Archive for the ‘Economics’ Category


Hitler’s Economic Revolution
by Magister James D. Sass

In response to a bulletin in circulation I am posting this small fragment of a much longer article on the 20th century that I wrote in 1992 that I am in the process of rewriting, expanding and updating for a collection of essays on social/political topics. (Another earlier part of this longer essay was adapted for the afterword to the Underworld Amusements reprint of Nietzsche’s The Antichrist.) JDS

{SNIP}….Therefore the media-created picture of the Nazis as abject monsters and the German people either as barbarians or gullible fools and sadists, must be transcended in order to examine the years in which the monetarists emerged as a force in world affairs. Since reason and our knowledge of human nature and history forces us to reject the notion of one set of human beings as the epitome of evil while another set are the epitome of heroic liberators imbued with all the ideal qualities of human justice, there is no escaping the fact that the history of the twentieth century must be reexamined. As we stated when entering this inquiry, historical revisionism is one thing, but using another method of analyzing events is another. Until the record of the last century, including specifically the distortion of historical events and personages in post-Weimar Germany, is corrected, we will be unable to make sense of our times.

It is impossible to measure the growth of these financial centers and the cross-over from being institutions to being the meridian points in a trans-national flow-system of money movement and currency manipulation. The creation of new money, and what institutions and agencies and people had the capacity to create it, all depends on our ability to examine the material of our times dispassionately without the disruption of inquiry by denunciation as being anti-humanist, or by rejection as being reactionary.

Once the fictitious layers of histrionic personality attacks have been peeled off to reveal the essential reality, then one must peel off the distortions of motives and events. The whole trajectory is suspect when viewed from a detached perspective. Hitler is a psychopath; Stalin is a sympathetic heavy-drinking avuncular figure, (yet somehow boding ill for the future); Churchill is the heroic archetypal Englishman fighting for freedom with his back to the wall; Roosevelt is the American aristocrat prepared to sacrifice his life for freedom, etc. The current view of Weimar Germany as a glorious Mecca of free artistic expression and culture is a gross distortion of the degradation and anarchic conditions that called out for renovation and renewal, which was just what the National Socialists brought to that cesspool of economic and social chaos, rapidly transforming Germany into the leading industrial nation in Europe with restored self-respect. The current mythology of Hitler as a demonic lunatic bent on world domination is perhaps the most pernicious distortion of facts in the whole spectrum of this time period. The irony of it being that England was in reality the country that had been and continued to be the country of global domination. As Hitler pointed out, “A minority of 45 million Englishmen rule 600 million inhabitants of the British Empire.” Yet according to status quo history Hitler’s alleged desire for “world domination” was a lunatic project that had to be stopped. What in fact did Hitler want? What was his world-view? What was his critique? How far was he right? What went wrong? All these questions must be answered within a framework allowing us to see the crucial matter of how and by what structural and dynamic methods did trans-national financial power come to dominate and control political entities.

