This should give us pause, but it won’t. I’ve said many times that all political issues in this country are sideshows compared to the printing of the dollar sending us hurtling toward the collapse of the us dollar.
The dollar is not backed by any hard asset (gold/silver). It is what’s called a “fiat” currency. It exists by government fiat. It stores value only because people have faith in the government re that currency. What is faith? Can it be measured? Well, sure, an interest rate is basically that–an objective measure of “faith”.
We borrow 43 cents of every dollar that is spent now at the federal level. How do we get the 43 cents that we don’t have? We issue debt; bonds. Someone from, ooh, say, China, has a bundle of money that they want to park in a super-safe investment, and earn a return on that money. They give us money now for the bond, and we pay them interest at periodic intervals and then ultimately (2, 5, 10, 20 yrs), we pay the principal back.
Now if the government of the US is printing money like it’s Weimar Germany, then the guy buying the bond is not going to continue to give up perfectly good money today, only to be repaid in the future in monopoly money–trash. As the risk of that grows, the amount of interest we will have to offer that “lender” to lend us money, will go up and up and up. And, once it hits a certain figure, it runs away to unsustainable very quickly. And no one will lend you money at ANY interest rate.
The only thing left to do at that point, because by then, you’re way past “austerity fixes”, is print more money–yup, the thing that got you in trouble in the first place. Once printing is your only way out, you’re done. The inflation will shift into hyperdrive and that’s when you read about the wheelbarrows of money to buy a loaf of bread scenarios.
The administration we have now has NO INTENTION of addressing ANY of this. They have made that quite clear. In fact, they are happy to make it worse–to accelerate it. And the media is happy to run interference for them. I no longer think it’s a question of “if”, but only of “when”. Our system should never have allowed the currency to be fiat without really specific and strict controls on the amount of deficit spending that can be done.
Now we have the Russians openly discussing in their lawmaking body, how long it will be before the dollar is worthless. Isn’t that great?
I had a thought of what might get people’s attention and that was for a Congressman to introduce a bill in the House that would charge the US government with the creation of an asset-backed currency completely separate from the dollar. The bill would basically state, “…since we are headed to the collapse of the US Dollar, we think it prudent that there be established, a means of exchange backed by gold and silver…etc”. You’re not introducing it so that it will get passed as much as you are introducing it to get people’s attention. Can’t hurt, or, wouldn’t hurt, anyway.
If we have hyperinflation, who gets hurt first and most? Well, savers. The older folks who can’t go out and do it again. Anyone who has savings denominated in dollars will be looking at total ruin. If you are young and a big debtor, you might even like it. You borrowed perfectly good dollars and you pay back your debts with monopoly money–score. It will be viciously unfair to all, however, and in ways we haven’t even thought about yet.