Dear Old Man,

Kellie is no fool and when you as a proud owner of a bank note mention Zimbabwe and Argentina she is not surprised either - she actually wants your bank note to lose its value as it's in her very interest that the fruits of your hard work over the years be junked and lost forever, so that the young will no longer be indebted to care for you once you are old, require their care and are no longer "useful".

Another fierce attack on a straw man

The "Washington Consensus" imagined by Kellie bears scant relationship to the consensus among international financial organisation that the term originally described.

http://en.wikipedia.org/wiki/Washington_Consensus#Original_sense:_Williamson.27s_Ten_Points

When a nation overspends its budget and takes on massive debt (thanks Kevin and Julia)it is 100% prudent and sensible to curtail spending and sell some assets if necessary. It is also necessary to stop handing out taxpayers' funds to persons who do not need the handouts - and that is an large number of people in Australia. The 'I expect a handout - it's my right' mentality is alive and well in this nation. May I recommend you stop taking the denial tablets and start on the reality tablets.

I think you misread me Old Man.

Was my post that obtuse?

Well finally some people are waking up. Both Labor and the Coalition are controlled by the banking system. We no longer have any Govt Banks thus 95% of our money is created as debt by the private system.

The real rate of inflation is far greater than 3%, more like 7% and our growth is lucky to be 2.5%. This means the debt will always be greater than growth and cannot be repaid.

Foyle,
You say "The only way that permanent money can come into existence is for the currency issuing government to spend more than it removes from circulation through taxes and charges." But why do you think money from the government spending more than it receives is permanent but money from the private sector spending more than it receives is temporary?

It's possible, and not that difficult, to engineer either set of conditions (on average over the economic cycle).

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Old Man,

Taxes are needed to create (and increase) demand for the currency and to control inflation, as your examples prove.

Are you sure Zimbabwe introduced a new currency? Wikipedia doesn't seem to mention it.

If Greece is kicked out of the Eurozone and reverts to a fiat currency it WON'T be Zimbabwe all over again (Greece exports to much for that to be a real threat). However their economy is still rather unbalanced so it would be very hard hit it it were done immediately. The effect would probably be more like the Asian Currency Crisis in the 1990s.

Spending more money than is raised does have consequences, but not the consequences you seem to think it has. Every hyperinflation episode ever has had other causes as well:
devoting the economy to fighting a war,
foreign currency loans,
failure to tax adequately,
currency pegging,
attacking exporters while discouraging foreign investment.

Avoid those five mistakes and you won't have hyperinflation.

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Arjay, what is the source of your 7% figure?