The US Dollar is Next in Line for the Centrally Controlled Money Graveyard

Centrally controlled money refers to a monetary system where a central authority, typically a country’s central bank or government, has significant control over the money supply and implements monetary policy. The central bank or government can print and issue currency. This gives them more direct control over the money supply. Interest rates and bank reserve requirements are often set by the central bank or government. This allows them to influence borrowing costs and bank lending activity. The Federal Reserve Bank here in the United States will be responsible for the US dollar eventually joining the centrally controlled money graveyard and our dollar will join the past fiat currency failures.

According to Bill Bonner Private Research, the history of centrally controlled monies is a history of theft, inflation and, eventually and invariably, defaults. There are many cases in modern economic history of fiat currencies being massively devalued from central bank policies gone awry or extremely imprudent government spending through the central banking system. Prominent economists would cite the lack of central bank independence and fiscal discipline as key culprits. Extremely imprudent government spending is a significant issue facing our great country today. If you have not noticed our government has a serious debt and spending issue at hand and inevitably this issue will get much bigger and ultimately lead to a currency and debt crisis. Those results too are a common outcome for many previous empires, republics, and countries that were based on a centrally controlled money system.

The Roman Empire heavily debased its coinage at various junctures

The Roman Empire infamously debased its currency at various points leading up to and during its decline. Ancient Rome originally used coins based on extremely high-purity silver and gold. This provided stability and international prestige. However, confronted by declining tax revenues, trade deficits, and high military spending demands, Roman emperors began incrementally reducing the silver content of their coins and instead mixing in cheaper metals like copper or tin. The motivations were to be able to mint more coins with the same precious metals to help finance growing state expenses.

However, this “coin debasement” led coins to lose intrinsic value. Inflation took hold, with continually more debased coins needed to pay for goods. Hyperinflation wreaked havoc at points. Price controls attempted to curb problems only led to illegal markets. The precious metal content of Roman coins went from around 95% silver in the 1st century AD to as low as 5% silver content by around 250 AD after several debasements by different emperors.

German marks under the Weimar Republic were in the central bank money graveyard

The German mark went through a period of severe hyperinflation and debasement during the Weimar Republic in the early 1920s. Germany had financed its WWI effort largely through borrowing and needed gold and foreign currency reserves to back the paper currency at the time. But under the burdensome war reparations imposed after WWI, Germany’s reserves depleted rapidly while military expenses remained high, and productivity was disrupted. The German government turned to the printing press to help finance itself. The German Reichsbank printed more and more bank notes that were not backed by gold or foreign reserves.

hyperinflation

In 1922 and 1923 especially, the acceleration in money supply expansion was stunning. The government kept printing money at an ever-faster pace. The flood of new marks being chased after limited goods made the currency depreciate rapidly. Hyperinflation took hold, with a dollar going from 8 marks to over 4 trillion marks by late 1923, near complete debasement. At the peak, prices were doubling every 3 days on average. People rushing to shops with wheelbarrows full of cash is an enduring image of this period. The economic chaos helped undermine the German economy and middle class. It also wiped out the savings of many Germans. Political instability ensued.

The Polish złoty has undergone several periods of high inflation and significant devaluation

In 1923, hyperinflation in Poland peaked as price growth hit a monthly rate of 275%. This was caused by money printing to finance deficits and reconstruction after WWI damages. The currency became greatly debased and unstable. Under centralized communist economic planning, Poland suffered from chronic inflation and periodic currency devaluations. Fixed prices set by planners were often out of line with market realities. This was dealt with by frequent currency redenomination and devaluations (around 20 in total).

As Poland transitioned to a market economy in the early 1990s, lacking fiscal discipline led to major inflation, reaching around 600% in 1990. The złoty lost over 90% of its purchasing power in this period, requiring another redenomination in 1995. In total, a history of political instability, wars, regime transitions, and loose fiscal policy created frequent upheavals for the Polish currency over time, leading to high inflation and devaluation episodes.

The Hungarian pengő currency was worthless after a period of hyperinflation

The Hungarian pengő currency underwent severe devaluation and hyperinflation in the aftermath of World War II. During the war, Hungary had accumulated large public and foreign debts to finance spending, which strained the value of the pengő. However, more serious inflation took hold after the war. To stimulate production and employment, the Hungarian Government ran very large budget deficits in the years after WWII. These were mainly financed by the National Bank of Hungary printing more and more pengő. Inflation started accelerating rapidly, with prices doubling every 15 hours by July 1946. The out-of-control money printing completely debased and devalued the currency.

hyper-inflation

As inflation hit astronomical levels, the government tried vainly to control prices and allocate limited supplies, which only fueled the hyperinflation further. Illegal market activity soared as well. By late July 1946, the hyperinflation peak was reached, with the highest denomination note of 100 quintillion pengő being issued. The exchange rate hit a nadir of over 300,000 quadrillion to 1 against the US dollar. Currency reforms were finally enacted in August 1946, replacing the pengő with the forint at an exchange rate of 400,000 quadrillion to 1 pengő to forint.

The Bank of Greece printed the drachma right into the currency graveyard

The Greek drachma was severely devalued and debased over the second half of the 20th century due to expansionary monetary policies enacted by the Bank of Greece. In the 1950s and 1960s, Greece pursued an import substitution strategy of economic development financed by money printing from the central bank. This led to higher inflation. Greece suffered double-digit inflation rates throughout the 1970s as fiscal deficits grew due to populist political pressures. The Bank of Greece monetized a large portion of this government debt. By the 1980s, annual inflation reached 20–25% at times as fiscal recklessness combined with loose monetary policy. The drachma was debased with continuous money printing.

