Check out this post, which has a photo gallery of currencies which collapsed-- i.e. money which died. The first example is a 10 Billion Dinar note. When a government is printing currency with "10 Billion" on it you know things are not good. I'm reminded of a guy in Zimbabwe who held up a sign: "Starving Billionaire".
One thing to notice is that it's a pretty long list, and it's by no means complete. There were two instances of French hyperinflation, but only French note is in the list. The Continental (currency of the American colonies) is not there, nor is the Confederate currency. Poland isn't in the photo list, but they have experienced hyperinflation. A few early Chinese paper failures are not there; I believe the Chinese invented the concept of totally unbacked currency, and were no doubt the first to experience a fiat currency collapse.
Among currencies that are not backed by anything, meaning that governments may freely create as much of the stuff as they like, a sudden loss of confidence in that currency is a common historical event, and an inevitable one. People argue about the life expectancy of an unbacked currency, but I've not seen estimates above 40 years, and the US dollar has been unbacked for 40 years next month. The paper dollar is past its life expectancy.
Maybe worrying about hyperinflation seems like doomer or survivalist thinking to some, but hyperinflation is neither a rare nor a surprising event from a historical perspective. Just look at those photos.
Considering the power of the American economy, I doubt the US dollar will ever suffer the same fate.
Posted by: Automated Forex Trading | August 12, 2011 at 01:13 AM