Hyperinflation

NPR recently ran a story on the hyperinflation in Zimbabwe. The economist being interviewed compared the situation in Zimbabwe today with Germany in the post-WWI period. The inflation rates being talked about here mean prices of all goods double about every two days. Wait a week to spend your paycheck, and you might as well use it for wallpaper.

Why would people continue using money that lost half its value every two days? Why not start bartering or using some other form of money? Apparently, the government enforces a law requiring all wages to be paid in the government-approved currency. And so it can continue printing money out of thin air to pay its own bills, and force its citizens to suffer the consequences in the disruption of the economy.

Allowing only one government-approved currency in a country has only this type of abuse in mind. Allowing competing currencies would force government economic policy to focus on keeping the dollar the best choice, rather than forcing citizens to simply accept the inflation that results from excess printing of money.

Hyperinflation is not an immediate threat to the United States, but the results of today's economic policies may not be seen for decades. I would feel much more comfortable with our long-term economic outlook if alternative currencies were allowed to compete with the dollar. I'm glad there is at least one Congressman working to make this happen.