They tried this in Germany after World War I, back when they suffered the Weimar Republic's hyperinflationary demise. I think history shows what happened and what the economy and life was like on that occasion.
They tried this in Japan back in the '90s (and still to this very day, with no end in sight). I think most Japanese people wouldn't mind me saying things haven't been great for them in this period, although they were lucky to get a tailwind from the economy of rest-of-the-world to help mitigate their woes.
How could one forget to mention Zimbabwe in any conversation regarding inflation?
The source of all these problems? Mismanagement of fiat money.
The British Empire grew (by accident) as a result of mercantile success on the high seas of the world. We were a nation of entrepreneurs and wheeler-dealers, who could make trades that worked for both sides and made a shedload of wealth. The wealth was counted in gold and/or silver. The UK Pound Sterling was backed by gold (and silver, hence Sterling -- literally a pound of silver), and the world gradually came to love and want to use the coin of the realm.
The British Empire has declined rapidly since Sterling was untied from the Gold Standard, after World War I to some degree, and after World War II entirely. This is most graphically demonstrated by looking at the history of the metal content of our old coinage -- before 1921, UK silver coins were 92.5% silver("Sterling"), and then until 1947 UK silver coins were 50% silver. From 1947, UK "silver" coins were made of a copper-nickel alloy.
Today, the British Empire has declined so far that it is in question if HM the Queen can continue to boss around the Scots for much longer, or the Welsh for that matter. If you come and visit me in Scotland and we stroll to the bank to draw out some cash, you will be surprised to find that even we do not use Bank of England notes! The same if you go to a shop, you will get your change very, very likely composed of Bank of Scotland, Royal Bank of Scotland or Clydesdale Bank promisory notes. Personally, I prefer to spend these as quickly as I can, and to keep any BoE notes in preference when I get them. Not least because when I am down south, people look at me kinda funny when I hand over the Scottish notes, they don't want to take them. But, more importantly, I figure any of those private Scottish banks could and still might fail at any time and certainly without prior warning, which would render those notes worthless while BoE notes will always be acceptable. Just a thought.
Back to reliable money then:
- BoE notes seem to me "better" than private Scottish bank notes.
- Gold and silver seem to me "better still".
Good money always chases out bad eventually.
2 comments:
So... you're thinking "OK, so a Pound Sterling was equivalent originally to a pound (weight) of silver -- but how much silver is a Pound Sterling worth today then, Baron?"
The Baron says: Today, at this moment of writing, the spot price of silver is £9.15 per troy ounce. There are 14.5833 troy ounces in a pound. A pound of silver therefore is worth today £133.44 -- that's a hell of a lot of lost purchasing power, thanks to Sterling moving off the gold standard and the government being able to print up as many spondulicks as it likes ever since.
Kinda makes you think huh?
So... you're thinking "OK, so a Pound Sterling was equivalent originally to a pound (weight) of silver -- but how much silver is a Pound Sterling worth today then, Baron?"
The Baron says: Today, at this moment of writing, the spot price of silver is £9.15 per troy ounce. There are 14.5833 troy ounces in a pound. A pound of silver therefore is worth today £133.44 -- that's a hell of a lot of lost purchasing power, thanks to Sterling moving off the gold standard and the government being able to print up as many spondulicks as it likes ever since.
Kinda makes you think huh?
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