Happens after your country's single most important asset gets wiped out. Agriculture.
You have to see the pictures to believe it. What I can't figure is why they just don't wipe out all of the zero's and start over.
A mail bag full of paper bills there = $100 bill here. Seems highly impractical at this point to make people suffer like that. Its like fractionalizing our pennies by over 10,000.
http://www.boncherry...he-real-crisis/
Our assets haven't been wiped out (yet.) But if you consider the notional value of all of the derivatives that are leveraged to create $500 trillion on assets that are worth far far less, it is not hard to imagine some fairly strong inflation winds stirring beneath the scenes if a sizable portion of this is unwillingly but necessarily forced to mark to market.
You'd have to print a ton of money, kind of like the government in the video above has had to print to offset the corresponding decrease in value caused by the hyperleveraged increase of the notional value of all of the derivatives. not an entirely easy concept to grasp, so when it starts to happen you will likely appreciate it better (not like it better) when the "important" things we currently value at x dollars become suddenly valued at 0.000000000x dollars. Or something like that.
That's the interesting part about FIAT money. (especially when there is no "standard" to reference it to.) Its only as good as the full "faith" and government behind it. And in our current condition you need one heck of a military to enforce the assurance of the value of that fiat as people you owe money to, become quite quite impatient or angry when then see it being de-valued and printed and not paid back in the same value or amount it was orginally "loaned at."
Want to make someone quite angry ? just start messing with his "paycheck" or source of income or dont pay him back money you've loaned him. So imagine when whole countries become angry.
Edited by nimblebear, 29 October 2008 - 07:00 PM.
