"Look at what Germany did when currency collapsed. They issued paper claims payable in labor, etc. In 4 yrs they were the strongest country in Europe. "
Hjalmar Schacht's program.
By Ellen Brown, August 9th, 2007
"We were not foolish enough to try to make a currency [backed by] gold of which we had none, but for every mark that was issued we required the equivalent of a mark's worth of work done or goods produced ... we laugh at the time our national financiers held the view that the value of a currency is regulated by the gold and securities lying in the vaults of a state bank."
- Adolf Hitler, quoted in "Hitler's Monetary System", www.rense.com, citing C. C. Veith, Citadels of Chaos (Meador, 1949)
Guernsey wasn't the only government to solve its infrastructure problems by issuing its own money. (See E. Brown, "Waking Up on a Minnesota Bridge," www.webofdebt.com/articles/infrastructure-crisis.php, August 4, 2007.) A more notorious model is found in post-World War I Germany.
When Hitler came to power, the country was completely, hopelessly broke. The Treaty of Versailles had imposed crushing reparations payments on the German people, who were expected to reimburse the costs of the war for all participants - costs totaling three times the value of all the property in the country. Speculation in the German mark had caused it to plummet, precipitating one of the worst runaway inflations in modern times. At its peak, a wheelbarrow full of 100 billion-mark banknotes could not buy a loaf of bread. The national treasury was empty, and huge numbers of homes and farms had been lost to the banks and speculators. People were living in hovels and starving. Nothing quite like it had ever happened before - the total destruction of the national currency, wiping out people's savings, their businesses, and the economy generally. Making matters worse, at the end of the decade global depression hit. Germany had no choice but to succumb to debt slavery to international lenders.
Or so it seemed. Hitler and the National Socialists, who came to power in 1933, thwarted the international banking cartel by issuing their own money. In this they took their cue from Abraham Lincoln, who funded the American Civil War with government-issued paper money called "Greenbacks." Hitler began his national credit program by devising a plan of public works. Projects earmarked for funding included flood control, repair of public buildings and private residences, and construction of new buildings, roads, bridges, canals, and port facilities. The projected cost of the various programs was fixed at one billion units of the national currency. One billion non-inflationary bills of exchange, called Labor Treasury Certificates, were then issued against this cost. Millions of people were put to work on these projects, and the workers were paid with the Treasury Certificates. This government-issued money wasn't backed by gold, but it was backed by something of real value. It was essentially a receipt for labor and materials delivered to the government. Hitler said, "for every mark that was issued we required the equivalent of a mark's worth of work done or goods produced." The workers then spent the Certificates on other goods and services, creating more jobs for more people.
Within two years, the unemployment problem had been solved and the country was back on its feet. It had a solid, stable currency, no debt, and no inflation, at a time when millions of people in the United States and other Western countries were still out of work and living on welfare. Germany even managed to restore foreign trade, although it was denied foreign credit and was faced with an economic boycott abroad. It did this by using a barter system: equipment and commodities were exchanged directly with other countries, circumventing the international banks. This system of direct exchange occurred without debt and without trade deficits. Germany's economic experiment, like Lincoln's, was short-lived; but it left some lasting monuments to its success, including the famous Autobahn, the world's first extensive superhighway. (1)
Hjalmar Schacht, who was then head of the German central bank, is quoted in a bit of wit that sums up the German version of the "Greenback" miracle. An American banker had commented, "Dr. Schacht, you should come to America. We've lots of money and that's real banking." Schacht replied, "You should come to Berlin. We don't have money. That's real banking." (2)
Although Hitler has rightfully gone down in infamy in the history books, he was quite popular with the German people, at least for a time. Stephen Zarlenga suggests in The Lost Science of Money that this was because he temporarily rescued Germany from English economic theory - the theory that money must be borrowed against the gold reserves of a private banking cartel rather than issued outright by the government. (3)
According to Canadian researcher Dr. Henry Makow, this may have been a chief reason Hitler had to be stopped: he had sidestepped the international bankers and created his own money.
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Economist Henry C K Liu writes of Germany's remarkable transformation:
The Nazis came to power in Germany in 1933, at a time when its economy was in total collapse, with ruinous war-reparation obligations and zero prospects for foreign investment or credit. Yet through an independent monetary policy of sovereign credit and a full-employment public-works program, the Third Reich was able to turn a bankrupt Germany, stripped of overseas colonies it could exploit, into the strongest economy in Europe within four years, even before armament spending began. (5)
In Billions for the Bankers, Debts for the People (1984), Sheldon Emry commented:
Germany issued debt-free and interest-free money from 1935 and on, accounting for its startling rise from the depression to a world power in 5 years. Germany financed its entire government and war operation from 1935 to 1945 without gold and without debt, and it took the whole Capitalist and Communist world to destroy the German power over Europe and bring Europe back under the heel of the Bankers. Such history of money does not even appear in the textbooks of public (government) schools today."
1 Koehl, "The Good Society?", www.rense.com (January 13, 2005); Stephen Zarlenga, The Lost Science of Money (Valatie, New York: American Monetary Institute, 2002), pages 590-600.
2 John Weitz, Hitler's Banker (Great Britain: Warner Books, 1999).
3 S. Zarlenga, op. cit.
4 Henry Makow, "Hitler Did Not Want War," www.savethemales.com (March 21, 2004).
5 Henry C. K. Liu, "Nazism and the German Economic Miracle," Asia Times (May 24, 2005).
6 Stephen Zarlenga, "Germany's 1923 Hyperinflation: A 'Private' Affair," Barnes Review (July-August 1999); David Kidd, "How Money Is Created in Australia," dkd.net (2001).
7 S. Zarlenga, "Germany's 1923 Hyperinflation," op. cit.
Ellen Brown, J.D., developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and "the money trust." She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Brown's eleven books include the bestselling Nature's Pharmacy, co-authored with Dr. Lynne Walker, which has sold 285,000 copies.
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