Greece attempted to anchor the drachma value through membership in the European Monetary System (EMS). However, the drachma still had to go through a few devaluations and the inflation rate remained in double digits. In 2000, Greece finally adopted the euro single currency, replacing the severely inflated Greek drachma after decades of losing purchasing power value. At the drachma’s peak inflation in 1994, prices were over 1500% higher than in 1975. Greek savers and consumers were robbed via high inflation.

The Brazilian cruzeiro has a place in the centrally controlled money graveyard

The Brazilian cruzeiro went through multiple periods of high inflation and significant devaluation from the 1960s to the 1990s due to unstable economic policies. The cruzeiro suffered from high inflation during an economic boom period, losing above 40% of its value from 1967 to 1970 and requiring monetary reform. In the lost decade of the 1980s, Brazil experienced extremely high and variable inflation that reached over 200% at points. The cruzeiro underwent several unsuccessful price freezes and mini-stabilization plans, losing value steadily.

Brazil saw some of history’s worst hyperinflation in 1993–94, with inflation peaking over 4,000 percent. Three ineffective new currencies replaced each other within months. Massive money printing to fund deficits crucially undermined these currencies’ values. Lack of fiscal discipline was the key driver in the cruzeiro’s and successor currencies’ chronic devaluation and high inflation. After a near economic collapse, this stabilization plan introduced a transitional “real currency unit” in 1994 that finally controlled inflation after decades of instability. It set the stage for a new Brazilian real currency that retains value today.

Russian/Soviet currency has undergone severe devaluation over the years

Hyperinflation during the Russian Civil War and War Communism period led to the ruble losing virtually all value. By 1923 over 50 trillion pre-revolution rubles were needed to buy one gold coin.

In the early 1990s high inflation and economic turmoil during the transition from the Soviet Union to Russia saw the ruble rapidly devalued. Savings were wiped out as prices increased 100–300% in some years. During the 1998 Russian Financial Crisis, the ruble collapsed over 60% despite Central Bank attempts to defend it after Russia defaulted and devalued. Financial turmoil ensued.

From 2014 sanctions and low oil prices caused the ruble to plummet around 300% against USD. The Russian Central Bank hiked interest rates to 20% to stabilize the currency. It has regained some ground but remains relatively weak. Since 2022 additional sanctions, restrictions, and uncertainty after Russia’s invasion of Ukraine have put more pressure on the ruble, requiring extensive central bank efforts to artificially restrict trading and prop value. Long-term impacts remain uncertain.

The US dollar could become the Zimbabwean dollar if the Fed and DC have their way

The Zimbabwean dollar underwent a period of extreme hyperinflation and devaluation in the late 2000s. Root causes stemmed from longtime Zimbabwean President Mugabe’s policies like land redistribution, price controls, and large military/public sector spending that strained government budgets in the 1990s and 2000s. Zimbabwe began printing money to fund increasing deficits while restricting foreign currency transactions. But production was declining, government spending kept rising, and inflation started taking off. In 2006 and 2007, money printing and inflation accelerated drastically. Inflation exceeded 1,000% in 2006 and surged higher.

The Zimbabwean dollar started rapidly losing value both domestically and on black markets. By 2008, monthly inflation exceeded over 79 billion percent, rendering the Zimbabwean dollar almost worthless. Its exchange rate collapsed to absurdly low levels against other currencies. People rushed to spend any cash they obtained. Shops increased prices several times each day to keep up. Barter systems emerged and other currencies were used instead. After multiple failed currency reforms, Zimbabwe ultimately abandoned its national currency in 2009. Today, the US dollar and other foreign currencies are primarily used instead of local currency.

The history of centrally controlled money has had many more victims than even the ones we have mentioned above. The Chinese yuan saw 500% hyperinflation in the 1930s and 1940s, the Nicaraguan córdoba saw periods of 10,000% inflation in the late 1980s, the Peruvian sol has had periodic devaluations for 50 years, the Angolan kwanza has especially been debased in the last 30 years, and even the continental currency issued by the American Continental Congress during the Revolutionary War underwent severe devaluation and was ultimately worthless by the end of the war.

What is the lesson in all of this? While central control grants powers to smoothly fund some projects, unrestrained money creation directly enables and feeds into the currency debasement process seen so many times in history when fiscal sanity lapses. The currency becomes debased via inflationary loss of purchasing power.

The primary driver behind the devaluation and debasement of centrally controlled fiat currencies tends to be excessive money supply growth. This simply occurs when central banks and governments resort to simply creating and printing more money to fund spending needs and fiscal deficits. This rapidly expands the money supply without matching productivity/resource growth in the real economy. This is exactly what the Fed and the US Government are doing at an exponential rate.

History says that the gravediggers should start preparing a spot for the centrally controlled money that we have here in the United States called the Federal Reserve Note. The headstone will read “Once a great US dollar, now a worthless Federal Reserve Note.” A big thank you goes out to all of the central bankers and politicians who have contributed to its demise over the past few decades. Way to go leaders! It has been a great job just spending and printing into oblivion. You are a disgrace to anyone who has fought and served for this country. All you did was abuse your power and overstep your charters and mandates in the name of greed and corruption.

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