Ever since the Federal Reserve began its quantitative easing policies four years ago, a group of pessimists has warned of looming hyperinflation.

It hasn't come. Not even moderate inflation.

But this isn't a topic to joke about. When we talk about hyperinflation, most point to examples in Zimbabwe and the Weimar Republic. But America actually has its own history of hyperinflation. Last week, David Cowen, CEO of the Museum of American Finance, told me the story. Have a look (transcript follows):

Morgan Housel: So about two years ago, I was at a conference, and for the lunch tickets, they gave us $100 trillion in Zimbabwean bills that were real and they had a face value of maybe two cents for U.S. Dollars. A lot of people don't know that we actually had a hyper inflation here in American quite a while ago. What can you tell me about that?

David Cowen: You know, you're so right; it's not just Zimbabwe, but the textbooks have those wheelbarrows of money in Weimar, Germany, but hyperinflation actually happened here during the Revolutionary War. There's a phrase from there, "Not worth a Continental." A "Continental" was the paper currency that the Continental Congress was issuing to try and pay for the war, and it depreciated so rapidly that there's a famous letter from George Washington where he writes that "a wagonload of money will not buy a wagonload worth of provisions." So we experienced that hyperinflation here once in our history, and we have examples of the Continentals right here.

Now, part of the problem was we were losing battles, as you're well aware, quite often. But also the British were counterfeiting our currency like mad. And as a result, as you can see on this bill above one thousand dollars, it says, "Death to counterfeit," so very serious consequences. Recently there was a movie, Catch Me If You Can about counterfeiting. We almost glorify it in that movie. Very, very serious business, not just during this time, but throughout American history.

Morgan Housel: Was this just a threat, or did they actually execute people who were counterfeiting?

David Cowen: I don't know if there were actual executions, but I've read newspaper accounts where they branded people back then with the letter "C" on their forehead for counterfeiting.

Morgan Housel: That's almost worse than being executed.

David Cowen: Yeah, almost, right, so very, very serious penalties.

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