September 1, 2025 • 25 mins
1621. The Thirty Years War is bleeding German treasuries dry, and desperate princes discover what seems like the perfect solution: improve their coins by making them cheaper to produce. What could go wrong?
Everything.
In this deep dive into one of history's most overlooked financial disasters, we explore how professional coin clippers called "Kipper & Wipper" accidentally created Europe's first hyperinflation crisis, crashed international trade, and taught the world lessons about currency debasement that we're still ignoring today.
From medieval mint operations to modern quantitative easing, this 400-year-old German monetary experiment reveals uncomfortable truths about every government's favorite financial magic trick: creating money out of thin air.
You'll discover:
- How German princes turned silver coins into copper while keeping the same face value
- Why sophisticated merchants took years to catch on to obvious fraud
- The psychology of monetary delusion that repeats in every currency crisis
- Why this obscure crisis predicted every hyperinflation from Revolutionary France to Weimar Germany
- What medieval coin clipping teaches us about Fed policy and modern "money printing"
- Why real assets become king when paper promises fail
This is a blueprint for understanding monetary chaos. And if you think "this time is different," this episode will change your mind.
The German princes of 1621 thought they had discovered unlimited wealth. Instead, they discovered the eternal truth: there is no substitute for real value creation, honest money, and the patience to build wealth the hard way.
Those lessons remain as relevant today as they were 400 years ago.
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Think Well. Act Wisely. Build Something Timeless.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
SPEAKER_01 (00:00):
Welcome back to the Timeless Investor Show.
(00:30):
We will also be investigatingthe builders, people that built
incredible things over historyand the lessons we can learn
from their stories.
A week or so back, we did anepisode on John Law.
So that is a new series ofdiscussions we're gonna have,
which are on the villains,right?
Or the cons, people that doreally bad things.
(00:51):
But another series type we'regonna have here is the crises,
the crashes, the, you know,whatever, the great,
interesting, terrifying,horrific, Thank you for
watching.
(01:18):
I want to start in the year1621.
The Thirty Years' War isbleeding treasuries across the
Holy Roman Empire.
German princes are desperate forrevenue, but their peasants,
their taxpaying populations, arecompletely broke.
They cannot pay anymore.
(01:38):
So they came up with what seemedlike a brilliant solution.
Improve their coins by makingthem more affordable.
to produce.
What could possibly go wrong?
Well, the truth is that theyaccidentally created Europe's
first hyperinflation crisis,crashed international trade, and
(02:00):
taught the world a lesson aboutcurrency debasement that, to be
honest, we are still learningtoday.
And I just did an amazinginterview in the last week.
Check it out if you haven't seenit with Mario Anecco talking
about the French Revolutionpiece we released recently and
the history of central bankingcurrency debasement.
But the truth is, you can debaseany currency.
(02:22):
And we give a lot of heat todayabout debasing the dollar,
printing, debt.
But you can debase hard currencyas well.
And this is the story of that.
This is the story of the Kipaand Wipa crisis, named after
professional coin clippers whoturned silver into copper and
(02:42):
nearly, if not effectively,brought down an empire.
So let's set the scene here.
for this crazy story.
It is 1618 and Europe has justplunged into what would become
known as the 30 Years War.
What started as a religiousconflict between Catholics and
Lutherans, the new Protestants,in the Holy Roman Empire quickly
(03:03):
spiraled into a continent-widecatastrophe.
Now, for those of you that don'tknow, the 30 Years War was one
of the most destructiveconflicts in European history,
which honestly is saying a lotas there have been some very
destructive conflicts inEuropean history.
An estimated four and a half toeight million soldiers and
(03:24):
civilians died from battle,famine, or disease.
Some parts of Germany reportedpopulation declines of over 50%.
And frankly, it's not somethingwe know about much.
And I just want to put somethingin context here.
World War II killed 60 millionplus people.
(03:46):
I may be misquoting the number.
A lot of people.
But that was in 1940.
This was in 1618.
I mean, the devastation in termsof population size, tremendous.
Tremendous.
And wars have a tendency to beexpected.
Very expensive, which if any ofyou read The Creature from
(04:09):
Jekyll Island, fascinating book,the gateway drug, honestly, into
hard currencies and anti-Fedthinking, but it's a great and
illuminating read.
You will know that one of hismain arguments is that the
Federal Reserve and centralbanks exist partially as a way
for governments to finance wars.
(04:29):
If democracies had to fund warsby taxing their citizens for the
actual cost of the war, we wouldnot have wars.
Now, obviously, the Holy RomanEmpire, not a democracy, not a
concern.
They could tax their citizens todeath.
But by 1620, treasuries acrossthe German states were running
dangerously low.
(04:51):
Now, if you're a prince in 1621and you need money, you have
very limited options.
You've already bled yoursubjects dry.
You can borrow money.
But who's going to lend to youwhen half of Europe is on fire?
Or, or, You can get creativewith your currency.
See, back then, coins were notjust tokens representing value,
(05:12):
which is frankly what we usetoday, right?
A nickel, a quarter.
What are they?
They're nothing.
They have intrinsic value givenby the government and by force
of arms, but they weren'tactually value.
Coins were
SPEAKER_00 (05:26):
value.
Were value.
