Adolf Hitler Came to Power 92 Years Ago When The German Banks Collapsed. Is History Repeating Itself?
“Those who cannot remember the past are condemned to repeat it.” — George Santayana
“History repeats itself, but in such cunning disguise that we never detect the resemblance until the damage is done.” — Sydney J. Harris
“If history repeats itself, how incapable must man be of learning from experience.” — Karl Marx
Is history repeating itself?
Banks and the rise of Adolph Hitler
In a March 19, 2019 Vox EU article titled How failing banks paved Hitler’s path to power: Financial crisis and right-wing extremism in Germany, 1931-33 José-Luis Peydró, Hans-Joachim Voth and Sebastian Doerr asked,
Can financial crises fan the flames of fanaticism?
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In a new study, we provide such evidence for the canonical case of Germany during the 1930s (Doerr et al. 2019). The country saw one of the worst depressions on record, with output contracting by more than a quarter, and sky-rocketing unemployment. Germany’s slump was aggravated by a severe banking crisis in the summer of 1931, which helped turn an ordinary recession into the Great Depression (Figure 1). The crisis was triggered by the collapse of Danatbank, one of Germany’s four big universal banks. Following a Central European banking crisis that had begun in Austria in May, German banks experienced deposit withdrawals. Danatbank itself faced unsustainable losses when one of its borrowers, a large textile firm, defaulted due to fraud and bad luck. The ensuing bank run led to a suspension of bank deposits, the failure of another bank, Dresdner, and a three-week bank holiday with Germany’s de facto exit from the gold standard. Both external and domestic factors, combined with political inactivity because of repayments (due to political conflict between Germany and France over reparations), turned Danatbank’s troubles into a full-blown financial crisis (Ferguson and Temin 2003, Born 1967, Schnabel 2004).
[ … ]
A rich and growing literature has shown that financial crises have real economic effects. Firms connected to banks in trouble perform worse, and the more so if they need external financing (Ivashina and Scharfstein 2008, Campello et al. 2010). Local economies exposed to firm-specific financial shocks suffer economically (Huber 2018). What has been missing in the literature on ‘real effects’ of financial crises is a clear link between financial shock and political catastrophe. Our new study documents such a link for one key historical episode – a financial shock increased support for a radical agenda that successfully blamed a minority for the general population’s misery.
Capital DE’s Christian Schütte in an article titled How the bank crash promoted the rise of the Nazis in 1931 wrote,
The German banks collapsed in the summer of 1931. The global economic crisis turned into a severe recession. A dictatorship from a shaky democracy.
[ … ]
Only a year and a half later the new Chancellor was called Adolf Hitler.
Did Hitler nationalize the German banks? No, he said there was no need to nationalize banks and industries when he had already nationalized the people (into the military). He gave huge military contracts to industries and they couldn’t be happier.
‘Rapid Deterioration’ as Moody’s Rating Service Downgrades U.S. Banking System
Spencer Brown | Townhall March 14, 2023 wrote,
Following the biggest bank failure since the financial crisis of 2008, Moody’s Investor Service has downgraded its rating of the “U.S. banking system” in the latest sign that President Biden’s Monday morning attempt to assuage concerns went over like a lead balloon.
Moody’s cuts outlook on entire U.S. banking system to negative, citing ‘rapidly deteriorating operating environment’ – CNBC
Moody’s — one of three major rating entities — downgraded its outlook for the U.S. banking system from “stable” to “negative” on Tuesday morning “to reflect the rapid deterioration in the operating environment following deposit runs at Silicon Valley Bank (SVB), Silvergate Bank, and Signature Bank (SNY) and the failures of SVB and SNY,” Moody’s explained.
In addition to downgrading the entire banking system, Moody’s also issued warnings for several individual banks “with substantial unrealized securities losses and with non-retail and uninsured US depositors” that “may still be more sensitive to depositor competition or ultimate flight” and end up “with adverse effects on funding, liquidity, earnings and capital.”
The unrealized losses, specifically, have become substantial:
View FDIC Unrealized Gains (Losses) on Investment Securities infographic.
The specific institutions being monitored by Moody’s for “potential downgrades” include INTRUST Financial, Western Alliance, Comerica, Zions Bancorp, and First Republic.
Markets, however, did not seem to move much on the news.
Moody’s just cut its outlook on U.S. banking system to negative due to ‘rapidly deteriorating operating environment’
Nationalizing American Banks
Roger Altman, the former Deputy Treasury Secretary in the Clinton administration, told CNN host Kaitlan Collins,
What the authorities did over the weekend was absolutely profound. They guaranteed the deposits, all of them, at Silicon Valley Bank. What that really means — and they won’t say it, and I’ll come back to that — what that really means is that they have guaranteed the entire deposit base of the U.S. financial system. The entire deposit base.
Watch the interview with Roger Altman.
Federal regulators shut down Silicon Valley Bank (SVB) Friday after its stock price collapsed and customers began a bank run following the financial institution’s disclosure of a $1.8 billion loss on asset sales due to high interest rates, CNBC reported.
America is now in a situation in which the federal government is in the process seizing control of the banks. This is the final economic step to tyranny.
We know that the Biden administration has expanded its government powers, conducted surveillance on U.S. citizens, colluded with social media to censor its political enemies and arrested and imprisoned those who peacefully demonstrated on January 6th, 2021.
The nationalization of our banks may be the last nail the Constitutional Republic.
It may also be the last nail in our economic freedom.
©Dr. Rich Swier. All rights reserved.
RELATED TWEET:
"Failure doesn’t signal disappearance as much as it signals ownership changing hands. Which speaks to genius of failure as essential driver of progress. Economies gain crucial strength from periods of weakness b/c poorly managed capital changes hands at distressed prices." #ampFW https://t.co/3WDum4Wq59
— FreedomWorks (@FreedomWorks) March 16, 2023
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Biden spending our money like he is some kind of King/Oligarch (ex. the collage loan bailout) and he must be stopped by Congress or the Courts or both. Irks me that I’ve not heard a lot of outrage about this bank failure situation nor Biden’s lies coming from Republicans in Congress ???? Why not ????
Following are astute comments from a retired Bank Auditor friend with 30 years experience in international and domestic banking.
“As important as the issues are that you pointed out, there is an even larger, constitutional issue involved. Biden’s Administration is spending the money above $250,000 per depositor out of funds from the Treasury that have not been approved by Congress. ALL federal spending approval must begin in the House of Representatives and be approved by both houses of Congress. Biden is spending this money as though he was a king.”
“And there is another issue. By spending FDIC funds in excess of $250,000 per depositor, and for what is now three failed banks, the deposit insurance fund will be exhausted.Where is the insurance fund coverage for the rest of us bank depositors? ”
“The fee charged to banks will have to be raised, and they will turn around and charge their higher costs to their customers, most likely in higher interest rates – leading to more INFLATION.”
“But that won’t aggregate enough deposit insurance funds in a short enough, period of time. The US Treasury and Federal Reserve Bank will have to ‘bail out’ the deposit insurance fund to refill it. More printing paper money (fiat money) which causes more inflation and higher interest rates. And none of it approved by Congress.”