Countries come and countries go and sometimes before they go, their money becomes worthless and sometimes they don't go anywhere, but their currency is still worthless. Hundreds of years ago there were many gold and silver coins in circulation and people didn't really have to worry about them getting devalued, because their content was valuable. It didn't really matter who would put out a one ounce gold coin, because one ounce of gold was worth a certain price even if it wasn't in coin form. The same can be said for silver. This all changed with the advent of paper money. To get around the fact that paper money had no intrinsic value, much of it was backed by precious metals. In other words you could redeem it for a fixed amount of gold or silver. Indeed the United States currency was backed by silver until 1963 and a year later silver was eliminated from coins.

At least one thing could be said about our money in pre-1963 days, it had a value. If we would have kept either the gold or silver standards, would this have helped prevent our money from losing it's value against many foreign currencies? It certainly would have. U.S. paper money and coins are no longer backed by anything. If you ask the government what is backing this currency they will state that it is the full faith and economy of the United States. If that is the case are we headed for a time when our money will be worthless? Our economy is in trouble and our government is the one that has put it in such bad shape. If the money was still backed by gold or silver then that would have stopped the government from printing trillions of dollars in new money, because it would have meant that the only way you could have printed money is if there was a dollar's worth of silver available to back every dollar printed. It seems to me that doing away with the last silver standard was just a cheap political trick to allow for printing more money for pork projects and to pay for an ever expanding governmental bureaucracy.

Other countries have printed endless money with devastating results. Zimbabwe was one of the richest countries in Africa and is a lesson for all. As their money became more and more worthless, their central bank kept issuing bigger and bigger denomination bills. Recently it has just issued a $100 billion bank note. That is $100,000,000,000, I figured you might want to see it in numbers to get the full effect. If you had this huge bank note and went to a supermarket or bakery in that country, you could just about buy a couple of loafs of bread with it. That takes into account the fact that you got there right away, because the values are falling rapidly. If you lived in Zimbabwe, you could expect to spend trillions of Zimbabwe dollars just for daily expenses.

Indonesia had problems with their economy just a mere 10 years ago and the value of their rupiah lost 80 percent of it's value within months and bills were being printed in huge denomination like the 100,000 rupiah note. The country rioted and President Suharto was thrown out of office after a 32 year rule. Mass demonstrations and violence accompanied the devaluation of Indonesian money, which was partly due to the Asian financial crisis. Before this that country had experienced economic growth. Suharto relied on American educated advisors to set his economic policy and the group was called the Berkeley Mafia. Ultimately his advisors were not able to help him get out of the economic mess that led to him being ousted.

Another African country the got itself into trouble by printing too much money was Guinea. It is rich in minerals, but is either unable or unwilling to take advantage of this. When the International Monetary Fund tried to have them mandate reforms they refused and foreign investment dried up. The denominations of their bills got bigger and bigger and now they have a 10,000 Guinean Franc note. This note is worth a little over $2.00 U.S.

Germany experienced a terrible inflation of their money in the 1920s. To give you an example of how worthless German money had become, some people were burning it instead of wood in their stoves because the bills would burn longer than the amount of wood that they could buy with those notes. As money became more and more worthless, people would load wheelbarrows with it to go to the store and pay for groceries. One woman from that time talked about her father, she said that her father had taken out an insurance policy and made faithful payments for 20 years, at which time he was able to cash it in. The amount of money he recovered was just enough to buy one loaf of bread. In 1923, Germany issued a one billion Mark note. By the end of the year, one U.S. dollar equaled a trillion marks.

Is the United States in danger of having this happen to it's currency? Unfortunately it is possible though unlikely as the extreme cases that I have quoted. There are similarities in our situation with some of the countries that have suffered extreme inflation and worthless money and there are some differences. Unlike some of the small African and Island countries, the world has a stake in the U.S. economy succeeding. Almost every country in the world owns U.S. securities and has U.S. dollars. If we fail, many of them will fail. They are also owners of many of our businesses in part or in whole. In the long run this may be the single most important thing that saves us. Then there is the other side of the coin. How long can we just keep printing money that is not backed by anything tangible? As we borrow more and more to run wars and for pork barrel projects, more of these bonds and notes are being bought by other countries who may demand payment some day in whole or part before we are ready or able to do that. Worse yet, they may just refuse to buy any more securities from us. We have embarked on a very risky course over the last eight years, when we began deficit spending again after the budget was balanced. I hope for all our sakes that we won't need a wheelbarrow to hold our money someday when we go to our grocery store.