Now, if you were a prince in1621
SPEAKER_01 (05:40):
and you needed money, you have very limited
options.
You can raise taxes, but you'resubject to already being bled
dry by the war.
You can borrow money, but who isgoing to lend it to you when
everybody needs money and halfof Europe is on fire?
Or you can get creative withyour currency.
You see, back then, unliketoday, coins were not just
(06:03):
representative tokens of value.
They were value.
A silver coin was worthsomething because it contained
actual silver.
Compare that to a quarter todayor even a dollar piece or
whatever.
What is its value?
It is plated.
It is nothing.
It is given value by thegovernment saying it has value
and you can use it to pay yourtaxes and by implicit trust of
(06:24):
society that it has value.
But silver had value and themore silver on a coin, the more
value.
Simple, right?
But what if you could make coinsthat look the same but contained
less silver?
You could make mint more coinswith the same amount of precious
metal.
Just a free money hack, right?
Enter Das Kippa and Wippa.
(06:46):
Excuse my German accent, but Ijust, you know, I have to honor
my ancestry.
So the term Kippa and Wippaliterally translates to tipper
and seesaw, named after thetools used to test and
manipulate coins.
These were not amateurcounterfeiters working out of
back alleys.
These were professionaloperations, often sanctioned or
(07:07):
directly employed by the princesthemselves.
Here's how it worked.
First, they'd We'll be rightback.
(07:30):
Now it gets devious.
They didn't just steal thesilver and keep the debased
coins.
They took that clipped silverand used it to mint new coins.
So from one original silvercoin, they might create two or
even three new coins with thesame face value.
Then came the whipping, thetesting and sorting.
They'd use scales and othertools to separate the good coins
(07:52):
from the bad, often sending thegood coins out of the territory
while flooding the local marketwith the debased ones.
And the math seemed to workbeautifully.
If you started with coins thatwere 90% silver and ended up
with coins that were 30% silver,you could theoretically triple
your money supply overnight.
Every prince with a mint starteddoing it.
(08:12):
And for a while, it actuallyseemed to work.
What is fascinating to me aboutthe Kipper and Whipper crisis is
how long it took for people tocatch on.
We are talking aboutsophisticated merchants,
international traders, peoplewhose livelihood depended on
understanding money.
But there's something aboutcurrency debasement creates a
kind of collective delusion.
(08:34):
Everyone wants to believe thatthe money they're holding is
worth what it says it's worth.
Admitting otherwise meansadmitting you've been cheated
and potentially losingeverything.
So merchants kept accepting thedebased coins.
They'd test them, sure, but thedebasement was often subtle
enough to pass casualinspection.
Besides, if everyone else isaccepting them, they must be
legitimate, right?
(08:54):
And this is the psychology wesee in every monetary crisis.
From the assignats of the FrenchRevolution, to the
hyperinflation of WeimarGermany, to modern quantitative
easing.
There's always a period whereeveryone pretends the obvious
isn't happening.
There was actually a story Iwrote about a while back, the
mines of Potosi in the SpanishEmpire.
Quick tangent, right?
(09:15):
The Spanish Empire conqueredthis amazingly large territory
and they got huge silver minesand gold mines.
And there was a mines in Potosiin modern day Bolivia that were
producing Spanish silver coins,but they were debasing the coin.
The owners of the mines weremaking money off of it.
And for a while, everybodyassumed it was good, but
(09:37):
eventually people startedcatching on.
And this is the psychology wesee often in most monetary
crises.
People take time to catch onbecause it's sort of
unbelievable that the thingyou're holding is not worth
anything.
One could argue, I don't want toget too conspiratorial here, but
one could argue that U.S.
currency is kind of goingthrough that right now, right?
(09:59):
I mean, there's a little bit ofan understanding that we're
printing money.
I just saw that our nationaldebt is increasing at a trillion
dollars.
Can't tell you the exact timeperiod because I can't recollect
it off the top of my head, butit took X number of years for us
to raise a trillion dollars indebt.
The next trillion wassubstantially less, and the next
trillion was even less, andwe're increasing at a trillion
(10:20):
dollars and a very unhealthyclip.
That is...
That is debasement, right?
And we are paying our own debtby printing it off.
The value of the money we use isbeing debased.
But I don't hear anybody outthere saying, oh, my dollar's
worth nothing, right?
It's not worth nothing, not yet.
There's some trust still.
And the princes in Germany atthis time convinced themselves
(10:42):
they were being clever.
They weren't stealing.
They were optimizing.
They were making the monetarysystem more efficient.
They were innovating.
Does that sound familiar?
So by 1622, the scheme wasbecoming, Very difficult to
hide.
Coins that should have beenidentical were weighing
dramatically different amounts.
International merchants startedrefusing German silver
(11:02):
altogether.
Local princes began to...
So by 1622, the scheme wasbecoming impossible to hide.
Coins that should have beenidentical were weighing
dramatically different amounts.
Tough to avoid that, to ignorethat.
International merchants startedrefusing German silver
(11:22):
altogether.
The prices began to spike aspeople realized their money
wasn't worth what they thought.
By the way, really interesting.
