Never having lived through a hyperinflationary currency meltdown makes it difficult to visualize how such an event may unfold. We know from historical examples like the Weimar Republic and Zimbabwe that the end result is wheel barrows full of paper currency being used to buy basic staples like bread and rice. The following chart from the late Howard Katz provides us an example of what the beginnings of a currency meltdown look like, in this case Zimbabwe’s hyperinflation, and how quickly it can devolve into completely financial chaos:
|year||rate of increase in prices|
The Zimbabwe dollar took roughly five years to completely lose the confidence of its people. But because the US dollar is the world’s reserve currency all bets are off in terms of time lines. Given our dependence on debt issuance and foreign investment to cover our expenses, there’s a distinct possibility that shouldn’t be ignored. As James Rawles discussed in his book Patriots and Troy Grice in his book Indivisible, if our foreign creditors pull the plug on lending, the entire monetary system of the United States could collapse in one fell swoop. This is certainly a possibility.
Whatever the triggering mechanism, and however long it takes for the American public and our foreign creditors to lose confidence, the end result will be the same. We often talk about store shelves emptying if and when the dollar becomes worthless, but another likelihood in such an event would be that store shelves remain fairly well stocked simply because the people have nothing of value to acquire those goods (and eventually, that leads to riots and political collapse).
The following video from Silver Investor demonstrates the pricing discrepancies that will result if the US dollar goes into meltdown.
However it comes about, whether quickly in a period of days or weeks, or progressively over months and years, the wealth of anyone who denominates their assets in US dollars (including now, ironically, many Zimbabweans) will be virtually destroyed.
Hat tip Chef