The hyperinflation of Germany in 1923 is the most documented case of inflation the world has witnessed. Caused by Germany being forced to repay the victors of World War I, Germany could not repay this huge debt without simply printing more money, thus creating it out of thin air, with nothing to back it up.
The result: The Deutschemark, once valued at 4.2DM to the US Dollar before the war in 1914, fell to 14:1 after the war; to 1900:1 in January, 1922; to 18,000:1 in January, 1923, one year later; to 353,000 in July, 1923; to it’s pathetic end, November 15, 1923, of 4.2 trillion marks to one US dollar!
One story I heard of was a family who sold their bakery in 1923, hoping to retire. By the time the transaction closed escrow, their proceeds from the sale could not buy a loaf of bread from their own bakery! Incidents of people being paid twice a day, so they could buy food and supplies before their pay would became even less valuable. They would haul wheelbarrows full of cash into the stores, and a few incidents occurred where a shopper would leave their wheelbarrow unattended for a moment, only to return to find their pile of money on the floor, and their wheelbarrow gone!
Inflation is caused by too much money, and not enough product. When a government prints money without any commodity, such as gold, to back it up, this dilutes the value of their currency, and the currency value falls. When you place your faith and trust in a man made government, and its money, you are in effect, trusting your fellow man to be trustworthy, caring, sharing, thrifty, considerate of others, and all those other characteristics that pretty much violate human nature. In effect, when you trust mankind to manage mankind, the “managers” will eventually ruin everything, starting with the money system.
Strangely, one group of people came out of this German hyperinflation in very good shape: Jews. Jews did not put their faith and trust in the Deutschemark; they put their faith and trust in the things their TORH told them to: gold, silver, crops and livestock, precious stones, and land. They put their faith and trust in God and the things man could not make or create out of thin air, commodities. So while everyone else in the German middle class was reduced to a peasant status, the rich got to pay back all of their indebtedness with an increasingly worthless currency, and the Jewish middle class who sat out much of this nonsense by means of barter, also prospered, using the worthless currency only when it served them best.
Currency inflation, in a man made state, where the currency is not backed up by gold or silver, is inevitable. To date, only a few small countries have currencies backed by gold or silver. It does not matter if gold or silver sits in their vaults; what matters is the nation, the printer of the currency, as a matter of convenience, must declare to all that a certain number of their currency units (dollars, pounds, francs, etc.) will equal one ounce of silver, or gold, and this nation must be willing and able to back it up, no matter what. This is something no large government power in this day and age has the backbone to do. They’re human. They’re government. They lack integrity.
God, on the other hand, has no problem keeping integrity. Throughout time, he as remained true and faithful in everything He has said and done. If God says he is going to do something, it’s as good as done. When God says to do this, or don’t do that, it will serve you well to obey.
The United States kept its currency on the gold standard until 1974, when our government found they needed more money to spend on their favorite projects and special interests. They lost their ability to control their spending. As a result, the value of Gold and other commodities has increased almost tenfold since 1974, and our dollar is now worth about 9 cents in 1967 dollars.
So, when God says, use gold and silver as money, you better not be content with printed paper. When God says it is good to trade products and services, but not good to charge interest on a loan to a neighbor, there is a reason.
So, what to invest in? Commodities and Real Estate. Equities or stocks might be allright, provided the stocks you invest in are tied to commodities. For this, I really like real estate investment trusts (or REITs), that are in residential real estate. Short term, the severe recession or depression we are in will make this scenario seem foolish; however, with 1-2 trillion dollars being pumped into our economy each year, an inflation similar to the late 1970s (or even worse) should be in store for us. These kind of investments should do very nicely, long term. Stay away from bonds, except for bonds maturing within a year. Long term, bonds will not be able to keep up with the inflation rates, and these bonds can become worthless.
The best investment we can make; however, is with our tithes and offerings. God honors us when we honor him in this manner. God even permits us to put Him to the test on this matter, and see if He doesn’t “throw open the floodgates of heaven and pour out so much blessing that you will not have enough room for it” (Malachi 3:10)
The end result of all of this is that while God wants us to prosper, and be wealthy, he wants us to worship Him, not money. The greatest wealth we can earn comes from the spiritual reward we receive by helping the poor survive in some of the worst conditions on earth. And while some will be called to be doers, the rest of us are called to be senders. Those of us honoring God with our tithes and offerings are the senders; those of us going are the doers. Both are equally valuable in God’s Kingdom.
Stay diligent, prepare yourself for the worst, but most important, keep the United States of America in your prayers. Our Lord and God is in the miracle business, and he will show us His way out.