National Currencies Destroyed by InflationEvery nation's monetary unit can be easily destroyed by inflation if nation’s money supply is not carefully managed. There are over 3,800 past examples of paper currencies that no longer exist.Examples from western currencies, which may have some collector value but no longer possess any monetary value. Of course, we could just as easily display beautiful but no longer functional examples from Argentina, Bolivia, and Columbia, and a hundred other places.
Here’s a relatively recent example that comes from Yugoslavia between the years 1988 and 1995. Pre-1990, the Yugoslavian dinar had measurable value: You could actually buy something with one. However, throughout the 1980’s, the Yugoslavian government ran a persistent budget deficit and printed money to make up the shortfall. By the early 1990’s, the government had used up all its own hard currency reserves, and they proceeded to loot the private accounts of citizens. In order to keep things moving along, successively larger bills had to be printed, finally culminating in this stunning example – a 500 billion dinar note. At its height, inflation in Yugoslavia was running at over 37% per day. This means prices were doubling every 48 hours or so.
To illustrate even more, suppose that on January 1, you had a penny and could find something to purchase with it. At 37% per day inflation, by April 3, you’d need one of these – a billion dollar bill – to purchase the very same item. In reverse, if you’d had a billion dollars on January 1st stuffed in a suitcase, by April 3rd you’d have had a penny’s worth of purchasing power left. Clearly, if you’d attempted to save money during this period of time, you’d have lost it all, so we can safely state that inflationary money regimes impose a penalty on savers. The opposite side of this is that inflationary money regimes promote spending and require that money be invested or speculated, so as to at least have the chance of keeping pace with inflation. Of course, investing and speculating involve risks, so we can broaden this statement to include the claim that inflationary monetary systems require the citizens living within them to subject their hard-earned savings to risk. 
Even more importantly, since history shows how common it is for currencies to be mismanaged, we need to keep a careful eye on the stewards of our money to make sure they are not being irresponsible by creating too much money out of thin air and thereby destroying our savings, culture, and institutions by the process of inflation. Definition of Inflation Hyperinflation Actual Inflation Rate Are we in Inflationary or Deflationary Economic Environment? Historical Inflation Rate Prestent Job Loss Statistics What is Counter-Party Risk? Current Precious Metal Prices Return from About Inflation to Inflation-Proof Investor Home
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