Freedomain Radio

Some thoughts on the century of "wars for freedom"...

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Great podcast stef!

I'd still like to get more information on the financing of germany by the US and UK. Any sources you recommend? I'd really like to find out how germany went from hyperinflation to military industrial complex in such a short period of time. It would cool if there were some detailed economic analysis out there.

ianlippert:

Great podcast stef!

I'd still like to get more information on the financing of germany by the US and UK. Any sources you recommend? I'd really like to find out how germany went from hyperinflation to military industrial complex in such a short period of time. It would cool if there were some detailed economic analysis out there.

One example from France:

In June and July 1931, Governor Harrison, head of the Federal Reserve Bank of New York, maintained an almost daily record of his responses to the Reichsbank's pleas for assistance. The detailed character of the memoranda that he preserved implies that he wanted the record to show that he made all reasonable efforts to aid the Reichsbank so that no one could hold him responsible for the collapse of Germany's gold standard and banking system. Ironically, the record creates the impression that Harrison never in fact intended to aid the Reichsbank. Maintenance of investor confidence in the ability of the Reichsbank to maintain the gold parity required the New York Fed to organize central bank and private bank support of the Reichsbank. The unwillingness of Harrison to exercise leadership doomed the international cooperation that could have maintained that confidence.

The record shows that Harrison had regular communication with Montagu Norman, governor of the Bank of England. On 20 June 1931, Norman informed Harrison that the Reichsbank had suffered a loss of 70 million reichsmarks and was near its legal limit on gold cover. The Reichsbank wanted a loan from the Bank of England and the New York Fed. (45) On 23 June Norman informed Harrison that "the situation was so critical and dangerous" that the Bank of England and the New York Fed should lend the Reichsbank $100 million. Harrison objected, arguing that if France did not participate, it would have no incentive to go along with the Hoover debt moratorium; Norman argued that Harrison's objection was irrelevant. (46) However, the Banque de France did agree to participate and the Reichsbank received the loan, with the Fed's share limited to $35 million.

from German monetary history in the first half of the twentieth century.

And, from England:

As German trade with Britain foundered in 1934, British traders demanded the seizure of German assets to pay for German debts in the early 30s, by the Bank of England and its pro-German Governor, Montague Norman, via "City," British banks and Treasury Department officials averted a German financial default which could have had devastating consequences for the British bondholders. Protecting the British bondholders and avoiding a collapse of the lucrative British-German trade, and the departure of Germany from international trade, became the major preoccupation of Norman, the "City" and the Bank of England. Loans to Nazi Germany industry and banks enabled Germany to rearm. This fed into a policy of trying to avoid disturbing Hitler and causing a default by Germany that could destabilize international trade and produce unforeseen consequences.

from A Low Dishonest Decade

Thanks a ton stef!

The main reason I wanted this info was because of the remarks of my macro prof last term who said that germany was able to rearm through keynsian economics. Obviously at the time I knew it was complete nonsense but it still brought up the question of how exactly they did rearm if they had destroyed the value of the mark To pay back reparations. Looks like I have some reading to do.

Also when you look at it from the point that governments are there to protect us its completely rediculous. They sent us off in WW1 to die for their interests, they piss off the germans with reparations, and then they fund the insane german populace who want to murder us. Its no wonder WW2 happened, its pure insanity!

And people wonder how private contractors are going to protect our interests. Lol?

Two things to amplify:

 - There's an economic corollary to the German situation of the late 1920s-early 1930s where the young's radicalism was funded by the social order.  Hyman Minsky's financial instability hypothesis seems to be proving itself.  It's been popularized in the WSJ as "stability breeds instability", that during periods of stability, people don't value risk appropriately.  Risk-taking behavior increases to inappropriate amounts, and financial structures tend towards Ponzi schemes.  This eventually collapses as risky structures take each other and everything else down.

 - I can't find a reference, but I saw a history channel show about a British woman who made quite a name for herself in telling people that the British version of Mein Kampf was severely abridged.  It was in the mid-1930s, and she had a seat in parliament.  The British version took out his roadmap, among other things.

FDR Premium - The Mythology of the Battle of Britain