One of the big concerns when the Federal Reserve began “Quantitative Easing”, otherwise known as “monetizing the debt”, was hyperinflation taking hold in the US. There was good reason to be concerned, because historically monetizing the debt has lead to bouts of hyperinflation as the currency supply increases and the good for sale remains the same. The currency looses value, and inflation can and has reached 5 digits or more monthly.
For reasons no one is 100% clear on, it has’t happened in the US or any other country that followed our lead. That’s a good thing. Hyperinflation isn’t pretty, and the solutions for it are often worse.
I support a group, the Zimbabwe Pensioner Support Fund, whose mission is to support the old age pensioners in Zimbabwe who lost nearly everything when majority rule was instituted, and who lost what little they had left when the government finally acted to stop the hyperinflation they had caused. I just got a message from them on the situation in Zimbabwe now, and I want to share one particular paragraph.
Overnight in January 2010 the reserve bank removed another 12 zeroes and people who had billions of Zimbabwe dollars were paupers the next day. No matter whether they had Zimbabwean dollars in the bank or at home they lost everything and were left with useless pieces of paper. They have never been compensated for the loss and never will be. So even though the currency changed to US dollars what they had in Zimbabwean dollars no longer existed. Pensioners are now at the mercy of Good Samaritans that reach out to them.
So consider this-the government lopped off 12 more zeroes from the currency in 2010. There were other zeroes removed earlier. On top of that, they effectively killed off the currency by moving their commerce to US Dollars. It wasn’t only the pensioners who suffered, it was everyone outside of a certain elite group within the government.
Before the Zimbabwean government took this action, the last measured monthly inflation rate was 79,600,000,000%.That’s almost 99% per day. Let those numbers sink in and scare the hell out of you.
Is that going to ever happen here? I certainly hope not, but it could. We could have the same thing to a lesser extent, say on the order of Wiemar Germany, where the highest measured monthly inflation rate was a mere 29,500%.
How would you handle such an event? In “When Money Dies“, author Adam Fergusson recounts various ways that Germans coped, including trading links from gold chains for needed goods.
So those Gold Eagles might be useful to buy a house, but not a meal. Even silver would be too “value dense” for use on a daily basis. How does commerce of any sort continue? The book has a lot to say on that subject, and honestly, you really need to read it yourself, since it’s been several years since I did. I do remember that barter was one way, but it was problematic. What if the farmer doesn’t want your flat screen TV in trade for 50 pounds of potatoes?
People also starved to death because they had nothing that had any value to others.
While this isn’t likely to happen here, it’s something to ponder on. Just in case.
"For reasons no one is 100% clear on, it has't happened in the US or any other country that followed our lead. That's a good thing. Hyperinflation isn't pretty, and the solutions for it are often worse."
That's because money, or more specifically, fiat currency, isn't what people think it is.
Hyperinflation is about lack of faith in the people managing the money – either the .gov or the central bank. And once people loss that faith, it is next to impossible to restore it.
As for what happened in Wiemar Germany, best lay in some trade goods ahead of time.
And finally on your statement: "While this isn't likely to happen here…" How is that any more than wishful thinking? Take a look at the expanding national debt, and tell me (with a straight face) that can go on forever. And one of the foundational principles of economics is "if something can't go on forever, it won't."
You're right, our expanding national debt is insupportable already. We're just waiting for the balloons to go up. But, I have a deep suspicion that they faceless few who are really running the show already have their plan for exactly how they're going to deal with it. I expect them to declare some kind of jubilee (https://en.wikipedia.org/wiki/Jubilee_(biblical)), wiping the slate clean, at least for those in their good graces. The rest, those that make it through the transition alive, will be allowed to become the serfs.