This last week, “Helicopter Ben” and The Fed decided to “create” $1.2 Trillion in new money.
That is a lot of money.
Of course, I have no idea what the future holds. I can only make predictions. So let me venture a prediction here.
All the bail-out money that’s been dished out so far hasn’t really hit main street. It’s only hit Wall Street. So we really haven’t seen much inflation from bail-out money.
But this latest development — adding $1.2 Trillion to the money supply — could very well usher in a new era of hyperinflation in America.
If you study the Weimar Republic in pre-Hitler Germany… or modern-day Zimbabwe… or any other country where the government has decided to print money for any and every need…
…you’ll soon discover that hyperinflation is no walk in the park.
At first, people are able to pay off old debts with newly created money. Some are even able to pay off their mortgages within months instead of years.
Ultimately, though, people end up selling their homes to buy things like… bread.
Imagine getting a paycheck and promptly spending the entire thing on basic necessities just because waiting one day would mean losing half your purchasing power.
It sounds insane, but that’s what happens when hyperinflation is in full swing.
In the Weimar Republic, people eventually burned their money because it was cheaper to burn the paper than to buy wood.
Anyway, what you read here is speculation about the future based on The Fed’s latest move to create $1.2 Trillion out of thin air. A trillion here, a trillion there and it starts to add up to real money. Or, more accurately, fake money.
For all our sakes, I hope we don’t have to experience the ravaging effects of hyperinflation. But at this point it may be too late.
UPDATE: World Net Daily has picked up the story, today, March 22, 2009. They report that it has now been two years since The Fed stopped reporting M3 money supply figures.
Jerry Robinson, author of the new book Bankruptcy of Our Nation, says:
…the actions of the Fed can only serve at best as a temporary fix – placing a Band-Aid on a severe laceration.
“And it will only serve to delay and enlarge the scope of the impending day of reckoning for the United States,” he adds.