The situation in the US is almost bizarre. The US Bureau of Engraving and Printing, which physically prints all US paper money, has only two printing offices left, in Fort Worth, Texas and Washington, D.C. Even printing around the clock, mostly $1 bills, they only produce enough paper money to support a meager 5% of US daily retail trade.
When they print $5, $10, $20, $50, and $100 bills, they print proportionately less of each denomination. And most $100 bills are shipped overseas to other nations that demand US currency.
Importantly, this has created the potential for a never before seen economic paradox: a currency split.
Because the government can and does create unlimited virtual dollars, the virtual money can easily inflate or even hyperinflate. But paper money cannot, and if there is a currency split, paper money is instantly *deflated* by 20 times. That is, a nickel is worth a dollar, minimum, and probably much more, if virtual money has lost its value.
The government may try and *pretend* that the two are pegged together, but the simple fact is that neither can *more* paper money can be printed, *nor* can they print higher denominations, for the simple reason that nobody could make change for them.
So virtual money can hyperinflate, or be locked up in bank holidays, or frozen by the government. But legally, *nobody* has to accept virtual money in payment of a debt, because virtual money is NOT legal tender.
If retailers refuse virtual money instruments, like credit and debit cards and bank checks, virtual money is worthless, even if Obama orders the Treasury to input a bunch more zeroes to the deficit.
Something I've read often, is to collect as much change as you can. I regularly bring home many rolls of nickels from the bank. If the dollar bill gets devalued, let's say by a factor of ten, your nickel is then worth 50 cents (goes up by a factor of ten). That's because the government will recall paper money but won't bother recalling coinage. May happen again soon.
I wouldn't count on that.
But legally, *nobody* has to accept virtual money in payment of a debt, because virtual money is NOT legal tender.
Dollars are legal tender no matter the form they take. Whether they are greenbacks or entries in a checkbook, they are legal tender. The people will lose confidence in both at the same time. Then the hyperinflation ensues.