Hyperinflation, what is it?
Well before the corruption of the 20th century, the gold standard for currency was GOLD. Quite literally gold, and silver was used as money, typically as a minted coin of some variety, usually with an ugly old rulers head stamped on it and a value assigned. The fact that you can't just make gold or silver out of thin air means it has intrinsic value, and thus the currency made from it retains a fairly stable value throughout most of history.
As time progressed though countries got a little more devious. They printed paper money in one form or another for centuries. The paper money was "backed" by gold. That is for every dollar in your pocket there was a dollar of gold some where in the treasury "backing up" that dollar. At least that's what they told you, and the world for that matter. For a long time you could exchange your gold backed dollar for a dollars worth of gold...or silver as the case may be.
Because you weren't holding actual gold, the value ratio between the paper money and the gold tended to slip, especially when banks got involved in providing loans to the governments who then printed gold-backed money to pay the interest on the loans. This process tended to drive the value of the currency down in relation to the gold it was backed by. This loss of value is called inflation, because you are inflating, that is increasing, the number of gold backed notes in relation to the amount of gold the country actually has in it's treasury.
The reason I call this devious is because history shows us that the printing of paper money backed by gold and redeamable for gold is the first step. The second is denying the exchanging of your precious metal backed currency for said precious metal.
What then? Well you have to continue to use the currency because about the same time they do this they also pass laws making it illegal to use anything but the paper money for currency. So even if you have gold, and your money is backed buy it, you can't buy anything with the gold itself, you would have to turn it in to some one and get cash for it.
Do you see what's happening here? Now the government and the banks are left holding all the precious metal, and you can't get it, even though they claim your money is backed by it. They have successfully stripped you of the real wealth behind your currency. You would have to spend your money to purchase gold, but then you couldn't use the gold to buy anything. Your trapped in the system.
Eventually the gold standard is done away with because the countries leaders (the banks, not the politicians, the banks ALWAYS run things if they are making loans to the country) get greedy and realize that if they can invent money out of thin air, they can make themselves rich beyond imagination. Thus "fiat" currency is born. This is step three, and is nothing more than the printing money and declaring it to be worth something. It's only backing is the trust in that particular countries market value and it's government's ability to pay interest on it's debt and pay off it's bonds.
That last part is important. Banks, and foreign governments tend to hold most of that debt and bondage, making them the ones getting rich off of the printing of money, not the country doing the printing. The politicians fall for this because it allows them to keep spending without restraint by allowing them to meet all their interest obligations.
This might seam pretty damn stupid, and something that can't last very long. If you thought that, your right.Sadly it's how most of the major powers in the world do things today, and it's why I, and many people believe we are in for a world of hurt.
You see, it's not like no one knows what happens when this is done. It's been done before, several times. Countries build debt, can't make payments, so they print money like crazy thinking the more money they print the more interest they can pay the banks, and thus keep borrowing and spending beyond their tax basis.
Germany tried this once, it led to the Nazi take over. At the time they were known as the Wiemar Republic, but here I will call them Germany, for continuities sake.
Germany in the 1920s was recovering from a major defeat (World War 1) and thus having to pay reparations to various countries. They also had internal political and military strife during this time as being the loser makes for a pretty rough political and social environment.
All of it had racked up some serious debt. This made the idea of printing more money very appealing, because of course, if you have more money you can pay off the debt right? That was their thinking any way.
So what happened? Well they turned on the printing presses, and German marks started pouring into the economy. For a short time it looked like their scheme might work as the amount of money they had vs their debt was growing. Then the bottom fell out.
You can keep this ruse going for a while, how long is dependent on how good your country is at tricking the rest of the world, and it’s own citizens into thinking everything is fine. Germany didn’t exactly have the world's favor at that time, and it didn’t take much for the rest of the world to realize printing a gazillion German marks didn't make them gazillionaires by any one else's standard but their own.
Having nothing to back up the quantity of money they were printing the value of each note plunged in buying power. This is hyperinflation. I'm not exagerating in this next statement. One month bread costs a normal amount, a few weeks later in Germany it cost thousands of marks, and then a month after that it cost BILLIONS of marks to buy a loaf of bread.
People went broke instantly. One week they were making a decent living, the next it took a whole weeks salary to buy food for one meal, and the next week you didn't have enough money to by anything.
The businesses of course try to keep paying you what they can so they can stay open, but inflation always outpaces the rise in income and in this environment of hyperinflation it was impossible to keep up. People got paid after each hour of work, and would rush out to buy something, anything before the prices went up farther.
Eventually they were printing trillion mark notes. The foolishness of the German leaders was astounding. This is the environment that lead to the rise of the Nazis. They promised freedom from this madness.
So what does this have to do with the United States? Well we have what is known as the Federal Reserve. It is not part of the government, it is a terrible creation of foreign banks and our government that loans the US treasury dollars, and in return we pay them interest. The United States government owes them as of this writing $16.4 Trillion dollars, and as of November 2012 they started pumping $40 billion dollars a month into the economy through the banking system. Notice any similarities with Germany?
You remember how I stated that the amount of time a country can keep up the printing without suffering the consequences of hyper inflation is related to how well they can fool the rest of the world? Well the United States Dollar has been the worlds currency standard for decades. It's going to take time for that trust to be be broken, but even now many asian coutnries are turning to China's fiat currency as a backing instead of the dollar.
It's also going to take months, maybe years for all that money that is currently being printed to trickle it's way into the economy. But when it does, there is no escaping what will happen. How expensive will bread be this time around? What will rise from the ashes of United States, and the world? It won't be just us. The entire world is on this system. If we go down, most of it will go down with us. Europe is in the process of a similiar collapse right now. Spain and Greece have already fallen.
It's going to get bad, and the worst part about it is, everything is going to look normal until the day hyperinflation kicks in, and no one can be sure what day that is, only that it's damn near inevitable.