A Proposal: The Zimbabwe/Weimar Scale

There is a research project I'd like to see undertaken, one that I think would contribute to the education of poor, misled libertarians everywhere.

In a nutshell, I would like to propose we create a Zimbabwe/Weimar scale. With this scale we can then measure modern money creation. I am reasonably sure that American and Japan have outdone Zimbabwe and Weimar in terms of money creation. It is a simple matter of technology, time, and scale. Zimbabwe and Weimar were hampered by the need to actually print currency on paper.

We use electrons now. There are far more dollars that exist solely as digits in an account somewhere than there is cash. We can conceivably create more currency in a single hour than both these unfortunate countries ever managed to do even while running their printing presses 24/7/365.

So, this Z.W. scale would help the unfortunate libertarian not make a mistake. They would see we've far surpassed those poor, amateurish countries in terms of money creation, and yet we've not had hyperinflation. And then they might start thinking about why.

The simple answer is that nations that suffered hyperinflation have debt denominated in other people's currency. If you are sovereign, and you get to pay people in your own currency, you can get away with a lot. But neither Z nor W were sovereign.

Additionally Z and W were engaged in old fashioned money creation- directly printing money, whereas we are in the age of currency creation via debt, which is, in a sense, even more daft than what those backward countries were doing. Why so? Well, it is, perhaps, insane enough to decide your problems can be solved by just printing more money, but if you do that, well, you actually have more money sloshing around in the economy- it is as if they imagined they needed a lubricant, and then went around spraying lubricant everywhere.

But currency creation via debt may look like lubricant at first, but it hardens up like glue rather quickly because the debt needs to be paid back. At the very least, payments need to be made on time. If someone defaults, that is essentially a deflation event. IF loans get paid off- a deflation event. And if the 'ideal' for the system is happening, then a large portion of the existing money supply goes to loan payments, which basically renders it non-functional for these lubricant purposes that the central bankers had dreamed up the whole scheme for in the first place.