Hyperinflation?

It's always amusing to hear scolds and cranks on the political right-wing (and I include libertarians here, as this article focuses on economic issues) warning about the possibility of US hyperinflation.  If I had a dollar for every time someone compared the United States to Weimar Germany or post-WWII Hungary or various African kleptocracies--I'd have enough cash to inflate the currency myself.  While the US uses fiat money, it ought to be obvious to anyone that the Fed is strictly under the thumb of banking interests, and that despite persistent 8% unemployment, isn't likely to do a damn thing about it--least of all, go off and print tens of trillions of dollars (and it would take an expansion that large in the money supply to devalue the currency sufficiently to trigger hyperinflation--generally defined as a halving of the value of a currency each month, or worse).  The size of the national debt is of some concern, but at present it is at a level manageable by current GDP.

Hyperinflation generally occurs when there's a very large change in the value of the money supply (money stock, bank deposits, etc) compared to the productive value of a country.  The biggest cause of hyperinflation is warfare and its aftermath, where massive amounts of capital are diverted to fund the war machine.  This is especially true for civil war and/or invasion--where productive assets are destroyed, civil society is disrupted, taxation becomes difficult, and/or punitive reparations are imposed on the loser of a conflict.  The other main cause of hyperinflation is ineffective government running unproductive economies (often also coupled with warfare).  Neither condition presently applies here--while the US is presently engaged in far too many foreign misadventures for my taste, all of the conflict is occurring abroad; US factories are not being bombed and the government remains able to finance its activities through taxation or debt.  And the country still has adequate infrastructure, productive farms and factories, and other ways of generating wealth.

So--could hyperinflation happen here?  The two times the US has come closest were during the Revolutionary and Civil wars.  The US was not yet a country at the time the colonists revolting against Great Britain were issuing "continentals" to finance the war, which quickly became worthless.  No other episode--including the infamous "stagflation" of the 1970s, come close--inflation then was on the order of 10% per year, not 50% per month.  As noted in the opening paragraph, the Fed seems to be in no mood to further expand the money supply, and US debt still is regarded as a highly safe investment.

If it does happen, it won't be in the way the tinfoil hats on the right predict.  My bigger concern would be a significant drop in the productive capacity of the country--caused by a continuing failure to invest in the infrastructure and human resources needed to maintain a first-world economy.   A first world economy requires quality roads and ports for movement of people and goods, an educated populace, a strong financial system, infrastructure for things like electricity, water, sewerage, and telecommunications, and a transparent and honest political and judicial system.  And recently, we have been neglecting all of these, often on the grounds that they are too expensive to maintain.  However, there remains ample money to fund a vast war machine for engaging in dubious adventures abroad.

If hyperinflation occurs here, it won't because the Fed fires up the printing press.  It will occur here because our infrastructure will become so neglected that it fails to function.  Our bridges will fall into rivers; our utility systems will become unreliable.  Our factories, many of which are shuttered due to cheaper labor (and better supply chains) available elsewhere, will become obsolete and no longer capable of high-level production.  Our children, deprived of a quality education, will not be qualified for any tasks other than physical labor.  Our politicians will become more bought, and our culture politics more poisonous.  And eventually, the GDP will plummet as the productive capacity of the land goes down, and all those dollars people have will correspondingly decline in value.

If hyperinflation occurs here, it won't be because of the numerator in the money/wealth ratio gets too high, it will be because the denominator gets too low. And that's actually the common denominator in cases of hyperinflation--a country that, for whatever reason, is poor.  Usually this occurs in a country that has never been otherwise, or which sees its wealth utterly destroyed due to catastrophe or sabotage.  It would be a rare thing indeed for it to happen due to simple neglect.