Silver as an investment

Too Much of a Good Thing, Part III / by Bill Bonner / August 31, 2012

08/31/12 The phenomenon known as “declining marginal utility” is well known. Economists cite it from time to time. Even butchers refer to the ‘point of diminishing returns.’ And poets warble about fading light and failing love.

No proof necessary. Everybody knows what happens to fat people when they eat too much. Everybody knows what happens to banks that lend out too much money or to plants when they are given too much water. As to Adolph Hitler, everybody who’s ever watched the History Channel knows he pushed his luck.

“Too much” is an expression that covers a lot of ground. It is what happens when you pass the point of diminishing returns…and keep going. Give the plant some water and it flourishes. Give it more and it doesn’t help. Keep giving it water and it will die. That is when you have gone too far and done too much. That’s when you have reached the downside.

There are some things, of course, which are excessive from the get-go. For those things even a little bit is too much. Those are the things that Adolph Hitler wanted to do.

But giving the man the benefit of the doubt, Germany felt under considerable pressure in the ’20s and the ’30s. She had agreed to an armistice in 1919. Then, still subject to a starving blockade by the English navy and with no further defenses left, she was stabbed in the back…forced to take the blame for the war and to pay the cost of reparations.

What would she pay with? Germany could barely feed herself, let alone pay billions — in gold — in compensation to her former enemies. And when she failed to make the payments, the French invaded, seizing the richest and most productive industrial area of Germany, the Ruhr Valley.

The situation seemed impossible. The French and British owed colossal sums to America. They counted on payments from Germany to balance their accounts. But Germany’s war debt was far beyond what she could pay. Nor could she even default and go bankrupt in the way that debtors who own too much typically do. War debt, like taxes, could not be resolved by ordinary means.

Since there was no honorable way out of the crisis, Germany took a dishonorable route. She made promises; she did not intend to keep them.

When you begin looking for ‘too much’ you find it almost everywhere. Had not the war reparations been set “too high” Germany, France and Britain might have been able to come to an agreement on more relaxed terms. Then, Germany might have been allowed into the company of civilized nations; they might have worked out their differences amicably and WWII might have been averted.

But in retrospect, the allies were too eager to assign the guilt to Germany, uniquely, too greedy for reparations…and then too blockheaded to see that they were making a major mistake. They practically forced Germany into a defensive, xenophobic…and ultimately delusional…position.

Adolph Hitler was ‘too much’ too. He was the kind of man who should have worked as a housepainter, giving himself plenty of time under the eaves to let his over-heated brain nurse grudges and design grand strategies. He could have simmered in a local bar after work…developed a bad case of lead poisoning…and eventually ended his days in a state mental hospital. Instead, in the ‘too much’ era of the ’20s and ’30s, history called him to do her dirty work. He was on the job in a flash…ready to add hyperbole to already overwrought situations.

As if Germany didn’t have enough trouble in the ’30s, Herr Hitler added more. He was a central planner’s central planner. He had a plan for everything. And every plan was a disaster.