Tuesday, February 05, 2013


Has a good lesson to teach on the dangers of printing money to solve a government budget deficit.
I've been sitting on these pictures for a while, but this story seems like a good one to bring them up with.
In 2008, Zimbabwe reached 231 Million Percent Annual inflation. Here is the result:

 Even more distressing? 
The national accounts of Zimbabwe total up to $217 following payroll last week.  

Lesson? A government cannot simply create more money to exit economic recessions, deficits, or liquidity traps. The current financial world has not yet reckoned with the potential for rampant inflation of the US dollar, but the time will come. Inflation is more rampant in an environment of economic growth, it is the boom not the bust which brings the destruction.  This lasting doldrums of the past four years has suppressed price inflation, although cracks still appear in the ceiling. See, gas prices rising consistently without obvious changes in supply or demand. 

To allay this gloom, recall an American electorate which as a long history of rejecting inflationary government measures. The Continentals, Greenbacks, and the Bimetallism of Williams Jennings Bryan were all cast upon the ash heap of history. We will either remember that crafting new monetary units from the ether results in hardship for the poor, or these current United States will cease to exist. 

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