Again, side note, this is howthe Spanish coin started to
devalue and people started torealize merchants started to
accept it at a lower value theystarted to not trust the value
(11:43):
but and and it's fascinatingit's like the you know the the
open hand of the market like itjust in individual
microtransactions people startto realize something's wrong and
they start to not accept it forwhat it was worth before
fascinating human society andeconomics is fascinating but
here's the thing about currencydebasement the major problem is
(12:05):
it's like a drug once you startit's almost impossible to stop
Because stopping means admittingwhat you've done.
Admitting what you've done meansyour currency will collapse
anyways.
So instead of stopping, manyprinces double down.
Also, they double down becausethey don't have a choice at this
point.
They have to do it.
They have to keep it going.
So if 30% silver worked for awhile, maybe 20% would work too,
(12:28):
or 10%.
Some coins from this periodcontain less than 5% silver.
And the results, unfortunately,for the German prince and their
subjects were predictable andcatastrophic.
Prices exploded.
In some regions, basic goodsincreased 300 to 600% in price
(12:49):
over just two years.
A loaf of bread that cost onesilver coin in 1620 might cost
six debased coins in 1623.
But it wasn't, and it never is,it wasn't just the inflation.
It was a complete breakdown ofmonetary trust.
Nobody knew what anything wasworth anymore.
Merchants started demandingpayment in specific types of
(13:12):
coins from specific mints.
International trade ground to ahalt.
The social consequences wereeven worse.
Peasants who had saved theirmoney found their savings
worthless overnight.
Wages couldn't keep up withprices.
People who had worked theirentire lives to accumulate
wealth watched it evaporate.
Riots broke out across theGerman states.
(13:34):
Not just food riots, monetaryriots.
People literally attacking mintsand demanding real silver.
And guys, consider this on topof a devastating war happening
at the same time.
Talk about a hell of a time tobe alive.
Not a good time to be a Germanprince or a German prince's
subject in this period.
So by 1623, it was clear thesystem had to be reformed or the
(13:57):
entire economy would collapse.
But how, how, guys, do youfigure out So the solution was
brutal, but necessary.
Most of the debased coins had tobe recalled and melted down.
New coins were minted withverified silver content and
strict quality controls.
(14:18):
International agreements wereactually established to prevent
future debasement.
But the damage took decades torepair.
Because you see, trust, onceit's broken, is really hard to
rebuild.
Transcription by CastingWordsNow, you might just be thinking
(14:59):
this is just ancient history.
We have central banks now, fiatcurrencies, sophisticated
monetary policy.
We'd never make such crudemistakes, or would we?
Let's think about this pattern.
Governments need money.
Traditional revenue sources areinsufficient.
Someone comes up with a cleverway to create money without
raising taxes, which, to behonest, is the goal of all of
(15:20):
our politicians.
Because I always think thisabout democracy.
It's one of the problems ofdemocracy.
The fundamental purpose of apolicy in a democracy is to be
reelected that is their jobtheir job is to be reelected
they want to be reelected andguess what doesn't get them
reelected raising taxes so theycreate this other system to get
(15:41):
around it and it works and it'slike a drug and everybody loves
it and we love it because wedon't like having our taxes
increased and def and inflationand deflation of currency is a
silent invisible force that wejust don't feel for a while
right so like we don't realizewe're paying we are paying a tax
we just don't realize realize itbut then people get
overconfident and they push ittoo far markets figure it out
(16:04):
everything collapses trust isdestroyed recovery takes decades
does any of this sound familiarto today because the kipper and
whipper crisis wasn't unique itwas the first documented example
of a pattern that is repeatedthroughout history from the
roman debasement utterdiocletian to the astronauts of
revolutionary france to thehyperinflation of weimar germany
(16:26):
and yes i will add modernquantitative easing into the
mix.
I'm not saying they're allidentical because they're not.
Modern monetary policy is moresophisticated than medieval coin
clipping, but the fundamentalshere are very similar.
By the way, this is not thefirst time I've talked about
this topic.
In this topic, I just keepputting my foot in it, this
(16:50):
topic is one that just getspeople riled up.
There's an argument thatclipping of currency and
debasing of coin is not the sameas modern fiat money printing.
But my question is, what is thedifference, right?
What is the difference?
If I debase a coin and I maketwo coins that are worth less,
but everyone for a while thinksit's the same, there is no
(17:13):
difference from the central bankprinting money to pay debt.
There is no difference.
It's the same thing.
Currency debasement is currencydebasement.
So when governments create moneywithout creating corresponding
value, markets do eventuallyfigure it out.
The question isn't really ifthey'll figure it out.
The question is when and howpainful the adjustment will be.
(17:35):
So what does a 400 year oldGerman monetary crisis teach us
about investing today?
First, understand thesemechanisms.
There is no such thing as freemoney.
When governments or centralbanks create currency out of
thin air, they are not creatingwealth.
They're just redistributing it.
It's usually from savers todebtors, from the prudent to the
(17:55):
leveraged.
Think about this.
Debt is a fixed rate instrument,okay?
Like you get a 30-year mortgage,it is fixed in the dollar value
that it was given at the day itwas written.
But if the Federal Reserve orany central bank is actively
debasing fiat currency overtime, then you are winning in
(18:18):
two ways on your loan.
You are winning because yourrate is fixed and you are
winning because the value ofthat loan is decreasing in real
value over time at the sametime.
So what What happens when thathappens, right?
It encourages debt.
