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The problem with printing money by governments is that every dollar printed means the value of that money is spread thinner and thinner. That means you need mor

The problem with printing money by governments is that every dollar printed means the value of that money is spread thinner and thinner. That means you need more of those thinner dollars to make up the value. It's like watering down the beer. You'll need to drink more glasses of that weaker beer to get the same effect. Every government gets away with printing money for a very short time, then the Zimbabwe Effect takes over. It will happen in the US just like it happened in the Confederacy. IIRC, in 1865 one silver dollar cost sixty paper dollars in exchange. In Germany in 1923, one wheelbarrow-load of Weimar Deutchmarks could buy you a loaf of bread.

sbelskie 6y ago
When will it happen?
- simonblack 6y ago
  Like the crack in the bridge over the Mississippi, the actual time can't be predicted. But that crack (amongst the thousands of other bridge problems) was certainly expected, and no surprise when it finally happened. A country is no different from a house. If you don't keep up the maintenance, things will definitely break sooner or later. The US's infrastructure has been lacking maintenance for decades. Many talk about the financial problems like the acrobat spinning lots of plates on sticks. He's having problems keeping them going, and those plates are getting wobblier and wobblier. If I have to make a prediction, I'd say in the next 5 years or so. So don't take on too much debt for you to handle, and start prepping for very difficult times.
ameetgaitonde 6y ago
The key similarity in all those situations was a loss of productive capacity. The Confederate currency wasn't backed by any assets, so it lost value as their defeat became more likely. Apparently, it lost 20% of it's value after the battle of Gettysburg. Zimbabwe's government seized the land of white farmers and gave them to people who lacked farming knowledge and experience. Predictably, their output cratered, sparking the hyperinflationary spiral. Germany lost a huge amount of it's productive capabilities due to the Treaty of Versailles. Keynes wrote a fantastic book (The Economic Consequences of Peace) that lays the economic case for why the Treaty would be a disaster. Germany basically had much of its land, equipment, and other assets seized while also being saddled with significant war debts. They were effectively forced into hyperinflation by the structure of the treaty.
- simonblack 6y ago
  The key similarity in all those situations was a loss of productive capacity. And the US production figures have gone where in the last 40 years? In 1980 the US was the world's biggest creditor nation. By 1988 the US was the world'd biggest debtor nation. The debt and deficit have only grown larger since then.

sbelskie 6y ago

When will it happen?

simonblack 6y ago
Like the crack in the bridge over the Mississippi, the actual time can't be predicted. But that crack (amongst the thousands of other bridge problems) was certainly expected, and no surprise when it finally happened. A country is no different from a house. If you don't keep up the maintenance, things will definitely break sooner or later. The US's infrastructure has been lacking maintenance for decades. Many talk about the financial problems like the acrobat spinning lots of plates on sticks. He's having problems keeping them going, and those plates are getting wobblier and wobblier. If I have to make a prediction, I'd say in the next 5 years or so. So don't take on too much debt for you to handle, and start prepping for very difficult times.

ameetgaitonde 6y ago

The key similarity in all those situations was a loss of productive capacity. The Confederate currency wasn't backed by any assets, so it lost value as their defeat became more likely. Apparently, it lost 20% of it's value after the battle of Gettysburg. Zimbabwe's government seized the land of white farmers and gave them to people who lacked farming knowledge and experience. Predictably, their output cratered, sparking the hyperinflationary spiral. Germany lost a huge amount of it's productive capabilities due to the Treaty of Versailles. Keynes wrote a fantastic book (The Economic Consequences of Peace) that lays the economic case for why the Treaty would be a disaster. Germany basically had much of its land, equipment, and other assets seized while also being saddled with significant war debts. They were effectively forced into hyperinflation by the structure of the treaty.

simonblack 6y ago
The key similarity in all those situations was a loss of productive capacity. And the US production figures have gone where in the last 40 years? In 1980 the US was the world's biggest creditor nation. By 1988 the US was the world'd biggest debtor nation. The debt and deficit have only grown larger since then.