This article was published by The McAlvany Intelligence Advisor on Wednesday, April 18, 2018:
Sinclair Lewis’s It Can’t Happen Here has recently been pounced upon by liberal pundits as a novel that remains relevant today with the election of President Donald Trump. Said left-liberal Salon magazine in its review of the 1935 novel, this is “the novel that foreshadowed Donald Trump’s authoritarian appeal.”
What this author intends is to draw a parallel between the inflation and destruction of the German currency in the early 1920s that led to the rise of Hitler and the slow, steady inflation of the American currency that could lead to the same end: a totalitarian police state here.
Here is what libertarian author, economist, and professor Murray Rothbard wrote about the runaway German inflation:
By the later months of 1923, the German mark suffered from an accelerating spiral of hyperinflation: the German government (Reichsbank) poured out ever-greater quantities of paper money which the public got rid of as fast as possible. In July 1914, the German mark had been worth approximately 25 cents. By November 1923, the mark had depreciated so terrifyingly that it took 4.2 trillion marks to purchase one dollar (in contrast to 25.3 billion marks to the dollar only the month before).
It was only until the government stopped the printing presses that sanity was restored. Wrote Rothbard:
How did Germany get out of its runaway inflation? Only when the government resolved to stop monetary inflation, and to take steps dramatic enough to convince the inflation-wracked German public that it was serious about it.
While sanity, at least from a free market perspective, was restored, permanent and ultimately fatal damage had been done to the German culture by the runaway inflation, exacerbated by the onerous reparations inflicted by the victors on the vanquished nation following the First World War. If Hitler hadn’t arrived on the scene, another equally odious and destructive dictator would no doubt have assumed the role. The German nation was ready for him with much thanks going to the destruction wrought by the previous inflation.
For those who haven’t read their history, it is being repeated in Venezuela. Once the richest and most prosperous country in South America, Marxists Hugo Chavez and his successor, Nicolas Maduro, have driven the country to the brink of economic extinction by similar practices. Price increases are no longer being reported by Maduro’s government, and the dictator himself has excoriated attempts by the now-illegal National Assembly and websites like Dolartoday.com to inform the citizenry about them.
Last week, the National Assembly reported on the country’s runaway inflation numbers that were so astronomical that few could relate to them. Prices increased by 67 percent in March, 453 percent in the first quarter, and 8,878 percent over the last year. A spokesman for the National Assembly, Congressman Rafael Guzman, told a press conference that the runaway prices are beyond the control of the government:
This means that the financial crisis has overwhelmed the Government. The Government isn’t interested in putting the brakes on inflation in order to help the Venezuelan people recover their purchasing power. We continue living with hyperinflation and there aren’t any government policies to stop it.
Guzman then pulled out a huge pile of the country’s currency, the Bolivar fuerte (“strong Bolivar”), which it would take to purchase a single American dollar bill. He explained that price tags are missing in stores that still have something to sell because prices are changing so fast. He explained further that store owners are using scales to weigh out the currency, but often the scales themselves break down when the weight exceeds their limits.
But what is life really like in Venezuela? How are everyday citizens coping with the destruction of the currency? How are they managing to eat, pay rent, pay the bills? How do they exist when their country’s very economic and financial foundation shifts from day to day?
J.G. Martinez, a citizen suffering under Maduro’s madness, has answered those questions. In a letter addressed to The Generic Prepper, Martinez warned Americans about “what you could expect in a hyperinflation scenario.” His letter is edited and summarized for emphasis:
Salaries stopped being useful for buying anything other than food….
One Bolivar is worth 0.000020 USD. The minimum wage is $5.21 or 1,800,000 Bs for a month. Now, how could we expect someone to live under these conditions?
Martinez then listed current prices for common commodities and foodstuffs, prices that by now have no doubt jumped considerably:
Vegetable oil, 900 ml bottle, 748,000 Bs
Wheat flour, 1 kg, 398,000 Bs
Cheese, 1 kg, 2,160,950 Bs (yes, TWO MILLION)
Oatmeal, 400 grams, 550,000 Bs
Margarine, 1 kg, 747,000 Bs
Ladies’ deodorant, 890,000 Bs
Mayonnaise, 910 grams, 955,000 Bs
Two toilet paper rolls, 399,000 Bs
Light bulb, 935,000 Bs
Shoes, 5,989,000 Bs
Martinez noted that not only has the supply chain been totally disrupted by Maduro’s war against the free market, but he has ordered his military service to distribute what’s available. His military services are starving along with the citizenry, and so they have further disrupted the flow by redirecting those commodities that are still available to street gangs in exchange for part of the profits. Those commodities are then sold on the black market at multiples of the prices fixed by the government. As Martinez explained:
The main problem arises because it is the military taking over the supply chain. They have an agreement with the gangs, and they deviate [reroute] the production of the plants that are under military control, to the street sales. The gangs are armed, and they protect the retail sellers from thieves and turmoil. This is in the most populated cities, where the money is, and therefore the products don’t make it so often up to the smaller towns.
As is always the case when currency is destroyed by government printing presses, a black market springs up. It’s the free market, but referred to by anti-capitalists as “black,” somehow intimating that it’s bad. Here again Martinez tells the truth: “The black market offers of tires, food, car spares, engine oil, and all kind of medicines and goods are rampant, and the social networks are full of resellers.”
He tells of an embarrassing moment when he tried to purchase at item, but learned at the last minute that the price had increased so much that he couldn’t make the simplest purchase:
I asked a granny how much she was charging for some hand towels she had for sale, [but] I did not have enough money in my pocket to buy even one towel…. I apologized but saw she was upset. It was a sad, awkward moment indeed.
Who survives in such an environment? Answered Martinez:
Someone with manual, valuable skills, [who] could provide basic goods or services, will be able to survive. They will just adjust their prices … and if the customer can’t pay, then most likely they will trade in their service for something to barter. People with low maintenance trucks that have received meat as payment in a farm for transporting a load of hay (many farmers have to buy hay down here in the dry season because they don’t have the machines to compact it and there is no rain for the pastures to grow). They exchange the remaining meat for cheese, poultry, and fish. Or the electrician like my dad got paid with half a pork for one day of work at his friend’s farm rewiring an old corn mill. He took the excess as a gift to one of my cousins, and got back 6 kgs of pasta, and 2 of sugar.
Who doesn’t survive? Said Martinez:
The hardworking father of three, with a minimum wage, is starving, and watching their family starve too. Some of them quit their jobs and started a life of crime. Other ones leave their families behind and don’t come back. Others have been kind enough to tell their families that they will be in this or that country, and never appear again.
Many have committed suicide.
Elders do it because they don’t want to be a burden nor an additional weight for their family.
Youngsters because they don’t see themselves in such an apocalyptical scenario.
Martinez ended his letter to the Organic Prepper:
And this, ladies and gentlemen, is what hyperinflation and a collapsed society looks like. May God bless us and protect us all.
Just what is so special about the United States that these horrors will be avoided? Indeed, the process has already begun.
Amazon.com: It Can’t Happen Here, by Sinclair Lewis
TheOrganicPrepper.com: What Hyperinflation in Venezuela Really Looks Like