I have been reading from Currency Wars by James Rickards. It is an interesting history of the recent currency troubles of the last century. One of the worst episodes was in Germany in the 20's. Here is what he said about that crisis:
In one incredible five-year stretch from 1977 to 1981, cumulative inflation was over 50 percent; the value of the dollar was cut in half. U.S. citizens in this period made the same analytic mistake as their counterparts in Weimar Germany had in 1921. Their initial perception was that prices were going up; what was really happening was that the currency was collapsing. Higher prices are the symptom, not the cause, of currency collapse.
Is the United States headed for such a collapse? I doubt it. But it is not impossible. Obama may “get religion” and start cutting the deficit. Romney may be lying to us now for the election, but he actually has a plan to save us. Maybe Glinda, the good witch of the North, will cast a magic spell and give us ruby slippers to solve the transportation crisis. As my son Daniel used to say when I would tease someone outrageously, "Anything is possible."
I would not rely on Glinda or magical ruby slippers.
What do I expect?
I expect that inflation will be 10 to 20% and so will unemployment. At that point whoever is President will be forced to act like Reagan did and appoint someone like Paul Volker and we will have a few rough years but eventually come out of it a smarter nation, but no longer the only superpower in the world.
This makes me an optimist. God help us.