7:53 am

"And China - Once the starvation and COPD and cholera epidemics get rolling"

And this is based on what, exactly? China appears to be the only nation that has made -any- attempt (regardless of the implementation or unaddressed issues thereof) to deal with the largest problem on the planet - too many people.

As for the unspoken implication in your statement "all they have are the guns and fighter planes and submarines and nuclear bombs they've spent our t-bills on what are they going to do?", it's far more likely that the good old USA will resort to the military conquest and occupation of resource areas in the near future than that China will (After all, the US has a history of lashing out externally rather than our politicians facing up to and dealing with domestic issues).

Statements to the contrary ignore the differences in US versus Chinese culture, geopolitical history, and both the history of China for the past 50 years and the trends that will govern developments in China for the next couple of decades. We've got more to fear from the UK than from China (other than from the perspective that, with multi-national corps' connivance and the protectionist/anti-labor stance of the PRC government, the Chinese are kicking our butts economically - but we have no one to blame for that except ourselves).

Baseless fear-mongering should be left to the reactionary right.

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Original Ray
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Jul. 16, 2010 11:22 am

At this point enviromental collapse is probably unavoidable.. Less than five years left to stop carbons from being released into the atmosphere before global warming is irreversible. Instead of reducing them, the globe has accelerated the release.

In about ten years, economically viable oil is done. In 15 years, ditto coal. Univ. of Colo. lecture:

http://www.youtube.com/watch?v=F-QA2rkpBSY

I sometimes wonder how Americans will react to the merging of economic, environmental and resource collapse. In the meantime, it's time to play the fiddle while Rome burns. We can smell the smoke,...just can't see the flames yet. Once they appear, it's too late. Resources at that point won't be sufficient to put out the flames.

As always, I suggest taking up gardening. Get good at before it's essential not to have a garden failure .....when a successul garden effort becomes a critical means for survival...unless, of course you can shell out $100 for a loaf of bread for the rest of your life.

Doing business as usual in Washington will prove to be not only an American tragedy, but a global one. as well.

Retired Monk - "Ideology is a disease"

polycarp2
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Jul. 31, 2007 4:01 pm

"As always, I suggest taking up gardening. Get good at before it's essential not to have a garden failure"

You forgot three other essentials: good soil, sufficient property for sustainability (below the frost line, if possible), and neighbors willing to help you till it and defend it in return for a share. Because you certainly aren't going to be able to feed everybody (unless that person happens to be the Second Coming...but that's going to create a whole set of issues in and of itself ;-) ), and as soon as the food in-place runs out, the city dwellers will be out into the countryside in their millions....

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Original Ray
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Jul. 16, 2010 11:22 am

http://bilbo.economicoutlook.net/blog/?p=17006

with title "Wir wollen Brot!" analyses hyper inflation in Germany. And "ZIMBABWE! WEIMAR! HOW MMT DEALS WITH HYPERINFLATION HYPERVENTILATORS (PART 1) | PRAGMATIC CAPITALISM" at

http://pragcap.com/zimbabwe-weimar-how-mmt-deal-with-hyperinflation-hype...

also does from an MMT perspective.

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pshakkottai
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Jul. 11, 2011 11:27 am
Quote Original Ray:

poly wrote: "As always, I suggest taking up gardening. Get good at before it's essential not to have a garden failure"

Original Ray responded: You forgot three other essentials: good soil, sufficient property for sustainability (below the frost line, if possible), and neighbors willing to help you till it and defend it in return for a share. Because you certainly aren't going to be able to feed everybody (unless that person happens to be the Second Coming...but that's going to create a whole set of issues in and of itself ;-) ), and as soon as the food in-place runs out, the city dwellers will be out into the countryside in their millions....

poly replies: True. It's called getting good at gardening. My best were in the desert. Any soil above the frost line can be modified to produce almost whatever type of crop you want...keeping minimum/maximum temperature limitations in mind and the growing time for any particular crop to mature before a freeze hits.. Sometimes the best crops for a desert are those varieties designed for the far north...where growing seasons are short. They mature before the desert heat kills them.

