'THERE MAY BE TROUBLE AHEAD'
'It'll all end in tears !', as Eddie (1), the shipboard computer on the starship 'Heart of Gold', in Douglas Adam's 'Hitchhiker's Guide to the Galaxy' (2), remarked on landing on the planet of Margathea (see right).
Currencies can be very useful for the majority of people, as long as one's attention is not focussed on them - those little intrinsically worthless pieces of paper and disks of base metal - which smooth our way through life.
The problem, of course, is that they are intrinsically worthless, as the Germans found out to their cost in the 1920s.
(see left a fifty million mark note -
which might have just bought a loaf of bread !)
And the solution ?
First the Rentenmark,
(see right - which surprisingly restored the value of the German currency),
and then the Reichmark, (see right), and finally World War,
which eventually gave birth to the mighty Deutschmark (see left).
And was the Deutschmark the precursor of the Euro ?
And what, you may ask, is the Rentenmark (here I am writing for the non historians and non economists) ?
The Rentenmark (literally, "Debt Security Mark") (RM) was a currency issued on 15 November 1923 to stop the hyperinflation of 1922 and 1923 in Germany.
The Rentenmark replaced the Deutsche Mark.
Due to the economic crises in Germany after World War I, there was no gold available to back the currency, therefore the Rentenbank, which issued the Rentenmark, mortgaged land and industrial goods worth 3.2 billion Rentenmark to back the new currency.
The Rentenmark was introduced at a rate 1 Rentenmark = 1012 Deutsche Mark, establishing an exchange rate of 1 United States dollar = 4.2 RM.
The Rentenmark was only a temporary currency and was not legal tender.
It was, however, accepted by the population and effectively stopped the inflation.
The Reichsmark became the new legal tender on 30 August 1924, equal in value to the Rentenmark.
The monetary policy spearheaded by Hjalmar Schacht (4) (see left) the Central Banker and Hitler's economic miracle worker - together with the fiscal policy of German Chancellor Gustav Stresemann (5) (see right) and Finance Minister Hans Luther (below left) brought the inflation in Germany to an end.
Now why was the Rentenmark so effective in bringing German hyperinflation to a halt, and producing a stable economy ?
The problem of the Euro is that while the economies of some states can 'represent' a realistic guarantee of the currency's value - ie Germany, other states, ie Greece cannot.
In addition those countries tainted with 'orientalism' in the past, - Greece, Spain, Portugal and Italy, have developed an economic culture of excessive credit and non-payment of tax.
These states, on becoming part of an organisation which has been dominated by a culture built on a 'Teutonic/Protestant' work ethic have now found that their excessive debt can no longer be disguised by currency manipulation, and now find themselves exposed to demands for repayment which their total assets cannot cover.
The author of this blog would suggest, therefore, that the eventual result of this situation will probably be the 'shrinkage' of the European Union - to exclude low productivity economies, and the removal of such economies from the Euro Zone.
(1) Eddie is the name of the shipboard computer on the starship Heart of Gold.
Like every other system on the spaceship, it has a Sirius Cybernetics Corporation Genuine People Personality. Thus, Eddie is over-excitable, quite talkative, over-enthused and extremely ingratiating, or alternatively a coddling, school matron-type as a back-up personality.
Shipboard networking interconnects Eddie with everything on the Heart of Gold; at one point, the whole ship is effectively crippled by Arthur Dent's request for tea from the Nutrimatic drinks dispenser; the computation of which nearly crashed Eddie and everything connected to him.
(2)The Hitchhiker's Guide to the Galaxy is a science fiction comedy series created by Douglas Adams. Originally a radio comedy broadcast on BBC Radio 4 in 1978, it was later adapted to other formats, and over several years it gradually became an international multi-media phenomenon.
(3) Angela Dorothea Merkel née Kasner; born 17 July 1954 is the current Chancellor of Germany (since 22 November 2005).
Merkel, elected to the Bundestag (German Parliament) from Mecklenburg-Vorpommern, has been the chairwoman of the Christian Democratic Union (CDU) since 2000, and chairwoman of the CDU-CSU (Christian Social Union) parliamentary coalition from 2002 to 2005.
From 2005 to 2009 she led a grand coalition with the Christian Social Union (CSU), its Bavarian sister party, and the Social Democratic Party of Germany (SPD), formed after the 2005 federal election on 22 November 2005.
In the elections of 27 September 2009, her party, the CDU, obtained the largest share of the votes, and formed a coalition government with the CSU and the Free Democratic Party (FDP). Her government was sworn in on 28 October 2009.
In 2007, Merkel was also President of the European Council and chaired the G8.
She played a central role in the negotiation of the Treaty of Lisbon and the Berlin Declaration.
In domestic policy, health care reform and problems concerning future energy development have thus far been major issues of her tenure.
Merkel is the first female Chancellor of Germany.
In 2007, she became the second woman to chair the G8, after Margaret Thatcher. In November 2011 she became the longest-serving leader of a G8 country.
(4) Dr. Hjalmar Horace Greeley Schacht (22 January 1877 – 3 June 1970) was a German economist, banker, liberal politician, and co-founder of the German Democratic Party.
He served as the Currency Commissioner and President of the Reichsbank under the Weimar Republic.
He was a fierce critic of his country's post-World War I reparation obligations.
He became a supporter of Adolf Hitler and the Nazi Party, and served in Hitler's government as President of the Reichsbank and Minister of Economics.
As such, Schacht helped implement Hitler's policies of redevelopment, reindustrialization, and rearmament.
He was forced out of the government by disagreements with Hitler and other prominent Nazis in December 1937, and had no role during World War II.
After the war, he was tried at Nuremberg and acquitted.
In 1953, he founded his own bank, and advised developing countries on economic development.
(5) Gustav Stresemann (help·info) (May 10, 1878 – October 3, 1929) was a German politician and statesman who served as Chancellor and Foreign Minister during the Weimar Republic.
He was co-laureate of the Nobel Peace Prize in 1926.
Stresemann's politics defy easy categorization.
Arguably, his most notable achievement was reconciliation between Germany and France, for which he and Aristide Briand received the Peace Prize.