Auraria-newsletter: Biggest Money Printing of all Time (Dr. Martin Erdmann)

(Dr. Martin Erdmann

logoBiggest Money Printing of all Time

March 10, 2014

Andrew Dickson White in his history of the French Revolutionary paper money era, Fiat Money Inflation in France, wrote, “It would be a great mistake to suppose that the statesmen of France or the French people were ignorant of the dangers of issuing irredeemable money. No matter how skillfully the bright side of such a currency was exhibited, all thoughtful men in France remembered its dark side. They knew too well, from what ruinous experience, seventy years before, in John Law’s time, the difficulties and dangers of a currency not well based and controlled. They had learned how easy it is to issue it; how difficult it is to check its over issuance; how seductively it leads to the absorption of the means of the workingmen and men of small fortunes; how heavily it falls on all those living on fixed income, salaries and wages; how securely it creates on the ruins of prosperity of all men of meager means a class of debauched speculators, the most injurious class that a nation can harbor-more injurious, indeed, than professional criminals whom the law recognizes and can throttle; how it stimulates overproduction at first and leaves every industry flaccid afterward; how it breaks down thrift and develops political and social immorality. All this in France had been thoroughly taught by experience.”

In both these French paper money episodes, gold and silver were outlawed by the State as alternative means of payment; although, the ultimate solution to both failed currency experiences was to return to sound money backed by gold and silver.

The lesson of these two fiat money episodes is that money printing begins at a relatively slow pace, but quickens as the economy and speculation expands. The end comes when the printing presses are operating day and night in a frantic effort to keep things from falling apart.

Similar frenzied monetary printing is now ongoing in a desperate effort to keep fiat currencies alive. As an example, thanks to Money and Markets, this is the Federal Reserve’s panic stricken monetary response since the collapse of Lehman Brothers.

Consider these outrageous facts:

Fact #1. Immediately prior to Lehman Brothers failure, the Fed reported that the monetary base stood at $849.8 billion (U.S.)

This past October 30th. it was $3,607.7 billion (U.S.). That’s an expansion of $2,757.8 billion (U.S.) or $2.7 trillion (U.S.).

Fact #2. This $2.7 trillion (U.S.) expansion has all taken place within just six years and one month.

If, instead, the Fed had continued to expand the monetary base at a normal pace (by the same amount as it had since 1961), it would have taken nearly 150 years to come this far.

In other words, with normal growth, the Fed’s recent $2.7 trillion (U.S.) monetary expansion would not have been achieved until the year 2158!”

Fact #3. Prior to 2008, there were only two times the Fed embarked on extremely rapid monetary explosion of this type-first in anticipation of the widely feared Y2K bug; and later in the aftermath of the 9-11 terrorist attacks. However, as of the latest tally, the post-Lehman QEs have been

  • a whopping 43 times larger than the dramatic Y2K expansion, and …
  • an unbelievable 69.5 times larger than the Fed’s explosive reaction to 9/11.

The most alarming fact of all is this…

While the Fed has used crisis after crisis to justify its monetary madness, it has not yet begun to resolve the underlying diseases that gave rise to those crises. It has merely papered over their symptoms.


Source: Money and Markets, Saturday, November 16, 2013.

All the capitalist central banks are printing money like mad in an effort, to perpetuate their fiat paper money currencies. This frantic printing of paper money is sure sign that the end is nigh for the era of fiat paper money, just as it was for the French fiat paper money fiascoes.

Dr. Martin Erdmann Editor, Auraria (a public service of Verax Vox Media)

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