2. Peter Bernholz, of University of Basel, says, the tipping point of hyperinflation “occurs when government’s deficit exceeds 40% of its expenditures”.

3. In 2012, US deficit was $1.2 trillion while expenditures were $3.6 trillion. The government deficit is 31% of expenditures and funded by US treasuries not money printing.

4. Under a gold standard, If too much money is print than investor will redeem cash into gold depleting gold reserves. If the government inflates the money supply than they will run out of gold. Money loses value when it is converted into gold because the government will be unable to maintain convertibility. Under a gold standard, central planners determine a fixed price for gold rather than letting the free market determine the real price of gold.

5. Foreign debt crisis punishes countries through loss of land assets and drops in production. The Treaty of Versailles in 1919 increased war reparations to 1/3 of Germany spending. The reparations were paid in the foreign currency owed. When the Germans defaulted on their debt the Belgians and French moved into the Ruhr region, Germanys heartland of production. Foreign debt had a repo effect on Germany. As production then prices increased due to domestic inflation. Germany began printing money to pay for domestic production. The printing cause hyperinflation and collapse.

6. Fiat money represents the liability of the government. Governments don’t face insolvency as long as they can create money. Insolvency occurs when Debt is financed by foreign countries.

7. Fiat money requires a large base of install users. Fiat currency is the only money accepted to pay taxes. Governments can coerce people to assume liabilities and pay for those liabilities. Failure to pay may be enforced by imprisonment or seizure of assets. Government fiat money exists while taxes can be enforced and collected.

8. Tax compliance is strong in the United States.