Is the US dollar headed for hyperinflation?

Published June 29, 2021, 12:12 AM

by James Deakin

ONE FOR THE ROAD

James Deakin

Where does the Federal Reserve keep all its newly printed money? Answer: In debasement. 

Ok, I know Father’s Day is over and I’m a week out of the dad joke amnesty period, but there’s nothing funny about this. In fact, the only joke here is the US dollar, and that joke may soon be on us. 

But first, let me just start out by saying that I am very aware that I am no financial expert; but do you really need to be one to know that if you print money out of thin air and offer nothing else but “trust” to back that, you are simply playing a game of financial Jenga with global implications. They will tell you otherwise, of course, just like they did in 2008 when they sold those sub prime CDO’s and passed it off as prime rib; but the nice thing about math is, unlike propaganda, the numbers themselves speak their own truth. 

So let’s just start with the basics, shall we? It is no secret that around 40 percent of US dollars in existence right now were printed in the last 12 months. If this is news to you, I’ll give you a minute for that to marinate. Actually, let’s make that two so that it gets both sides. Because it’s a lot to absorb. In fact, if that little factoid doesn’t send a 1921 Weimar shiver down your spine, then you need your schnitzel examined. 

Because just like the US did in 1971––with the rest of the world following suit with what we now call FIAT currency––Weimar Germany also decided to remove itself from the gold standard during the first world war so that they could turn on their magic printers and fund their global domination with funny money, and then simply plunder their enemies for their hard assets once they were done. Problem is, they didn’t win. And worse, they needed to pay war costs, too. And not in their own currency, either. Which led to one of the most famous cases of hyper inflation the world has ever known. 

Yet despite being a cautionary tale played out on the global stage, it was not the first, nor the last, or even the worst example. We saw Austria, Bolivia, Brazil, China, France, Greece, Hungary, North Korea, Peru, Poland, Soviet Union, Venezuela, Yugoslavia and yes, even the Philippines during World War II when the Japanese issued fiat currencies for general circulation undergoing the same. For perspective, in 1942, the highest denomination available was 10 pesos. Before the end of the war, however, due to hyperinflation, the Japanese government was forced to issue 100-, 500-, and 1000-peso notes. The fiat money’s lack of value earned it the nickname “Mickey Mouse money” and you may even ask your Lolo or Lola about the tales of bringing suitcases or bayongs overflowing with Japanese-issued bills just to buy a box of matches.

Printing your way out of trouble is nothing new, and neither is getting caught out by it. This is because math is immutable and humans are not. To put this into a better analogy, just imagine if we employed the same system with time. As it is, we all get 60 seconds in a minute, 60 minutes in an hour and 24 hours in each day. The world can now synchronize because our measurement system for time is universally agreed upon and immutable, therefore providing a sacred base. Now picture that base being ‘subjective’ and we started allowing each government to inflate time as it saw fit so that they would never be late. 

Can you see the problem now? Good. Because time is money. And ever since taking it off the gold reserve in 1971, the US government and other central banks playing the same game have been forcing us to adjust our lives around a faulty clock. 

So why don’t they stop? 

Because as crazy as it sounds to you and me, for those intoxicated by this highly addictive practice, the only way they know how to avoid the hangover, or crash is to stay drunk––and you only need to ask any addict how that strategy works out in the end. In fact history has been so predictable with this that even back in 1791, just before the French revolution, Honore Gabriel Riqueti, comte de Mirabeau, a French Revolutionary politician and orator that governed France during the early phases of the French Revolution famously called printed money: “a nursery of tyranny, corruption, and delusion; a veritable delirium…a loan to an armed robber” 

And unsurprisingly, they are doing it all over again.

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