The entire system encourages theuse of debt because debt
devalues over time.
(18:39):
That is to the benefit ofdebtors.
And it helps people that take onloans and it hurts people that
save.
Okay.
So it creates bad dynamics.
And people always ask me, whatdoes this matter today?
What does this matter?
Well, most of our crises aredebt crises, right?
Like we mostly have debt crisistoday.
This entire system we live inexists to push that on people.
(19:28):
reason they are understood to bean inflation hedge.
Now, I want to be really clear.
I'm not going to bePollyanna-esque about this.
If we have a currency crisis andcollapse, real assets will also
lose value.
Let's just be very clear.
It's not like they're a perfectantidote to this problem.
But during the Kipper andWhipper crisis, people who owned
land, buildings, andcommodities, things with
(19:50):
intrinsic value, did a lotbetter than those who held the
base coins.
That's why I focus on realestate.
I also just like real estate.
So everything I talk about isgoing to be why real estate's
great.
I admit I am biased.
I will freely admit it.
But there is some validity towhat I'm saying.
And this is why the timelessinvestor emphasizes hard assets,
(20:11):
building companies, buildingequity, owning real things.
Because when paper promises ordebased coinage fail, and
history shows they alwayseventually do, you want to own
things that have a valueindependent of what the
government says they're worth.
The German princes of 1621discovered what every government
will eventually learn and haveinevitably learned every time.
(20:33):
You cannot create prosperity bydebasing currency.
You can create the illusion ofprosperity temporarily.
And when the illusion breaks,what do you want to hold as an
investment?
We are living through our ownversion of this story right now.
Since 2008, central banksworldwide have created more
money than in the previouscentury combined.
(20:55):
The justifications sounddifferent.
Quantitative easing, Modernmonetary theory, fighting
deflation, deflation being bad.
It's a big question too, by theway.
Why does growth have to beaccompanied by inflation?
Why?
We all believe it because that'swhat we're taught.
That's what our financeprotesters teach us.
That's what the central banktells us.
(21:16):
All of my brethren who work onWall Street and in major banks,
just like I did, we're all toldthe same thing.
There's a healthy level ofinflation.
We want a healthy level ofinflation.
Look at Japan.
Japan is trapped because it's ina, deflationary spiral.
But do they have to go togetheris a big question.
I'm not going to answer it todayon this podcast.
I don't even have the answer, tobe honest with you guys.
(21:38):
I exist to explore these thesesand express my perspective on
them.
I don't know, but I thinkthere's some modern BS around
the fact that inflation isnecessary.
But listen, the mechanics ofwhat's happening today are
surprisingly similar to whatthese German printers did 240
years ago.
You create more currency units.
(22:00):
You hope nobody notices thedebasement.
You promise it's temporary andcontrolled.
You take on exorbitant debt andyou pay it back with debased
currency.
I mean, think about that for ahalf second.
Nobody's getting more ripped offthan people that are buying the
US 10-year treasury.
Nobody.
Nobody.
You buy it and your money isworth less every single year.
(22:22):
Why?
That's the system we live inright now.
Some thoughts on that too.
I'm not going to get into it,but the Das Kippa and Wippa
crisis reminds us how this storyends.
Not necessarily withhyperinflation, I hope not, but
with a loss of confidence, arepricing of assets, and a
painful adjustment back toreality.
(22:44):
The question is not really ifthe adjustment will come.
History suggests it's relativelyinevitable.
The question is when and whetheryou'll be positioned to survive
it.
That's why I like to study thesehistorical patterns.
not because I think historyrepeats exactly, but because the
fundamental dynamics of humannature, government incentives,
(23:05):
and market forces remainremarkably consistent across the
centuries.
We are no different, nodifferent from our Roman
ancestors who liked watchingblood sports.
You know, I'm going to go waywide here, right?
But like, what is cage fightingexcept a modern version of
gladiatorial fights?
And we love it.
(23:25):
Do people in the audiences getexcited when a cage fighter
starts bleeding and keepsfighting?
Yeah, they love it.
How are we any different?
How are you, my male listeners,any different from a caveman
7,000 years ago who was tryingto prove himself to some female
member of the tribe?
We are no different, but wethink we are.
The only difference today maybeis education.
(23:47):
And unfortunately, in my humbleopinion, education is sort of
deteriorating today.
We are trapped in an ecosystemof less education less valuable
education and social media,phones, AI sort of dumbing us
down over time.
And so like, you know, it'sjust, we're not that different.
(24:08):
The tools have changed.
The scale obviously changes.
I mean, the world is vastlylarger and more connected, but
the patterns persist.
And for investors who arewilling to learn from history,
these patterns offer valuableguidance about how to build and
preserve wealth throughinevitable monetary chaos.
Because it's either we're in aperiod of monetary instability
(24:30):
and decline or we're in a periodof monetary stability.
I don't know where we are rightnow.
Where do you think?
The Kipper and Whipper crisislasted only a few years, but its
lessons, to quote my main man,Marcus Aurelius and Maximus and
Gladiator, echo througheternity.
It showed us that currencydebasement always seems like a
(24:53):
clever idea until it doesn'twork and the market figures it
out.
And it demonstrated thatshort-term benefits of monetary
manipulation are alwaysoverwhelmed by the long-term
costs.