It is worth noting that among the famous 20 Points of Hitler’s National Socialist Party was the commitment to “break the bondage of interest.” It is this that lies at the heart of the convulsive tremors that went through middle Europe in the twenties and thirties. It was also the failure of that era to realize what forces were in play, unleashed by the first significant attempt to allow a nationalist state power to control its own wealth system. In his monumental Military History of the Western World, J.F.C. Fuller, (the British Fascist, Major-General in the British Army, and respected military historian), writes, “Among these artists of power were two men possessed of a new philosophy – Benito Mussolini and Adolf Hitler. They challenged the myth of Economic Man, the fundamental factor in Capitalism, Socialism, and Communism, and exalted in its stead the myth of the Heroic Man…. In Hitler’s eyes the aims of international Capitalism and Marxism were one and the same. Both, he said, repudiated ‘the aristocratic principle of Nature’; both were destroyers of quality, not of things but of life…. Unless this struggle between these two myths – Economic Man and Heroic Man – is accepted and understood, the cataclysm which in 1939 submerged the world is almost incomprehensible and the age to which it gave birth little more than the plaything of chance.” Aside from a natural gift for leadership, continues Fuller, “The demons that exalted him were the Treaty of Versailles, which bore no resemblance to Wilson’s Fourteen Points… the invasion of the Ruhr by Poincare in 1923, which debauched the German currency and wiped out the German middle classes; the influx of £750m. in foreign loans between 1924 and 1930, which debauched the German people, and lastly the crash on the American stock exchange, which begat the world-wide monetary depression of 1929-31. In 1930, 17,500,000 Germans were supported by the state, and in 1931 the Communist electorate in Germany rose to over five million. In that year the American journalist H.R. Knickerbocker… estimated that at least 15 million Germans were partially starving; that two-thirds of the voters were hostile to Capitalism, and more than half were hostile to the existing political system called democracy. In the following year these calamities led to Hitler’s triumph… Save by those who witnessed it, the exultation of the masses on Hitler’s advent to power is unbelievable… Whether this extraordinary man was devil or madman, as his enemies proclaimed him to be, in no way belittles the fact that he stamped out Bolshevism in Germany and accomplished astonishing things.”

Fuller further describes Hitler’s financial reforms as of foremost importance among these astonishing accomplishments, “Hitler’s goal was Napoleonic: to establish a German Continental System under the aegis of Germany. Also his means were not far removed from those of the great emperor: to liberate Germany from the shackles of international loan-capitalism, to unite all Germanic peoples into the Third Reich, and to establish in eastern Europe what he called the German Lebensraum (living space) which he considered as essential to the economic security of Germany as Napoleon had considered the confederation of the Rhine essential to the strategic security of France. Hitler held that, as long as the international monetary system was based on gold, a nation which cornered gold could impose its will on those who lacked it. This could be done by drying up their sources of exchange, and thereby compelling them to accept loans on interest in order to distribute their wealth – their production. He said: ‘The community of the nation does not live by the fictitious value of money, but by real production which in its turn gives value to money. This production is the real cover of the currency, and not a bank or a safe full of gold.’”

Fuller continues by outlining Hitler’s reforms, “He decided: (1) To refuse foreign interest-bearing loans, and to base currency on production instead of gold. (2) To obtain imports by direct exchange of goods – barter – and subsidize exports when necessary. (3) to put a stop to what was called ‘freedom of the exchanges’ – that is, license to gamble in currencies and shift private fortunes from one currency to another according to the political situation. And (4) To create money when men and material were available for work instead of running into debt by borrowing it.” This had a tremendous impact on the trans-national financiers, “Because the life of international finance depended upon the issue of interest-bearing loans to nations in economic distress, Hitler’s economics spelt its ruination. If he were allowed to succeed, other nations would certainly follow his example, and should a time come when all non-gold-holding governments exchanged goods for goods, not only would borrowing cease and gold lose its power, but the money-lenders would have to close shop… This financial pistol was pointed more particularly at the United States, because they held the bulk of the world’s supply of gold, and because their mass-production system necessitated the export of about 10 percent of their products in order to avoid unemployment. Further, because the brutalities meted out to German Jews by Hitler understandably had antagonized American Jewish financiers, six months after Hitler became Chancellor, Samuel Untermyer, a wealthy New York attorney, threw down the challenge. He proclaimed ‘holy war’ against National Socialism and called for an economic boycott of German goods, shipping, and services.” Hitler’s reforms also had a tremendous impact on his domestic economy, further arousing international resentment. Fuller continues, “Between 1933 and 1936, Hitler had reduced German unemployment from six millions to one, and prosperity had so far returned that… in 1936 Winston Churchill is reported to have said… ‘Germany is getting too strong and we must smash her.’” Fuller astutely observes of the world situation at this juncture, “When we consider these economic causes of the Second World War it must be borne in mind… that the struggle between the two economic systems is not a question of right and wrong but of survival values.”

