Saturday, September 22, 2012

Coordinated Toilet Flushing - A Hyperinflation Story

I have a trillion dollar Zimbabwe note in my desk for kicks and giggles. It is worth less than 1 American dollar. Zimbabwe is the land of hyper inflation and this coordinated toilet flushing is an unintended consequence of out of control monetary policy which exacerbates shortages of anything. 
It sounds silly at first, but there is nothing funny about what has happened in that country. America is at that loss of control-point with QE3. I am not saying that Zimbabwe like hyperinflation is on the way for the U.S., but faster inflation (higher prices) certainly are along with eventual product shortages and all the fun stuff that comes with morphing into a third world financial basket case. Thus far, monetary hyperinflation here has been confined to the banking system. Let's hope it stays that way, or we'll all be flushing too.

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