Other Theories

Although I am a supporter of the hyperinflation / dollar value destruction theory, I want to include the other competing theories here to show a bit of balance.

a) Deflation

The deflation theory, as best as I understand it, suggests that due to a massive onslaught of personal and corporate bankruptcies - enough dollars will disappear to cause the value of the remaining dollars to rise.  This has president in history but only for a short time.  During the last Great Depression the money supply shrunk - but the government quickly re-inflated the money supply again.

I think that whoever is in charge during the next financial collapse will be a populist and prefer to try to spend her way out of it.  I don't think their will be any Austrian economist beside her to advise her on the quickest solution; do nothing but repeal all of your intervention.  Dissolve government as we know it and spend your days trying to make amends for the evil crap you pulled.  No likely.

b) Steady State

Trust the government.  They control the economy don't you know.  When they want to speed it up they lower rates.  When they want to slow it down because it's "going to fast" they raise rates. And if they need money they just print some.

The Government does try desperately to control the economy (individuals economic actions) and they do control it to a point.  An easy way, in fact to see what's areas are controlled by government are to observe all the areas which are fucked up; healthcare, education, and money it's self!

People who adhere to the Steady State theory just haven't given it much thought.

Debt: if you have to borrow more than you can pay off - then you'll go bankrupt - and your standard of living will decrease.  Inflation: if you print more money than the value of all the money will drop.

Everything in the American Dream is not Peachy-Keen.  There will be ramifications for our debt and for our dishonest and exponential expansion of the supply of fiat.

Nothing was ever created in this Universe that did not eventually change.  Rome Fell, so did the Berlin Wall, so too will the United States Government and its flagship fiat currency.

c) Exponential Growth of Productivity

This theory espouses that capitalism (GDP) can grow along side of the money supply.  In effect Capitalists (producers) can create value to give that paper money value to represent, as fast as the politicians (looters) can print that paper. 

We'll point to the manufacture of computers as  the best example of this.  Every year you can buy a better computer for less money than you bought one the year before.   

Only nano-construction offers a future GDP growth exponential enough to keep up with the Fed's reckless expansion of M3.  And nano-tech will not come fast enough to save the state from hyperinflationary destruction. 

It is upon us.