"Those who cannot remember the past are condemned to repeat it." - George Santayana
The lesson from history we'll be focusing on today is:
How those with wealth protect their wealth before a depression.
Throughout the roaring 20's the global economy saw a boom in consumerism, with a "keeping up with the Joneses" mentality, to own the latest technologies and keep up to date with the latest fashion trends. This consumerist mentality coupled with an increase in the General Public's up-take of buying and trading stocks/bonds, especially on leverage, meant the average Joe throughout the 20's overspent in both lifestyle and investment, and for the most part they was never punished.
With so many people buying into the idea of infinite riches without the need to work. Stock Brokers and Banks offered 10-1 leverage, where anyone could turn $300 into $3000 worth of stocks, and as the price of stocks soared through a leverage demand driven feedback loop, an individual could see their $300 turn into $10,000 whilst only owing $3000 + change back to the broker.
This desire for individual wealth using other peoples money, was a foundational reason for the Stock Market Crash in October 1929.
The issue a lot of wealthy individuals had in the lead up to October 1929 was their inability to liquidify their assets in time. In the 6 months lead up to the crash, a few wealthy individuals managed to convince the market it was the best time to buy, whilst they decreased their holdings on the new found demand they created in the market. Unfortunately for the majority of the most affluent and middle class had lost a large portion of their fortune, through both the 90% drop in Market Value from its peak, as well the debt they'd accumulated leveraging to speculate on an entirely leveraged market.
Now fast forward to 2008... the economy was on the brink of collapse, and like 1929, most of the wealthy hadn't foreseen the market circumstances. So they enlisted the help of Governments and Central Banks, to prop the market up and keep it going... creating an era of fake growth on under the illusion of debt.
This new money coming into circulation allowed the wealthy to get out of their Government Bond positions, to exit out of investments they deem won't survive the collapse, to move their wealth into preservation and liquid assets.
Reshaping their portfolios to focus on; Increasing their positions in Physical Gold/Silver, slowly selling enormous portfolios and realising their profits (thanks to Government and Corporate initiatives like Quantitative Easing & Stock Buybacks), all whilst increasing their holdings of fiat currency to take advantage of all the 'bargains' at the bottom of the market.
The crash is just the beginning, the collapse is what they're planning for and it seems they're betting on the legal system to hold true through the storm. International agreements, property ownership, land ownership, lease agreements should all carry over to a new economic system.
Reflecting on the past again, Germany is a perfect example to show how the legal system can prevail though a change in Economic System.
Moving Germany from the Goldmark to the Papiermark in 1914 took them off the Gold Standard, thus allowing for the unlimited printing of money, which as we know inevitably led to hyperinflation.
Even though money was worthless by 1924, items still held value, property still held value, gold still held value.
The legal precedent of ownership held on until a new system could be created. The winning solution was to print a limited circulation of a new currency, The Rentenmarks, around 1,800,000,000, which eventually held the same value as the new Central Bank printed currency, the Reichsmark.
The same principle must be somewhere close in our future, as we watch Central Banks continue to sell the idea that they can print their way out of this crisis.
Based on this reflection from history, it seems the perfect opportunity to increase wealth is the point just before fiat currency no longer buys you anything.
The printing of money between 2008 and 2020 has enabled these dynasties to prepare for the next system, whilst leaving we the people unaware of the coming struggles we'll face as we navigate the transition to the new system.
With this perspective.... what will you change?
