http://www.zerohedge.com/news/150-years-us-fiat
At some point, and I think it is likely to be sooner rather than later, the Federal Reserve Note or $FRN ( note that I did not refer to the United States dollar, which essentially no longer exists) is likely to stop being the reserve currency of the world. Eventually, the USA will no longer be able to afford or be able to commit to military action against all the nations that no longer wish to trade in dollars for oil and other things we need, and the dollar will stop being the means of exchange. I think that gold will become the reserve currency of the future, but silver might serve, too.
When that happens, all the dollars now held in reserve around the world are going to come back to the US seeking goods. When they do, the destructive 10-15% inflation we have seen the last several years will be only a fond memory. Keep in mind that the 20% inflation of the Carter years was fueled by a 7% increase in the Fed's money supply, combined with a repatriation of *some* of the dollar holdings of the Arabs and some of the other foreign sovereignties concerned about Carter's apparent propensity to 'freeze' the bank accounts of those with whose politics Carter took issue.
Two of the factors that explain why we have not seen massive inflation so far as a result of the DOUBLING of the Fed's currency supply:
-The Euro is perceived as less stable than the dollar, and people would rather hold dollars than Euros. Once the Euro collapses, that will no longer hold true. People will then look at the dollar much as they did the Euro. At that point, all currencies will be suspect.
-Much of the new currency issued has gone to the vaults to prop up the reserves of various large banks, and overseas, where it is used to facilitate oil sales. Once the Euro dies, and dollars are not used as a reserve/exchange currency, then all they will be good for is to buy US goods.
About all that the US still excels at is agricultural production; I predict the price of food in $FRN will at least double within the next year. At some point, as inflation accelerates, food prices will double within a month, then a week, then a day. Gasoline will top out at some point, ($25 a gallon? 100$ a gallon? 1000$ a gallon? Who knows?)as people stop driving, but nobody is going to willingly stop eating. If you have not gotten your food storage and production squared away, time is growing short.
Another point to ponder- When the welfare checks no longer buy enough food to prevent starvation, one may expect trouble. The day will come when you will not be able to buy food for $FRN at any price; shortly afterwards, it may be that food will be more precious than gold or silver, and maybe even more precious than ammunition....
The Founders knew that currency devaluation always ends badly, which is why the US Constitution has that part about silver and gold being lawful money. (Hint- look at Article 1 sections 8 and 10) Just as with so many other restrictions on the power of Government contained within the Constitution, our 'representatives' have been ignoring this one. History will record the result, but given the dozens of examples we have just in the twentieth century, I have no doubt that this will be an exceedingly painful lesson. As Robert Anson Heinlein put it- "There ain't no such thing as a free lunch", aka TANSTAAFL. We cannot keep spending money we do not have; long term, no entity can spend more wealth than they create. This is a law of existence which is just as valid for groups as it is for individuals.
Historian