Among the issues most commonly discussed are individuality, the rights of the individual, the limits of legitimate government, morality, history, economics, government policy, science, business, education, health care, energy, and man-made global warming evaluations. My posts are aimed at intelligent and rational individuals, whose comments are very welcome.

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11 May 2011

Sometimes it gets a little crazy in Africa

Zimbabwe issued the highest denomination currency ever and in 2009 it would not buy a bus ticket in its own capital.  These bills are no longer in use as currency in Zimbabwe.  Zimbabwe gave up on adding more zeroes to its currency before 2009 was over, but the bills are now worth something to currency collectors.  The bills are selling on the Internet for more than 15 times what they were worth in circulation.  They are now worth about $5 American as a collector's item.

Since the Democrats will not cut back on their spending and taxation will never provide them as much as they want to spend, I wonder when the American highest denomination bills will hit $100,000, then $1,000,000, then $10,000,000?  Look at the growth of our money supply since 2000 compared to its growth in prior times in the plot below:

The rate of expansion of the M2 money supply from 2000 to 2010 was at a rate of about $380 billion per year.  M2 was very nearly twice as large at the end of 2010 as it was in 2000.  As long as most of M2 is held abroad by people and countries who think the American dollar is reasonably sound, this may be less than totally catastrophic.  But, but, but, if those holding these dollars lose confidence in the dollar and start dumping it in panic, the jig is up.  We may then see that $100,000 bill, with a $1,000,000 bill fast on its heels.

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