Parallels between USA and Weimar Republic and hyperinflation are clear. Trump must get China trade deal to avoid US collapse

To show the parallels between the USA today and the Weimar republic, let's look at a description of hyperinflation in the Weimar Republic from Mises.org and transpose it to 2019 and apply it to the USA and the Trump administration.

https://mises.org/library/90-years-ago-end-german-hyperinflation

The new Weimar Republic faced tremendous economic and political challenges. In 1920, industrial production was 61 percent of the level seen in 1913, and in 1923 it had fallen further to 54 percent. 

The new Trump administration  faced tremendous economic and political challenges. In 2019, the weak base of industrial production, declining for decades, was hit by his trade wars with China 

The land losses following the Versailles Treaty had weakened the Reich’s productive capacity substantially: the Reich lost around 13 percent of its former land mass, and around 10 percent of the German population was now living outside its borders. 

Trump's trade wars and extreme weather also made farmers bankrupt in droves, weakening the USA's productive capacity substantially, having the same impact as land loss through  invasion.

In addition, Germany had to make reparation payments. 

In addition, the USA had to make growing interest payments on its record 22 trillion dollar debt.

Most important, however, the new and fledgling democratic governments wanted to cater as best as possible to the wishes of their voters. 

Most important, however, the new and fledgling Trump admin wanted to cater as best as possible to the wishes of their voters and cut taxes.

As tax revenues were insufficient to finance these outlays, the Reichsbank started running the printing press.

As shrinking tax revenues were insufficient to finance these outlays, the Trump admin started running a huge deficit.

From April 1920 to March 1921, the ratio of tax revenues to spending amounted to just 37 percent. Thereafter, the situation improved somewhat and in June 1922, taxes relative to total spending even reached 75 percent. Then things turned ugly. 

Tax revenues to spending dipped, then rose. Then things turned ugly.

Toward the end of 1922, Germany was accused of having failed to deliver its reparation payments on time.

Toward the end of 2019, the USA faced de dollarization, the end of its status as the world's reserve currency and  a crisis of confidence among investors who started to demand ever higher interest rates to hold US debt at record levels.

The Trump admin was unwilling to raise taxes which would weaken the economy still more, and ran the printing presses hotter.

To back their claim, French and Belgian troops invaded and occupied the Ruhrgebiet, the Reich’s industrial heartland, at the beginning of January 1923. The German government under chancellor Wilhelm Kuno called upon Ruhrgebiet workers to resist any orders from the invaders, promising the Reich would keep paying their wages. 

The Trump admin kept promising workers, etc the state would keep paying their wages.

The Reichsbank began printing up new money by monetizing debt to keep the government liquid for making up tax-shortfalls and paying wages, social transfers, and subsidies.

The Trump admin started running the printing press, injecting 60 billion per month just to keep the 3 month debt low. That sum went up to 600 billion per month by 2020 and 6000000000000 billion by 2021 as interest sky rocketed.

Hyperinflation can hapen very quickly.





From May 1923 on, the quantity of Papermark started spinning out of control. It rose from 8.610 billion in May to 17.340 billion in April, and further to 669.703 billion in August, reaching 400 quintillion (that is 400 x 1018) in November 1923.2 Wholesale prices skyrocketed to astronomical levels, rising by 1.813 percent from the end of 1919 to November 1923. At the end of World War I in 1918 you could have bought 500 billion eggs for the same money you would have to spend five years later for just one egg. Through November 1923, the price of the US dollar in terms of Papermark had risen by 8.912 percent. The Papermark had actually sunken to scrap value.


https://mises.org/library/90-years-ago-end-german-hyperinflation


The US budget deficit widened to $1.067 trillion for the first 11 months of the fiscal year, an increase of 19% over this time last year, the Treasury Department reported Thursday.

https://edition.cnn.com/2019/09/12/business/us-federal-deficit-august/index.html


The U.S. government estimates it will receive $3.645 trillion in revenue. That creates a $1.101 trillion deficit for October 1, 2019, through September 30, 2020. 

....

The government expects to spend $4.746 trillion. Almost 60% pays for mandated benefits such as Social Security, Medicare, and Medicaid. 

Interest on the U.S. debt will be $479 billion. The U.S. Treasury must pay it to avoid a U.S. debt default. Interest on the approximately $22 trillion debt is already the fastest growing federal expense.

https://www.thebalance.com/u-s-federal-budget-breakdown-3305789


Federal tax revenues were lower in 2018 than in 2017, reversing a trend of rising revenues seen in recent years, according to U.S. Treasury data tracked by District Economics Group.

DEG’s Diane Lim said that “2018 was an unusual year for tax revenue. Not just because revenue levels dropped so much but because they dropped so much as the economy was growing so strongly.”


(CNN)Earlier this week, the Congressional Budget Office announced that the federal deficit for this past fiscal year was $984 billion, the highest that it's been in seven years.


But Trump has put a series of policies in place -- most notably the tax cut law -- that have ballooned the debt to more than $22 trillion in just the last three years alone.

https://edition.cnn.com/2019/10/09/politics/budget-deficit-trump/index.html


From Mieses org

The new Weimar Republic faced tremendous economic and political challenges. In 1920, industrial production was 61 percent of the level seen in 1913, and in 1923 it had fallen further to 54 percent. 

The land losses following the Versailles Treaty had weakened the Reich’s productive capacity substantially: the Reich lost around 13 percent of its former land mass, and around 10 percent of the German population was now living outside its borders. In addition, Germany had to make reparation payments. Most important, however, the new and fledgling democratic governments wanted to cater as best as possible to the wishes of their voters. As tax revenues were insufficient to finance these outlays, the Reichsbank started running the printing press.

From April 1920 to March 1921, the ratio of tax revenues to spending amounted to just 37 percent. Thereafter, the situation improved somewhat and in June 1922, taxes relative to total spending even reached 75 percent. Then things turned ugly. Toward the end of 1922, Germany was accused of having failed to deliver its reparation payments on time. To back their claim, French and Belgian troops invaded and occupied the Ruhrgebiet, the Reich’s industrial heartland, at the beginning of January 1923. The German government under chancellor Wilhelm Kuno called upon Ruhrgebiet workers to resist any orders from the invaders, promising the Reich would keep paying their wages. The Reichsbank began printing up new money by monetizing debt to keep the government liquid for making up tax-shortfalls and paying wages, social transfers, and subsidies.

From May 1923 on, the quantity of Papermark started spinning out of control. It rose from 8.610 billion in May to 17.340 billion in April, and further to 669.703 billion in August, reaching 400 quintillion (that is 400 x 1018) in November 1923.2 Wholesale prices skyrocketed to astronomical levels, rising by 1.813 percent from the end of 1919 to November 1923. At the end of World War I in 1918 you could have bought 500 billion eggs for the same money you would have to spend five years later for just one egg. Through November 1923, the price of the US dollar in terms of Papermark had risen by 8.912 percent. The Papermark had actually sunken to scrap value.


https://mises.org/library/90-years-ago-end-german-hyperinflation