Friday, September 04, 2009

The Zimbabwe Option

Power Line points to a Jeffrey Roger Hummel article discussing our future.

According to the article, we have three options:

1. We can try to get off cheap on repaying treasury securities through comparatively modest inflation.

2. We can default on treasury securities.
3. We can adopt the Zimbabwe option, repudiating the national debt indirectly through hyper inflation.

Mr Hummel is optimistic enough to believe the political class would avoid option 3 and does not believe option 1 will work. That leaves us with option 2. I don't know whether option 1 would work, but Mr. Hummel offers plausible reasons why not.

No option is good. Option 1 would severely damage the American economy. Option 2 would put an end to America as we know it, dramatically reducing our standard of living. Option 3 would leave us streaming into Mexico, looking for something to eat. My seat-of-the-pants guess is something in between 2 and 3.

Oh frabjous day. Obama is The One.

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