And it reminds us that whenmonetary systems fail, Thank you
(25:36):
for listening to the TimelessInvestor Show.
If you found this deep dive intomonetary history valuable,
please subscribe and share itwith someone who appreciates the
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Leave a written review.
(25:56):
It would be amazing.
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You know, whatever.
I mean, you know, good karma foryou if you leave me a nice thing
If you leave me a bad review,karma might come for you.
I don't know.
And remember, guys, in a worldof paper promises and digital
currencies, real assets remainthe ultimate hedge against
(26:17):
monetary chaos.
Until next time, think well, actwisely, and build something
timeless.
Take care of yourselves.
Welcome back to the Timeless Investor Show.
(00:30):
We will also be investigatingthe builders, people that built
incredible things over historyand the lessons we can learn
from their stories.
A week or so back, we did anepisode on John Law.
So that is a new series ofdiscussions we're gonna have,
which are on the villains,right?
Or the cons, people that doreally bad things.
(00:51):
But another series type we'regonna have here is the crises,
the crashes, the, you know,whatever, the great,
interesting, terrifying,horrific, Thank you for
watching.
(01:18):
I want to start in the year1621.
The Thirty Years' War isbleeding treasuries across the
Holy Roman Empire.
German princes are desperate forrevenue, but their peasants,
their taxpaying populations, arecompletely broke.
They cannot pay anymore.
(01:38):
So they came up with what seemedlike a brilliant solution.
Improve their coins by makingthem more affordable.
to produce.
What could possibly go wrong?
Well, the truth is that theyaccidentally created Europe's
first hyperinflation crisis,crashed international trade, and
(02:00):
taught the world a lesson aboutcurrency debasement that, to be
honest, we are still learningtoday.
And I just did an amazinginterview in the last week.
Check it out if you haven't seenit with Mario Anecco talking
about the French Revolutionpiece we released recently and
the history of central bankingcurrency debasement.
But the truth is, you can debaseany currency.
(02:22):
And we give a lot of heat todayabout debasing the dollar,
printing, debt.
But you can debase hard currencyas well.
And this is the story of that.
This is the story of the Kipaand Wipa crisis, named after
professional coin clippers whoturned silver into copper and
(02:42):
nearly, if not effectively,brought down an empire.
So let's set the scene here.
for this crazy story.
It is 1618 and Europe has justplunged into what would become
known as the 30 Years War.
What started as a religiousconflict between Catholics and
Lutherans, the new Protestants,in the Holy Roman Empire quickly
(03:03):
spiraled into a continent-widecatastrophe.
Now, for those of you that don'tknow, the 30 Years War was one
of the most destructiveconflicts in European history,
which honestly is saying a lotas there have been some very
destructive conflicts inEuropean history.
An estimated four and a half toeight million soldiers and
(03:24):
civilians died from battle,famine, or disease.
Some parts of Germany reportedpopulation declines of over 50%.
And frankly, it's not somethingwe know about much.
And I just want to put somethingin context here.
World War II killed 60 millionplus people.
(03:46):
I may be misquoting the number.
A lot of people.
But that was in 1940.
This was in 1618.
I mean, the devastation in termsof population size, tremendous.
Tremendous.
And wars have a tendency to beexpected.
Very expensive, which if any ofyou read The Creature from
(04:09):
Jekyll Island, fascinating book,the gateway drug, honestly, into
hard currencies and anti-Fedthinking, but it's a great and
illuminating read.
You will know that one of hismain arguments is that the
Federal Reserve and centralbanks exist partially as a way
for governments to finance wars.
(04:29):
If democracies had to fund warsby taxing their citizens for the
actual cost of the war, we wouldnot have wars.
Now, obviously, the Holy RomanEmpire, not a democracy, not a
concern.
They could tax their citizens todeath.
But by 1620, treasuries acrossthe German states were running
dangerously low.
(04:51):
Now, if you're a prince in 1621and you need money, you have
very limited options.
You've already bled yoursubjects dry.
You can borrow money.
But who's going to lend to youwhen half of Europe is on fire?
Or, or, You can get creativewith your currency.
See, back then, coins were notjust tokens representing value,
(05:12):
which is frankly what we usetoday, right?
A nickel, a quarter.
What are they?
They're nothing.
They have intrinsic value givenby the government and by force
of arms, but they weren'tactually value.
Coins were
SPEAKER_00 (05:26):
value.
Were value.
Now, if you were a prince in1621
SPEAKER_01 (05:40):
and you needed money, you have very limited
options.
You can raise taxes, but you'resubject to already being bled
dry by the war.
You can borrow money, but who isgoing to lend it to you when
everybody needs money and halfof Europe is on fire?
Or you can get creative withyour currency.
You see, back then, unliketoday, coins were not just
(06:03):
representative tokens of value.
They were value.
A silver coin was worthsomething because it contained
actual silver.
Compare that to a quarter todayor even a dollar piece or
whatever.
What is its value?
It is plated.
It is nothing.
It is given value by thegovernment saying it has value
and you can use it to pay yourtaxes and by implicit trust of
(06:24):
society that it has value.
But silver had value and themore silver on a coin, the more
value.
Simple, right?
But what if you could make coinsthat look the same but contained
less silver?
You could make mint more coinswith the same amount of precious
metal.
