Where Does Hyperinflation Come From?
Johns Hopkins University economics professor Steve H. Hanke, in a research paper published last week about the Zimbabwean hyperinflation explained it: “The source of Zimbabwe’s hyperinflation is the Reserve Bank of Zimbabwe’s money machine. The government spends, and the RBZ finances the spending by printing money. The RBZ has no ability in practice to resist the government’s demands for cash.” It is no different in the U.S. The government borrows, and the Fed finances the borrowing by printing money. Like the Reserve Bank of Zimbabwe, the Federal Reserve has no real ability to resist the government’s demand for loans. The late Nobel Laureate economist Friedrich von Hayek stated it bluntly more than 30 years ago in his essay, Denationalization of Money: “Since the function of government in issuing money is no longer one of merely certifying the weight and fineness of a certain piece of metal, but involves a deliberate determination of the quantity of money to be issued, governments …,
