Friday, October 15, 2010

World War I is finally over!

"He Kept us Out of War."
– 1916 Democratic slogan for President Wilson during the election.
The US joined WWI under Wilson in 1917.

Here's an odd fact you're not likely to find in History Books. The final act of WWI occurred on September 26, 2010 β€” 92 years after the WWI officially ended. Last month Germany made its final payment of $94 million in war reparations β€œto private individuals, pension funds and corporations holding debenture bonds as agreed under the Treaty of Versailles.” Who knew Germany was still paying a 90-year-old war debt? I thought Hitler torn up the Treaty of Versailles when he started WWII.

Interestingly while WWI has an "official" ending date with the signing of the Treaty of Versailles, no single date works for WWII. The war in Europe ended on 8 May 1945, V-E Day. Fighting in Asia continued until the announcement of Japan's surrender on 14 August 1945,  V-J Day; in Japan the date was 15 August due to time zone differences. Armistice was formalized on 2 September 1945 when Japan signed a document of surrender. However the official Treaty of Peace with Japan was not signed until 1951.

Bottom Line

Debt has consequences. The German wartime debt from WWI led to hyperinflation and loss in faith in the government which gave Hitler an opportunity to gain power. Today some fear that the US is at risk for hyperinflation given our record amount of debt and generous printing of money to "stimulate" the economy.

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