Just a free money hack, right?
Enter Das Kippa and Wippa.
(06:46):
Excuse my German accent, but Ijust, you know, I have to honor
my ancestry.
So the term Kippa and Wippaliterally translates to tipper
and seesaw, named after thetools used to test and
manipulate coins.
These were not amateurcounterfeiters working out of
back alleys.
These were professionaloperations, often sanctioned or
(07:07):
directly employed by the princesthemselves.
Here's how it worked.
First, they'd We'll be rightback.
(07:30):
Now it gets devious.
They didn't just steal thesilver and keep the debased
coins.
They took that clipped silverand used it to mint new coins.
So from one original silvercoin, they might create two or
even three new coins with thesame face value.
Then came the whipping, thetesting and sorting.
They'd use scales and othertools to separate the good coins
(07:52):
from the bad, often sending thegood coins out of the territory
while flooding the local marketwith the debased ones.
And the math seemed to workbeautifully.
If you started with coins thatwere 90% silver and ended up
with coins that were 30% silver,you could theoretically triple
your money supply overnight.
Every prince with a mint starteddoing it.
(08:12):
And for a while, it actuallyseemed to work.
What is fascinating to me aboutthe Kipper and Whipper crisis is
how long it took for people tocatch on.
We are talking aboutsophisticated merchants,
international traders, peoplewhose livelihood depended on
understanding money.
But there's something aboutcurrency debasement creates a
kind of collective delusion.
(08:34):
Everyone wants to believe thatthe money they're holding is
worth what it says it's worth.
Admitting otherwise meansadmitting you've been cheated
and potentially losingeverything.
So merchants kept accepting thedebased coins.
They'd test them, sure, but thedebasement was often subtle
enough to pass casualinspection.
Besides, if everyone else isaccepting them, they must be
legitimate, right?
(08:54):
And this is the psychology wesee in every monetary crisis.
From the assignats of the FrenchRevolution, to the
hyperinflation of WeimarGermany, to modern quantitative
easing.
There's always a period whereeveryone pretends the obvious
isn't happening.
There was actually a story Iwrote about a while back, the
mines of Potosi in the SpanishEmpire.
Quick tangent, right?
(09:15):
The Spanish Empire conqueredthis amazingly large territory
and they got huge silver minesand gold mines.
And there was a mines in Potosiin modern day Bolivia that were
producing Spanish silver coins,but they were debasing the coin.
The owners of the mines weremaking money off of it.
And for a while, everybodyassumed it was good, but
(09:37):
eventually people startedcatching on.
And this is the psychology wesee often in most monetary
crises.
People take time to catch onbecause it's sort of
unbelievable that the thingyou're holding is not worth
anything.
One could argue, I don't want toget too conspiratorial here, but
one could argue that U.S.
currency is kind of goingthrough that right now, right?
(09:59):
I mean, there's a little bit ofan understanding that we're
printing money.
I just saw that our nationaldebt is increasing at a trillion
dollars.
Can't tell you the exact timeperiod because I can't recollect
it off the top of my head, butit took X number of years for us
to raise a trillion dollars indebt.
The next trillion wassubstantially less, and the next
trillion was even less, andwe're increasing at a trillion
(10:20):
dollars and a very unhealthyclip.
That is...
That is debasement, right?
And we are paying our own debtby printing it off.
The value of the money we use isbeing debased.
But I don't hear anybody outthere saying, oh, my dollar's
worth nothing, right?
It's not worth nothing, not yet.
There's some trust still.
And the princes in Germany atthis time convinced themselves
(10:42):
they were being clever.
They weren't stealing.
They were optimizing.
They were making the monetarysystem more efficient.
They were innovating.
Does that sound familiar?
So by 1622, the scheme wasbecoming, Very difficult to
hide.
Coins that should have beenidentical were weighing
dramatically different amounts.
International merchants startedrefusing German silver
(11:02):
altogether.
Local princes began to...
So by 1622, the scheme wasbecoming impossible to hide.
Coins that should have beenidentical were weighing
dramatically different amounts.
Tough to avoid that, to ignorethat.
International merchants startedrefusing German silver
(11:22):
altogether.
The prices began to spike aspeople realized their money
wasn't worth what they thought.
By the way, really interesting.
Again, side note, this is howthe Spanish coin started to
devalue and people started torealize merchants started to
accept it at a lower value theystarted to not trust the value
(11:43):
but and and it's fascinatingit's like the you know the the
open hand of the market like itjust in individual
microtransactions people startto realize something's wrong and
they start to not accept it forwhat it was worth before
fascinating human society andeconomics is fascinating but
here's the thing about currencydebasement the major problem is
(12:05):
it's like a drug once you startit's almost impossible to stop
Because stopping means admittingwhat you've done.
Admitting what you've done meansyour currency will collapse
anyways.
So instead of stopping, manyprinces double down.
Also, they double down becausethey don't have a choice at this
point.
They have to do it.
They have to keep it going.
So if 30% silver worked for awhile, maybe 20% would work too,
(12:28):
or 10%.
Some coins from this periodcontain less than 5% silver.
And the results, unfortunately,for the German prince and their
subjects were predictable andcatastrophic.
Prices exploded.
In some regions, basic goodsincreased 300 to 600% in price
(12:49):
over just two years.