Other political events brought the impending conflict to a head; Germany withdrew from the League of Nations in 1933, negotiating with Poland to secure the eastern flank, repudiated the arms provision of the Versailles Treaty and reintroduced conscription in 1935; then after dishonorably failing to fulfill treaty agreements with Italy over Abyssinia, the League of Nations was not only discredited but instrumental in driving Mussolini into strategic alliance with Hitler.

These and other crisis, Fuller writes, “…generated a violent propaganda against Hitler. Foreign affairs lost all objectivity and became wrapped in an explosive animosity which so perturbed Dr. Goebbels… that he appealed to the American Ambassador in Berlin, who replied that the ‘most crucial thing that stood between any betterment of American Press relationships was the Jewish question.” The situation deteriorated when a young Polish Jew assassinated the third secretary at the German Embassy in Paris (1938), precipitating an immediate pogrom against the Jews in Berlin, which added fuel to the anti-German propaganda mills in the United states.

Fuller quotes at length the very revealing report to the Polish Foreign Office from Count Jerzy Potoki, the Polish Ambassador to Washington, dated January 12, 1939; “Public opinion in America nowadays… expresses itself in increasing hatred of everything… connected with National Socialism. Above all, propaganda here is entirely in Jewish hands… when bearing public ignorance in mind, their propaganda is so effective that people here have no real knowledge of the true state of affairs in Europe…. It is interesting to observe that in this carefully thought-out campaign – which is conducted primarily against National Socialism – no reference at all is made to Soviet Russia. If that country is mentioned, it is referred to in a friendly manner and people are given the impression that Soviet Russia is part of the democratic group of countries. Thanks to the astute propaganda, public sympathy in the USA is entirely on the side of Red Spain. Side by side with this propaganda an artificial war-panic is created…. No effort is spared to impress upon the American mind that in the event of a war the USA must take an active part in a struggle for freedom and democracy. President Roosevelt was first in the field to give expression to his hatred of Fascism. He had a two-fold purpose in mind: firstly, he wanted to divert American public opinion from difficult and complicated domestic problems… Secondly, by creating a war-panic… he wanted to induce Americans to endorse his huge program of armaments…. Furthermore, the brutal treatment meted out to the Jews in Germany as well as the problem of the refugees are both factors which intensify the existing hatred of everything connected with German National Socialism. In this campaign of hatred, individual Jewish intellectuals such as Bernard Baruch, Lehman, Governor of New York State, Felix Frankfurter, the newly appointed Supreme Court Judge, Morgenthau, the Financial Secretary, and other well known personal friends of Roosevelt have taken a prominent part. All of them want the President to become the protagonist of human liberty, religious freedom and the right of free speech…. This particular group of people, who are all in highly placed American official positions and who are desirous of being representatives of ‘true Americanism’, and as ‘Champions of Democracy’, are, in point of fact, linked with international Jewry by ties incapable of being torn asunder. For international Jewry – so intimately concerned with the interests of its own race – President Roosevelt’s ‘ideal’ role as a champion of human rights was indeed a godsend. In this way Jewry was able not only to establish a dangerous center in the New World for the dissemination of hatred and enmity, but it also succeeded in dividing the world into two warlike camps. The whole problem is being tackled in a most mysterious manner. Roosevelt has been given the power to enable him to enliven American foreign policy and at the same time to create huge reserves in armaments for a future war which the Jews are deliberately heading for.”……..{SNIP}….(c)2009 JDS.