Probably not many city dwellers will be seeking food in desert areas. A solar pump on a desert well is pretty essential with a resource collapse...and is essential for a swamp cooler as well as the garden. Rain barrels in other areas would be adviseable with alternating periods of downpours/drought associated with global warming..

An average sized city lot in Denver could support a small family (with a solid fence blocking the garden)..supplemented with fruit trees (energy/vitamins) and nuts (proteins/oils). I'd suggest dryng rather than canning or freezing as the main preservation technique. Dried plums, beans, etc. Acid fruits such as tomatoes are easily canned without a high risk of botulism. They can also be dried and re-hydrated for sauces..

Swiss Kale will produce an edible green through winter if kept covered with leaves/straw when temps fall below freezing. "Tis a hardy plant. It produced for me in Ohio until temps got down below zero.

A basic garden won't produce a diet most are accustomed to...and is better than starving or losing one's health..

Retired Monk - "Ideology is a disease".

polycarp2
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Jul. 31, 2007 4:01 pm

Well, polycarp2, if you don't know about this you're in for a treat.

http://www.youtube.com/watch?v=jRz34Dee7XY

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jmacneil
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Mar. 6, 2012 7:24 pm

"Role of the national government

Before we establish specific arrangements in the financial markets etc, we need a clear statement of purpose for any national government. I think some of the erroneous reasoning in the media and within the broader debate stems from a lack of clarity about what it is that the national government should be doing on our behalf.

From the perspective of modern monetary theory, the national government which issues the currency as a monopolist has a charter to advance public purpose (welfare) at all times even if, in doing this, specific private interests are impeded. In general, the advancement of public interest will provide a sound basis for private benefit also. But at times this will not be the case.

From that broad charter, full employment, poverty alleviation and environmental sustainability become the most significant expressions of public purpose although in choosing those policy targets I am expressing my values rather than making an economic statement.

However, it is highly unlikely that an economy will perform to potential if these policy targets are compromised in any way so I think there is a good case for making them the starting points in the pursuit of public purpose." says Bill Mitchell in

http://bilbo.economicoutlook.net/blog/?p=5098&cpage=1#comment-1553

with the title " operational design arising fom modern monetary theory"

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pshakkottai
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Jul. 11, 2011 11:27 am

I quote fromBill Mitchell: "

Role of the national government

Before we establish specific arrangements in the financial markets etc, we need a clear statement of purpose for any national government. I think some of the erroneous reasoning in the media and within the broader debate stems from a lack of clarity about what it is that the national government should be doing on our behalf.

From the perspective of modern monetary theory, the national government which issues the currency as a monopolist has a charter to advance public purpose (welfare) at all times even if, in doing this, specific private interests are impeded. In general, the advancement of public interest will provide a sound basis for private benefit also. But at times this will not be the case.

From that broad charter, full employment, poverty alleviation and environmental sustainability become the most significant expressions of public purpose although in choosing those policy targets I am expressing my values rather than making an economic statement.

However, it is highly unlikely that an economy will perform to potential if these policy targets are compromised in any way so I think there is a good case for making them the starting points in the pursuit of public purpose."

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pshakkottai
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Jul. 11, 2011 11:27 am
Quote jmacneil:

Well, polycarp2, if you don't know about this you're in for a treat.

http://www.youtube.com/watch?v=jRz34Dee7XY

poly replies: Thanks for the treat. Cuba experienced "peak oil" with an energy famine and responded with good sense rather than bombs. Food production without a high oil energy input. for the growing and distribution of foods was an excellent response...

Something similar is occurring in Detroit.

Imagine the possibilities if Denver's milion plus trees produced something edible. The time frame between planting fruit/nut trees to a crop is fairly long. Production per acre, however is really high. Government could lead the way by planting food producing trees in Denver and in the surrounding counties large amounts of reserved "green space".