A loaf of bread that cost onesilver coin in 1620 might cost
six debased coins in 1623.
But it wasn't, and it never is,it wasn't just the inflation.
It was a complete breakdown ofmonetary trust.
Nobody knew what anything wasworth anymore.
Merchants started demandingpayment in specific types of
(13:12):
coins from specific mints.
International trade ground to ahalt.
The social consequences wereeven worse.
Peasants who had saved theirmoney found their savings
worthless overnight.
Wages couldn't keep up withprices.
People who had worked theirentire lives to accumulate
wealth watched it evaporate.
Riots broke out across theGerman states.
(13:34):
Not just food riots, monetaryriots.
People literally attacking mintsand demanding real silver.
And guys, consider this on topof a devastating war happening
at the same time.
Talk about a hell of a time tobe alive.
Not a good time to be a Germanprince or a German prince's
subject in this period.
So by 1623, it was clear thesystem had to be reformed or the
(13:57):
entire economy would collapse.
But how, how, guys, do youfigure out So the solution was
brutal, but necessary.
Most of the debased coins had tobe recalled and melted down.
New coins were minted withverified silver content and
strict quality controls.
(14:18):
International agreements wereactually established to prevent
future debasement.
But the damage took decades torepair.
Because you see, trust, onceit's broken, is really hard to
rebuild.
Transcription by CastingWordsNow, you might just be thinking
(14:59):
this is just ancient history.
We have central banks now, fiatcurrencies, sophisticated
monetary policy.
We'd never make such crudemistakes, or would we?
Let's think about this pattern.
Governments need money.
Traditional revenue sources areinsufficient.
Someone comes up with a cleverway to create money without
raising taxes, which, to behonest, is the goal of all of
(15:20):
our politicians.
Because I always think thisabout democracy.
It's one of the problems ofdemocracy.
The fundamental purpose of apolicy in a democracy is to be
reelected that is their jobtheir job is to be reelected
they want to be reelected andguess what doesn't get them
reelected raising taxes so theycreate this other system to get
(15:41):
around it and it works and it'slike a drug and everybody loves
it and we love it because wedon't like having our taxes
increased and def and inflationand deflation of currency is a
silent invisible force that wejust don't feel for a while
right so like we don't realizewe're paying we are paying a tax
we just don't realize realize itbut then people get
overconfident and they push ittoo far markets figure it out
(16:04):
everything collapses trust isdestroyed recovery takes decades
does any of this sound familiarto today because the kipper and
whipper crisis wasn't unique itwas the first documented example
of a pattern that is repeatedthroughout history from the
roman debasement utterdiocletian to the astronauts of
revolutionary france to thehyperinflation of weimar germany
(16:26):
and yes i will add modernquantitative easing into the
mix.
I'm not saying they're allidentical because they're not.
Modern monetary policy is moresophisticated than medieval coin
clipping, but the fundamentalshere are very similar.
By the way, this is not thefirst time I've talked about
this topic.
In this topic, I just keepputting my foot in it, this
(16:50):
topic is one that just getspeople riled up.
There's an argument thatclipping of currency and
debasing of coin is not the sameas modern fiat money printing.
But my question is, what is thedifference, right?
What is the difference?
If I debase a coin and I maketwo coins that are worth less,
but everyone for a while thinksit's the same, there is no
(17:13):
difference from the central bankprinting money to pay debt.
There is no difference.
It's the same thing.
Currency debasement is currencydebasement.
So when governments create moneywithout creating corresponding
value, markets do eventuallyfigure it out.
The question isn't really ifthey'll figure it out.
The question is when and howpainful the adjustment will be.
(17:35):
So what does a 400 year oldGerman monetary crisis teach us
about investing today?
First, understand thesemechanisms.
There is no such thing as freemoney.
When governments or centralbanks create currency out of
thin air, they are not creatingwealth.
They're just redistributing it.
It's usually from savers todebtors, from the prudent to the
(17:55):
leveraged.
Think about this.
Debt is a fixed rate instrument,okay?
Like you get a 30-year mortgage,it is fixed in the dollar value
that it was given at the day itwas written.
But if the Federal Reserve orany central bank is actively
debasing fiat currency overtime, then you are winning in
(18:18):
two ways on your loan.
You are winning because yourrate is fixed and you are
winning because the value ofthat loan is decreasing in real
value over time at the sametime.
So what What happens when thathappens, right?
It encourages debt.
The entire system encourages theuse of debt because debt
devalues over time.
(18:39):
That is to the benefit ofdebtors.
And it helps people that take onloans and it hurts people that
save.
Okay.
So it creates bad dynamics.
And people always ask me, whatdoes this matter today?
What does this matter?
Well, most of our crises aredebt crises, right?
Like we mostly have debt crisistoday.
This entire system we live inexists to push that on people.
(19:28):
reason they are understood to bean inflation hedge.
Now, I want to be really clear.
I'm not going to bePollyanna-esque about this.
If we have a currency crisis andcollapse, real assets will also
lose value.
Let's just be very clear.
It's not like they're a perfectantidote to this problem.
But during the Kipper andWhipper crisis, people who owned
land, buildings, andcommodities, things with
(19:50):
intrinsic value, did a lotbetter than those who held the
base coins.
That's why I focus on realestate.