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Thinking Outside the Box: How a Bankrupt Germany Solved its Infrastructure Problems
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,”

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,” http://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 (“thanks” to the second world war); 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

Hitler has gone down in infamy in mainstream history books, but he was immensely popular with the German people who voted him in, democratically, at 98%. Stephen Zarlenga suggests in The Lost Science of Money that this was merely 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.*** Makow quotes from the 1938 interrogation of C. G. Rakovsky, one of the founders of Soviet Bolsevism and a Trotsky intimate, who was tried in show trials in the USSR under Stalin. According to Rakovsky, Hitler had actually unknowingly been funded by the international bankers for a time, through their agent Hjalmar Schacht, in order to control/counter-check Stalin, who had usurped power from their agent Trotsky. But Hitler had become an even bigger threat to the international bankers than Stalin when he had taken the bold step of printing his own money. Rakovsky said:

[Hitler] took over for himself the privilege of manufacturing money and not only physical moneys, but also financial ones; he minted a new mark and put it to work for the benefit of the state . . . . Are you capable of imagining what would have come . . . if it had infected a number of other states? If you can, then imagine its counterrevolutionary functions!4

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 any overseas colonies it could exploit (like the British had always done), into thee 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 [can you see why hitlers successful example of economic reform threatened international banking? it eliminated interest with a single, broad-stroke and threw the usurers on their heads. those who were most deeply disadvantaged then turned around and spun this entire reform as a threat to democracy and decency around the world– just like they do today with their “terrorist” enemies]. 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. [the reasons are abundantly clear when you remember that the victors write our books while the vanquished have no voice.]

Another Look at the Weimar Hyperinflation

What does appear in modern textbooks is the disastrous runaway inflation suffered in 1923 by the Weimar Republic (the common name for the republic that governed Germany ***before Hitler came on the scene*** from 1919 to 1933). The radical devaluation of the German mark is cited as the textbook example of what can go wrong when governments are given the unfettered power to print money (exactly what our government is doing today, and with the very same consequences). That is what it is cited for; but in the complex world of economics, things are not always as they seem. The Weimar financial crisis began with the impossible reparations payments imposed at the Treaty of Versailles. Schacht, who was currency commissioner for the Republic, complained:

The Treaty of Versailles is a model of ingenious measures for the economic destruction of Germany. . . . The Reich could not find any way of holding its head above the water other than by the inflationary expedient of printing bank notes.

That is what he said at first. But Zarlenga writes that Schacht proceeded in his 1967 book The Magic of Money “to let the cat out of the bag, writing in German, with some truly remarkable admissions that shatter the ‘accepted wisdom’ the financial community has promulgated on the German hyperinflation.”6 Schacht revealed that it was the privately-owned Reichsbank which operated before Hitler’s ascent, not the German government, that was pumping new currency into the economy. Like the U.S. Federal Reserve, the Reichsbank was overseen by appointed government officials but was operated for private gain. What drove the wartime inflation into hyperinflation was speculation by foreign investors, who would sell the mark short, betting on its decreasing value. In the manipulative device known as the short sale, speculators borrow something they don’t own, sell it, then “cover” by buying it back at the lower price. Speculation in the German mark was made possible because the Reichsbank made massive amounts of currency available for borrowing, marks that were created with accounting entries on the bank’s books and lent at a profitable interest (fractional reserve). When the Reichsbank could not keep up with the voracious demand for marks, other private banks were allowed to create them out of nothing and lend them at interest as well.7

According to Schacht, then, not only did the government not cause the Weimar hyperinflation, but it was the Hitler government that got it under control. The Reichsbank was put under strict government regulation, and prompt corrective measures were taken to eliminate foreign speculation, by eliminating easy access to loans of bank-created money. Hitler then got the country back on its feet with his Treasury Certificates issued Greenback-style by the government.

Schacht actually disapproved of this government fiat money, and wound up getting fired as head of the Reichsbank when he refused to issue it (something that may have saved him at the Nuremberg trials). But he acknowledged in his later memoirs that allowing the government to issue the money it needed had not produced the price inflation originally predicted by classical economic theory. He surmised that this was because factories were sitting idle and people were unemployed. In this he agreed with John Maynard Keynes: when the resources were available to increase productivity, adding new money to the economy did not increase prices; it increased goods and services. Supply and demand increased together, leaving prices unaffected.


1 Matt 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,” http://dkd. net/davekidd/politics/money. html (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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