The Crash Course, Revised Edition

CHAPTER 13Like a Moth to Flame

Our Destructive Tendency to Print

When the Great Credit Bubble first began to lurch about unsteadily in 2008 as the consumer withdrew, most governments of developed nations predictably turned to Keynesian stimulus to try and keep the bubble going. Meaning, they racked up enormous and unprecedented levels of debt trying to stabilize the situation, and this debt will someday need to be paid back.

History is quite clear on the subject: Whenever governments or countries have found themselves saturated with too much debt totaling more than could possibly be paid back out of their productive economy, they've nearly always resorted to printing more money. In times past this meant physically debasing the coinage of the realm by reducing the purity of the silver or gold in the coins, or by making the coins smaller, or both.

The Moths

In the fourth century BC, Dionysius of Syracuse became the first recorded ruler to debase his currency in order to pay down his accumulated debt. The trick he used was to recall the circulating money, melt it down, and make all the coins a bit smaller. Presto! More money! But this was relatively hard work because they had to perform the tasks of actually getting the physical coinage back, melting it down, and then refashioning it into coinage.

Far easier was the task of running paper printing presses and churning out truckloads of paper currency, as Germany did in the 1920s and Zimbabwe did in the 2000s.

Today, “money printing” ...