Repeating history: The future of Greece, Europe, and the United States.

I’m rereading The Path to Tyranny to prepare it for a second printing and came across this section about Germany in the late 1920s and early 1930s (before the Nazis took over) very relevant for today:

The country’s economic problems worsened and the government approached bankruptcy. To reduce the budget deficit, the government raised unemployment insurance premiums, increased duties on wheat and barley, reduced pension and unemployment benefits, and cut the salaries of civil servants. The Social Democratic Party’s popularity declined even more when these measures pushed up unemployment even further and weakened the already fragile banking system. The government was trapped in a no-win situation. It cut back on spending to avoid bankruptcy, but this increased hardship on the people and reduced the government’s popularity. On the other hand, the government could have continued providing welfare to the people, but this would likely have forced Germany to default on its debt, which would have resulted in massive inflation and a flight of capital out of the country. The German government’s large deficits, which were the result of the economic depression combined with Germany’s already semi-socialist economy, forced Germany to decide between two equally bad choices. The resulting economic and political crisis was inevitable, regardless of what the government chose to do.

Are we in the same no-win situation today? If governments cut back on spending, this reverse-stimulus will hurt the economy and the removal of economic support will certainly increase the pain for many poor people. However, if the government continues with its deficit spending, bankruptcy will eventually occur, first in Greece which already has debt to GDP of 173%, but eventually in most if not all Western countries.

2 responses to “Repeating history: The future of Greece, Europe, and the United States.

  1. I see only one way out of the no-win situation, Michael. When Greece defaults, the other dominoes will not be far behind and the US will not be immune. Deflation will take over. The banksters will want the Fed tot turn on their printing presses and pay off all their debts. Because the banksters are first in-line, they will take these new dollar and buy gold and silver and anything else of value before these dollars begin to circulate causing hyperinflation for you and me. If this occurs after the 2012 elections there is a chance if we elect the right people to stop the Fed from doing what the banksters want. With a great big set of cajones, the US should declare that will no longer recognize Federal Reserve notes. Yes, we need to default. the Treasury should begin print new dollars backed by a basket of gold, silver and some other metals. We will suffer maybe a year of deflation and then we will begin to recover. Every nation needs to do the same or we will for ever be at the mercy of the banksters.

  2. I have a plan, that could ease this problem with out some of the interwound complex pain that congress loves so much. I thought I could get to Herman of Newt to offer them this simple idea. So simple that no one would ever think of it, well not here, any way. We should talk about this and launch a sight for the simple solution. Germany had one thing that works for it the people love to work. They love to make stuff. Sad that their best work was in Rockets, Tanks, and Die Glocke. I have just spent two weeks in Germany through the reading of the history of their problems. We need to rethink all of this and look for the time line we face now. Same story different day.

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