Tuesday, February 12, 2013

On the Road to Bathgate Act 2: Funny Money

Running the printing presses to monetize debt, in whatever form that takes, drives the boom cycle before it spectacularly bursts.  During the Roaring Twenties bank notes, traded and accepted as currency, were the prime mechanism for inducing the boom before becoming the means of destruction during the Great Depression.  Virtually every small town had a national bank empowered to issue notes secured against its capital base.  This is a Series 1929 bank note, issued in my Dad’s hometown, by the National Bank of Bathgate, North Dakota.  This 1929 note barely survived Black Monday (October, 28, 1929); it was worthless by 1930 when the National Bank of Bathgate liquidated.  The Depression hit quick, it hit hard and it hit without warning, wiping out virtually everyone and everything that laid within its path, regardless of merit, history or accountability.   Tens of millions of lives were destroyed or ended.  Yet the progressives remember the Great Depression as a wonderful time because it gave rise to President Franklin Delano Roosevelt and evolved into the biggest war induced economic surge ever known.  They laud the fruits of currency devaluation fomented by excessive issuance of debt.  It’s a lesson for all mankind to avoid, but it's a lesson unknown to the progressive political pipsqueaks who drive the political show today.   

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