Reichsbank Gold

Why Hitler couldn’t wait to start WWII — and today’s striking parallel

One thing that had never been clear to me is why Hitler started World War II in such haste. Nazi Germany just wasn’t ready to fight a war on two fronts.

The explanation came via a documentary. Chronicle of the Third Reich is, I am pleased to say, not just another “Weekly Hitler Show” rehash.

The answer lies in finance. The Third Reich actually made government debt a state secret. Given that, no-one with any sense was going to lend Hitler and his cronies a cent. The Reichsbank did what central banks always do in these situations, and printed money to make up the gap in revenue.

But no-one outside the Third Reich was obliged to accept Reichsmarks. For foreign transactions, such as importing food, which the Reich was short of, gold was the only reliable payment option.

And of course, Germany’s gold was running out. The financial situation was desperate. So what to do?

Well, taking over neighbouring countries and their central bank gold hoards was actually the best option available.

Austria welcomed annexation into the Third Reich, and their gold stash was quietly absorbed. But that wasn’t enough.

Hitler set his sights on Czechoslovakia. Unfortunately for Hitler, the rest of Europe didn’t want another war and acceded to his demands for the Sudetenland to be given over. This deprived Hitler of the excuse he needed to invade Czechoslovakia proper and take its gold.

The Reich’s finances were a week-to-week proposition. Hitler had to get his war started — how else would he explain increased rationing to the Germans? And expansion into the Lebensraum would help solve the food shortage.

At risk of having Godwin’s Law invoked against me at this point, I am going to continue this train of thought: There is in fact a direct parallel between today’s financial crisis, and Hitler’s.

That is, that the Western world has spent far beyond its means to ever repay. The financial situation is arguably far worse than that faced by Germany back then. Hitler at least had no capacity to raise debt. Every ounce of gold he spent had to come from somewhere. Whereas today, the West has been able to stave off the day of reckoning far longer than Hitler could have dreamed. Financial markets have swallowed whole the notion that irredeemable paper currency and its corresponding government bills, notes and bonds are perfectly sound savings vehicles.

But you say, isn’t gold a relic of a bygone era? What do today’s central banks care for gold?

Well, a very great deal as it turns out. For in order to prolong the reign of irredeemable currency, Western central banks have engaged in covert interventions to prevent an all-out stampede into gold. They have been staging a managed retreat for more than a decade as the price has risen year by year.

And in order to stage this retreat, a great deal of golden ammunition has been spent. It is estimated by some, such as GATA, that as much as half the reported gold “assets” of Western central banks have in fact been disposed of or otherwise encumbered.

At some point, the bottom of the barrel is reached. And then gold must be found from elsewhere.

We can only speculate on the possibility that Germany’s gold, deposited for “safe keeping” in New York, is being held hostage to ensure Germany forecloses on Greece’s gold. One of history’s ironies.

The central bank vaults of Iraq, Libya, Greece and who knows where else can only assist in prolonging the saga of irredeemable currency. But for how long and what comes next?

The Third Reich’s quest for gold led directly to the outbreak of total war.

In our era, the finances are far worse and the stakes are far higher.

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