Letter: How hyperinflation starts
The Gazette-Journal’s critique on Del. Bob Marshall’s plan to study Virginia printing its own currency is misguided. Since 1900, there have been 44 examples of hyperinflation, defined as 50 percent inflation in at least one month. Forty-three of the examples started with the central bank of the country printing money to buy the treasury bonds of their own country, expanding the central bank balance sheet to eventually unsustainable levels.
A fiat currency such as ours always reverts to its true value, which is zero. Since the creation of the Federal Reserve in 1913, the U.S. dollar has lost 98 percent of its purchasing power. It’s an insidious tax, as it is hidden. The Fed balance sheet stands at $3 trillion, and is estimated to be $4.1 trillion at the end of the year as they buy $85 billion a month in mortgage-backed securities and treasury bonds. This will not end well. This is how hyperinflation starts.
Zimbabwe’s treasury reported $217 cash on hand last week. I have one question for the Gazette-Journal editorial staff: In the case of hyperinflation, would you rather be paid for subscriptions with a Zimbabwe-type dollar, or a state currency backed by gold or silver?