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TheStreet Open House

When Prices Make No Sense

VANCOUVER ( Bullions Bull Canada) -- A reader recently passed along some fascinating material providing a detailed review of the Weimar hyperinflation experienced by Germany in the 1920s, along with some astute analysis of those events in order to give readers a clear picture of this economic catastrophe.

The purpose of this piece, however, is not to review that article. Those interested in further enlightenment will have to obtain it on their own.

What my own reading of that analysis provided was some interesting surprises and reinforcement of several of my own economic premises.

Among the most important of these is the illusory nature of "change."

The Weimer hyperinflation provides us with a classic illustration of that concept. Viewed from nearly a century in the future, our assumption is that this "episode" was characterized by a consistent progression: either the parabolic explosion in prices (and collapse in the value of currency) that we are taught defines hyperinflation, or (at the least) some steady-but-dramatic linear progression.

In fact Germany's hyperinflation did not unfold like that at all. Rather, there were dramatic ebbs and surges, including intervals of weeks at a time where the reichsmark actually rose in value versus other currencies.

Imagine the difficulty in trying to convince the average German that their currency was "being destroyed by hyperinflation" when they saw it rising in value for weeks at a time. Hyperinflation? What hyperinflation?

Undoubtedly, these average Germans told themselves if there were any hyperinflation event they would "see it coming." They were wrong.

With the modern citizens of our Western economies, their folly is two-fold.

First, they suffer from the same self-delusion as the German people: that they would/will see any economic catastrophe coming. This alone is a potentially terminal lapse of judgment. Second, they have been deceived by the statistical lies of our duplicitous governments.

The poster child for this deceit is the U.S. government. For nearly four years a cast of liars from government, media, and the banking community have assured Americans they have been enjoying an "economic recovery."

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