Bad Monetary Policy

Bad monetary policy has caused many of the economic problems here in the United States and around the world.

The basics of money section provided explanations of money creation, evolution, currency debasement and the ravages of inflation and hyperinflation.

This section builds upon that information.

It provides historical examples of the effects of bad monetary policy.

Fiat Currency Failures
Fiat currency failures are common. Government’s power to print unlimited sums of money creates the danger of fiat currency failures.

When the government has the power and the will to print unlimited monies; there is a sense of prosperity for awhile. At the same time the government is increasing its own power base (because it doles out the money).

United States Currency Devaluations
There have been many United States currency devaluations throughout the past 235 years. A common theme is huge deficit spending for wars; public works, social programs, and poor monetary policy.

Excessive inflation (or hyperinflation) and large (or massive currency devaluations) and/or have bubbles occurred afterwards.

Inflation and Stagflation
Inflation and stagflation were significantly damaging to the economy and to money’s purchasing power from 1970 to 1982. The early 70s’ saw high inflation. During the late 70s to the early 1980s the nation experienced stagflation.

Not Worth a Continental
The saying: “ Not Worth a Continental ”has its roots at the start of this great nation.

Wars are rarely funded out of the existing treasury, nor are they financed from excessive taxes. The massive amounts needed would curb the enthusiasm of even the most ardent supporters.

The Revolutionary War was no different. At the beginning of the war in 1775 the total money supply was around $12 million. Over the next several years the Continental Congress issued a total of $425 million more fiat money.

Before we leave this section let’s take a peek into a potential future if the United States continues on the same economic trajectory that it is currently on.

It Can't Happen Here
Many people believe that it cant happen here. What they are saying is that they believe that the United States can not fail economically. There is compelling evidence that suggests that we should tread lightly with these words.

The Dangers of Currency Redenomination
Currency redenomination occurs when a government uses a single currency unit to replace a fixed number of old units (usually a positive integer).

These numbers can be as high as 10, 100, 1000 (or more) of the old units for one new unit. This could happen here in the United States if the monetary policy doesn’t change dramatically.

Final Thoughts
Bad Monetary Policy and the Basics of Money have been provided to increase your understanding of the US and world economy and how they can (and will) affect your monetary future.

The remainder of this site provides information on how to take control of your finances, invest in this strange new economy, ways to protect your wealth and to generate extra income.

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