Devaluing Money

I recently won a $1000 coin on an auction site. The $ is
pesos, not dollars (USD). As a result of hyperinflation in
Mexico, 1000 “old” pesos (MXP) became 1 “new” peso (MXN) in
1993. A savings of $1,000,000 (MXP) became only $1,000 (MXN).
Mexico was given loans and guarantees of $50B (USD) –
principally by the Clinton administration – in order to
survive the financial crisis.
Nations get money by taxing, by borrowing and/or by
printing it. If you are a debtor nation and unable to pay
your debt, then you can devalue the currency in order to make
it possible to pay the debt. This is done by spending more
than your revenues and creating – by borrowing or printing –
the difference. The effect is called inflation or monetizing
the debt.
To boil a frog, put the frog in cool water and gradually
raise the temperature until the frog has boiled to death.
What we (frogs) see is that an item costing $1000 (USD) in
1913 would cost over $22,354 (USD) in 2011. This works
exactly like a tax. The government makes it worse because,
if you sell the item, you will be taxed on the $21,354
“profit.”
Our coins no longer contain any gold or silver, and our
paper money is only as good as the world's faith in it.
If the world loses that faith, then our dollar becomes as
worthless as a Zimbabwe dollar!