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Wednesday, January 6, 2013

In a telling demonstration of their lack of faith in the future of the U.S. dollar, lawmakers in Virginia are considering minting their own state coinage. But could the dollar really fail?

National currencies have failed before, and it has happened more frequently and more recently than you probably think.



Today's Random Fact:

The most famous example in the 20th century is Germany's Weimer Republic of 1922-1923. When Germany was unable to pay the war reparations imposed after WW I the government began printing unbacked currency.

Too much money was circulated, and the money was soon considered worthless. In 1922, the largest denomination of the Papiermark was 50,000. A year later it was 100 Trillion. This means that by December 1923, the exchange rate with the US Dollar was 4.2 Trillion to 1. It is estimated that by November 1923, the yearly inflation rate was 325,000,000 percent.

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Bonus Fact:

The most recent example is Zimbabwe. When Zimbabwe became an independent African state in 1980, the Zimbabwe dollar was actually valued higher than the US dollar, at a rate of 1 to 1.25. Through a series of questionable race-based land seizures and rampant money-printing, the Zimbabwe dollar began to experience rampant inflation. By 2006 it surged to 1,730 percent. In August 2006, the currency was replaced with a New Zimbabwe dollar at a rate of 1 to 1,000. By mid-2007, inflation reached a yearly increase of 11,000 percent. By May 2008, 100 Million and 250 Million New Zimbabwe Dollars (ZWD) denominated notes were released. Eventually the government was printing 100 Billion denomination notes.