Asking this question from an American perspective. At an average of 2% inflation, an equivalent new car that costs $40,000 today would cost $2,000,000 in 200 years. Assuming matching(ish) wage growth (i.e. a household of two married professionals could still afford a $2M car), what are the government’s options? Let things ride? Print new $1,000 or $10,000 bills? Reissue a *NEW* USD that is worth 0.01% of the old one?
Still on the fence about if humanity will be around long enough to have this problem, but just curious about the options for my great-great-great-great-great-grandkids.
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at 2% per year the value of a dollar would double every 35 years and increase a thousandfold ever 350 years and make a million dollar worth what a dollar is worth today in 700 years.
It seems rather unlikely that the dollar will still be used as it is now that far in the future.
Star Trek: The Next Generation was set in a time when at 2% inflation per year $1000 would be worth $1 of today. They didn’t use money anymore in Captain Picard’s time.
That was a rather utopic vision of the future, but for an average of 2% inflation things would have to be incredibly stable.
It seems like that the US dollar ceases to be a thing long before that happens for some reason or another.
But imagining that it did stay a thing for long enough to reach such high inflation values at such low rates, that would not be a big issue either.
The USD and the Japanese Yen did start out being worth the same (both being copies of a popular silver coin) Nowadays a Dollar is worth 140 Yen and people in Japan still manage to deal with that.
At 2% annual inflation the US dollar will not be worth what the Yen is worth today for a quatre of a century.
So if Americans are still using paper money and coins in 250 years they will be able to deal with that the way the Japanese are dealing with it now.
Eventually the cent will disappear. The Japanese Yen had a cent like subunit at some point and it went a way. In fact the US Dollar used to have coins worth less than a cent. The US stopped minting half cent coins in 1857.
At that point the 0.5 cent coin was worth what 17 cent are worth today meaning that by all logic the US should have given rid of at least their 1 cent coin a while ago.
It cost the US government more than a cent to make a cent coin and it has little use today. the only reason it seems to still be made is that the companies who profit from the minting of those useless coins are lobbying to keep getting paid.
Other countries are in the process of phasing out similar small coins and eventually the US will too.
A century or two from now the idea of pricing things in fractions of a dollar might seem ridiculous to most people.
Of course physical money appears to be on the way out regardless. Governments have more control over people if all the money is electronic, so it seems a likely long term trend even if it is not a popular change.
Bigger bank notes might otherwise become a thing, but especially for bigger sums government are discouraging the use of cash in transactions.
So you might never see large bank notes worth thousands of dollars again, they used to be thing a century ago when they were worth much more by comparison.
Even ignoring all that adding a few extra zeros would not break anyone.
If worst comes to worst the us government can do what turkey did when they replace their old lira with new lira currency. they basically just struck out the last 6 zeros and made a new lira worth a million old ones. that made the math for the transition easy for everyone and made the numbers much more manageable. (Lets no talk about what Erdogan did with the Lira later.)
In general it seems much more likely that the USD gets replaced by a new currency like the euro replaced the national currencies in Europe because it merged closer economically with perhaps Canada and others or be replaced by new currencies because the country broke apart.
Or it might undergo a financial crisis and have some hyperinflation or otherwise necessitate a switch to a new currency.
Or money goes almost entirely digital.
Or it becomes increasingly irrelevant as we go to a place where automation and social programs have made money less of a thing.
Or the opposite happens and we all live in a cyberpunk dystopia where everyone uses company script again and is in debt to google and facebook and walmart.
whatever happens, I think the least likely thing is that everything stays stable and like it is today for long enough that 2% inflation amounts to too much.
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