I also just like real estate.
So everything I talk about isgoing to be why real estate's
great.
I admit I am biased.
I will freely admit it.
But there is some validity towhat I'm saying.
And this is why the timelessinvestor emphasizes hard assets,
(20:11):
building companies, buildingequity, owning real things.
Because when paper promises ordebased coinage fail, and
history shows they alwayseventually do, you want to own
things that have a valueindependent of what the
government says they're worth.
The German princes of 1621discovered what every government
will eventually learn and haveinevitably learned every time.
(20:33):
You cannot create prosperity bydebasing currency.
You can create the illusion ofprosperity temporarily.
And when the illusion breaks,what do you want to hold as an
investment?
We are living through our ownversion of this story right now.
Since 2008, central banksworldwide have created more
money than in the previouscentury combined.
(20:55):
The justifications sounddifferent.
Quantitative easing, Modernmonetary theory, fighting
deflation, deflation being bad.
It's a big question too, by theway.
Why does growth have to beaccompanied by inflation?
Why?
We all believe it because that'swhat we're taught.
That's what our financeprotesters teach us.
That's what the central banktells us.
(21:16):
All of my brethren who work onWall Street and in major banks,
just like I did, we're all toldthe same thing.
There's a healthy level ofinflation.
We want a healthy level ofinflation.
Look at Japan.
Japan is trapped because it's ina, deflationary spiral.
But do they have to go togetheris a big question.
I'm not going to answer it todayon this podcast.
I don't even have the answer, tobe honest with you guys.
(21:38):
I exist to explore these thesesand express my perspective on
them.
I don't know, but I thinkthere's some modern BS around
the fact that inflation isnecessary.
But listen, the mechanics ofwhat's happening today are
surprisingly similar to whatthese German printers did 240
years ago.
You create more currency units.
(22:00):
You hope nobody notices thedebasement.
You promise it's temporary andcontrolled.
You take on exorbitant debt andyou pay it back with debased
currency.
I mean, think about that for ahalf second.
Nobody's getting more ripped offthan people that are buying the
US 10-year treasury.
Nobody.
Nobody.
You buy it and your money isworth less every single year.
(22:22):
Why?
That's the system we live inright now.
Some thoughts on that too.
I'm not going to get into it,but the Das Kippa and Wippa
crisis reminds us how this storyends.
Not necessarily withhyperinflation, I hope not, but
with a loss of confidence, arepricing of assets, and a
painful adjustment back toreality.
(22:44):
The question is not really ifthe adjustment will come.
History suggests it's relativelyinevitable.
The question is when and whetheryou'll be positioned to survive
it.
That's why I like to study thesehistorical patterns.
not because I think historyrepeats exactly, but because the
fundamental dynamics of humannature, government incentives,
(23:05):
and market forces remainremarkably consistent across the
centuries.
We are no different, nodifferent from our Roman
ancestors who liked watchingblood sports.
You know, I'm going to go waywide here, right?
But like, what is cage fightingexcept a modern version of
gladiatorial fights?
And we love it.
(23:25):
Do people in the audiences getexcited when a cage fighter
starts bleeding and keepsfighting?
Yeah, they love it.
How are we any different?
How are you, my male listeners,any different from a caveman
7,000 years ago who was tryingto prove himself to some female
member of the tribe?
We are no different, but wethink we are.
The only difference today maybeis education.
(23:47):
And unfortunately, in my humbleopinion, education is sort of
deteriorating today.
We are trapped in an ecosystemof less education less valuable
education and social media,phones, AI sort of dumbing us
down over time.
And so like, you know, it'sjust, we're not that different.
(24:08):
The tools have changed.
The scale obviously changes.
I mean, the world is vastlylarger and more connected, but
the patterns persist.
And for investors who arewilling to learn from history,
these patterns offer valuableguidance about how to build and
preserve wealth throughinevitable monetary chaos.
Because it's either we're in aperiod of monetary instability
(24:30):
and decline or we're in a periodof monetary stability.
I don't know where we are rightnow.
Where do you think?
The Kipper and Whipper crisislasted only a few years, but its
lessons, to quote my main man,Marcus Aurelius and Maximus and
Gladiator, echo througheternity.
It showed us that currencydebasement always seems like a
(24:53):
clever idea until it doesn'twork and the market figures it
out.
And it demonstrated thatshort-term benefits of monetary
manipulation are alwaysoverwhelmed by the long-term
costs.
And it reminds us that whenmonetary systems fail, Thank you
(25:36):
for listening to the TimelessInvestor Show.
If you found this deep dive intomonetary history valuable,
please subscribe and share itwith someone who appreciates the
timeless lessons that financialmarkets keep giving us.
If you haven't done so yet, dome a favor.
Please leave a review for theshow.
One star, two star, five starmaybe.
Leave a written review.
(25:56):
It would be amazing.
It's really helpful.
Also, if you have a one or twostar review, maybe don't leave
it.
You know, whatever.
I mean, you know, good karma foryou if you leave me a nice thing
If you leave me a bad review,karma might come for you.
I don't know.
And remember, guys, in a worldof paper promises and digital
currencies, real assets remainthe ultimate hedge against
(26:17):
monetary chaos.
Until next time, think well, actwisely, and build something
timeless.
Take care of yourselves.
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