Need more money? Why not print it?

Is it possible we face global hyperinflation? It's an odd question to ask when the official inflation rate is heading for less than zero.

But the financial crisis was caused because the banks started printing money. They lent vast sums they hadn't got.

Nobody else had the money either, which usually doesn’t matter because it’s lent against assets of an equivalent worth.

Now it seems the assets weren’t worth that much and there is no chance of turning them back into cash.

We are now dealing with the consequences of that policy of, in effect, printing money – lending against non-existent or grossly over-valued assets.

Now it's payback time. Only Governments have the money. So they have to bail out (ie nationalise) the banks.

Even a supposedly independent bank like Barclays is being nationalised, but by Middle Eastern Governments rather than Britain's.

The Financial Times says the extent banks have lent against their assets is so vast that in some countries it represents "up to ten per cent of output".

If by output it means gross national product then the sums are truly vast. Britain's GNP is £1.16 trillion.

According to another source, the real total of bank indebtedness in Britain alone is actually £13 trillion. Yes, trillion. Not ten per cent of output but ten times it.

Even if that’s an exaggeration, there is no doubt the banks have been inventing money where it didn’t really exist. It’s what they have always done. Only more so.

Now the taxpayer is bailing out the banks. But is Gordon Brown’s £50 billion package enough to do the trick. And who bails out the taxpayers?

Which leads to the most fundamental question of all: Where does the money come from? You can always borrow it, I suppose, but who from?

Sovereign nations in theory borrow from the rest of the world, putting their own economies up as security. But the more they borrow, the less their economies are able to provide a return on that investment.

That, in turn, means the economy is worth less. Which means the currency gets devalued. Hence Shadow Chancellor George Osborne’s warning of a run on the pound if Gordon Brown goes for tax cuts and increased public spending on the back of borrowed money.

So where will it come from? Taxpayers, maybe. From "sharing the proceeds of growth", maybe.

There is, unfortunately, one other option. Governments can, in effect, borrow from themselves.

There can come a point where the simplest solution appears to be the most obvious of them all: to print money. It’s illegal for the rest of us to print money but not for Governments to behave like back-street forgers.

Suppose for one hideous moment that the slump gets worse, businesses can't pay their debts back, the banks can't be trusted, money isn't safe anywhere, not even under the bed.

What can any Government do? Why, it can get out of the crisis in the same way the banks got us into it. By printing money.

It's disastrous, inflationary, terrible. But at some point it may seem manageable and a way out of the spiral of decline.

Printing money has been a solution to financial crises in the past. When Germany was short of cash in the 1920s, it printed more.

The snag is that printing money means people have more cash so they pay higher prices for everything. As the cash gets less valuable, the price rises. Very quickly, inflation becomes hyperinflation.

In 1920s Germany, they needed a wheelbarrow full of banknotes to pay for a loaf of bread. Thieves would steal the barrow and left the notes behind. It’s one of the main reasons they voted in Hitler’s Nazi party.

Hyperinflation is hitting Zimbabwe very badly today – Robert Mugabe’s corrupt regime has turned Africa’s breadbasket into its basket-case. Prices double and double again every six days.

Zimbabwe’s inflation rate is now allegedly 215 Quintillion per cent. I have tried to find out what a Quintillion is and read several definitions but I am none the wiser. Let’s just agree it’s a bigger number than most of us can really imagine.

Now, though, one “answer” to global meltdown and massive government debts might be to print more money.

It’s already being suggested that the International Monetary Fund should print its own money to meet promises to bail out governments in Iceland, the Ukraine, Pakistan, Hungary, Belarus and Serbia.

Perish the thought that we end up like the Weimar Republic in Germany or present-day Zimbabwe. But as the Government commits itself to spending more and more money it hasn’t got, you do have to keep asking the question: Where does money come from?

And if it’s not “secured for the workers by hand or by brain the full fruits of their industry”, it can only come from the printing presses.

But if that happens, a few tax cuts here and there will be irrelevant. Money itself will cease to have any meaning. Just ask a Zimbabewan. In March, a loaf of bread cost 10 billion Zimbabew dollars. Today, it’s over 10 trillion.

As the crisis deepens and becomes daily more complicated, is there a possibility that our Government and others might resort to the most basic and unsophisticated method of all?