In this interview, Jason Hartman asks Barry Habib why the United Kingdom is the focus of recent money‑printing concerns. Habib explains that the UK has moved beyond traditional quantitative easing to outright printing of currency, likening it to an unlimited credit‑card that can be spent without repayment. He warns that such large‑scale money creation is a classic first step toward hyperinflation, a pattern seen historically in wartime economies. Habib draws parallels to the Weimar Republic’s post‑World‑War I reparations crisis, where the German government printed money so rapidly that notes were printed on one side and prices skyrocketed to billions of marks per loaf of bread. He also references Zimbabwe’s hyperinflation, noting how the government attempted price‑fixing, which led merchants to stop selling goods, creating shortages. Throughout, Habib stresses the danger of a feedback loop: rising debt levels (citing the U.S. Fed’s expanding balance sheet), increasing velocity of money, and the temptation for other central banks to follow the UK’s example. He concludes that the UK has “crossed the Rubicon,” and the path of unchecked money printing is one the world should avoid.
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You were mentioning off air something that was particularly interesting and that is about the money printing in the uk. Why the UK specifically?
Well, that's where it's happening. So the United Kingdom, which is not a insignificant country, decided to actually print money, which is very different than what's been done with Quantitative Easing. It's been very different than what's been done with increasing indebtedness. Because there's a corresponding ledger. When you print money, it's pretty intoxicating. You know, it's kind of like if I said to you, here's a credit card, you can go out and spend all you want, pay off all the debts you want on it, and you don't have to make payments and you don't owe any money. It's pretty darn intoxicating. But that's really putting a lot more money into the system. And if you look through history, which I look very carefully at history, inflation, right?
Yeah.
It can potentially lead to not just inflation, but some of the dangers. Every place where we've seen hyperinflation, which is defined by an inflation rate of greater than 50% per year, this was the first step. And typically it's in wartime situation where for the safety of the general public, you have to build up your war machine. And that puts the country in a great deal of debt. But then that becomes so great that they just begin printing money and that can later on, if it's not met with corresponding demand, cause significant inflation. And it's very troublesome and it's very worrisome because if the UK does it, then who's next? I don't know. Maybe Japan says, well, if the UK is doing it, maybe we should do it. We haven't done it yet. Here in the US you can see what our debt levels are astronomically soaring to. You could see what the Fed's balance sheet is astronomically soaring to. And you just wonder, is this a precursor to say, okay, well, it's okay to do it because other central banks are doing it. I'm just very troubled by this because I think that this is something that is a road that we do not want to cross. So currently, you know, the UK has crossed the Rubicon right now, and it is a very hard thing to reel back.
Right. And the UK is in an interesting position based on Brexit. And, you know, that's been going on in the news for years, but finally happened, of course, we see this kind of massive amount of QE of debt creation and we haven't seen the last of it maybe we've just seen the beginning. Will we see. I mean, you know, when you said mostly done during wartime, this is a sort of a war. And as you were saying that, it brought me back to thinking of what happened in the Weimar Republic. And, you know, I'm a big student of monetary history and fiscal history to a lesser degree.
That's exactly what happened in the Weimar Republic. Germany had to pay reparations from World War I that were just too much. And then they went into enormous debt. And then eventually, in order to keep up, they began just essentially printing money, literally printing. In fact, history has a very interesting component to what they had done. They had to print money so fast that Deutsche marks had to be printed with just one side because they couldn't print them fast enough. And a loaf of bread wound up costing 20 billion marks for a loaf of bread. So the stories are crazy. And what happens in those times is you ride on the bus in the morning and it's one fare on the way home, it's much higher fare. There's stories of people going to get a cup of coffee. And it was at one price when you came in, but by the time you left, it was a higher price.
It's a major disincentive for capital formation because when the price of things is rising so quickly, you want to just spend your money to. To get the goods, the widgets, before the value of the currency is debased further. And what's interesting is in the Zimbabwe story, and I'm sure you know about this, but just for the listeners, literally the currency was debasing so quickly that they instituted price fixing. And the merchants who were selling literally, you know, before and after lunch, things were different price. And they said to the merchants, look, if you raise prices, we're going to arrest you. And so, of course, the merchants stopped selling stuff because, you know, a banana, you couldn't make any money on it.
Yeah, big underground market there.
So it leads to shortages and all sorts of problems. But given the situation that we're in, where you see oil price crashing now, maybe that'll change with the new agreement that just happened. But, you know, how long is it before we see inflation? I mean, it has to happen, you know, Friedman, it doesn't have to happen. Okay?
And actually, that's. That's the. The fork in the road here, because if the US Continues down this path, which is one of indebtedness, it's very repressive towards inflation. The greater your debt without money printing, the lower inflation remains. And the lower interest rates remain. And the reason for that is because if you look at it as like a family who has so much debt that the monthly payments, the debt service on that doesn't give them any discretionary money to spend. It's the same here. And what that does is it dramatically reduces what's called the velocity of money. And the velocity is something that people hear, but it's difficult. The vast majority of people don't really have a good handle on. What does that mean? Well, the velocity of money before this crisis in the US years ago was 2.2. Now it's 1.4 times. So what does that mean? Velocity of money is how quickly it changes hands. But it has to happen in a productive way. So let's just say if you go out, you borrow $30,000 from the bank. Now that comes along with a monthly payment. So that's your debt service on that. Right? If you just take the car and you drive it on Sunday afternoons, well, you've consumed that now, sure, when you purchase the car, it did create some economic activity, but essentially you're taking money out every month with that debt service that you're paying. That's less money to fund things. But what if you took that same investment and now you took that monthly payment and instead of driving the car on Sundays, you took it and you became an Uber driver or a Lyft driver and now you're generating income, so that $500 that you're spending is generating $1,000 or $2,000 a month. Well, that's a velocity of money multiple. So that's what we're seeing not happen. And the more debt we have and the more repressive it is, the less velocity we have, which keeps interest rates low. That's why this bridge of do you print money or not? Is so important. And I would have not thought, even though with the debt levels this high, that this could occur. But with the UK now being the first major country to say, hey, we're going to go down this path, it is a tricky one, it's a potentially dangerous one because it can turn low rates, low inflation into a high rate, high inflation environment that really wipes out savers. Not saying this is going to happen. I just find it's very interesting that the UK took the first step and I find it troubling.