Hazelnut hedges between properties in place of non-productive ones would be a boon.

Drought associated with global warming should probably be anticipated by increasing water storage facilities. Decorating front yards with native plants rather than water guzzling lawns would be a good idea. In some areas, that would require a change in zoning and homeowner association regulations..

As to the auto, unless electric cars get their electricity from renewable energy sources, they are just a short-term solution....addressing mainly carbon emissions. Fossil fuel resources to produce electric energy are going to get prohibitively expense as supplies diminish and the expense to pump remaining hard to obtain oil skyrockets.. For every new barrel of oil discovered, we use 5..

The "drill baby drill" mantra is rather stupid. Sort of like telling people on a lifeboat to eat more of their rapidly diminishing food supplies...and deplete it quicker.

Pshakkottai, maintaining a viable economy has been a primary purpose of government ever since the establishment of the first nation-state...Ancient Egypt..Nations failing in that have either disintegrated or have been taken over through conquest.

As to money. The Roman Empire entered its most dynamic period when it simply spent an abundance of cheap copper coins into existence for roads, aqueducts and the like.. They became ample enough within the general population for commerce and exchanges of goods to thrive.

When Rome replaced them with gold and silver coins the circulating money supply shrank. Only the wealthy had the coins. That combined with replacing hired labor with slave labor began the disintigration of the Roman Empire. The dole and circuses to prevent revolt took the place of commerce and wages. Rome bankrupted itself enriching the few at the expense of the majority. It's an old story often repeated throughout history...as now..

Retired Monk - "Ideology is a disease".

polycarp2
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Jul. 31, 2007 4:01 pm

Thank you. I found it to be a treat. The information in that video reafirms my belief that humans will survive.

We are the most adaptable animals that have ever inhabited this planet. I also think that the Cuban model is what much of the successful world will look like one hundred years from now.

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olenzekm
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Oct. 26, 2010 11:01 am

It appears like the comments to this essay are petering-out.

So, can I conclude that all on this board agree that it is better to risk becoming Weimar Germany than to risk becoming Ephesus? Is this true?

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olenzekm
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Oct. 26, 2010 11:01 am

Although your time frame of a century in which to expect worldwide change is hopeful, it is also extremely pessimistic in it's time frame. Already the criminal gangs that rule most of modern society are exhibiting voluminous signs that they know their rigged system is failing and their ever increasing desperation is exhibited in the profusion of draconian measures they implement in an effort to maintain their control over the masses. Once they reach the tipping point, their fragile grip on society will collapse in a sudden rush for the exit and the majority of the world's nations will have to grasp for a sustainable alternative to fill the void. In Cuba there is a ready made model that doesn't just include sustainable farming but also the best medical system in the world, the best educational system in the world, the best civil defense system in the world, and a host of other top quality programs that deal with all matters civil in a thoroughly professional manner.

As an example of that dedication to the moral development of society, among many other equally fine examples, is the Escuela Latinoamericana de Medicina, which trains thousands of student from other nations to be doctors, at no charge to the students. And they do it not for glory, profit or self-agrandisement, but because they saw human and societal need that was not being addressed in a substantive manner by any other nation. Below is a link to a story about that medical school, although it is a couple of year out of date and the new numbers of doctors graduated are many thousand higher since the program has been expanded according to plan. No other country in the world would even come up with the concept of training 100,000 doctors in a short time frame and that shows that the Cubans are not only thoroughly professional but also the most responsible world citizens on the planet today.

http://www.medicc.org/ns/index.php?s=10&p=0

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jmacneil
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Mar. 6, 2012 7:24 pm

Probably nations with a strong cultural "me, myself, and I syndrome" will have the most difficult time adapting to a merging of economic, resource and environmental collapse.

Retired Monk - "Ideology is a disease"

polycarp2
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Jul. 31, 2007 4:01 pm

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