Greg Bacon

The Continental Congress discovered in 1775 what every government eventually discovers: printing money feels like creating wealth until the bill arrives. To fund the Revolutionary War, Congress issued Continental dollars, no gold, no silver, no redemption guarantee. Just paper backed by the "anticipation of taxes" that never materialized at scale. By 1779, Congress had issued over $240 million in Continentals. Prices in Philadelphia exploded. A barrel of flour that cost $6 in 1777 cost $1,575 by 1781. Soldiers at Valley Forge received pay in currency that merchants refused at any price. The government's printing press destroyed savings more thoroughly than enemy cannon fire ever could. Washington himself complained that a wagonload of money could barely buy a wagonload of provisions. The phrase "not worth a Continental" entered the American vernacular, which is a damning epitaph for any currency. Each new bill diluted every existing bill. Late recipients of freshly printed money paid inflated prices while early recipients, mostly government contractors, spent at lower prices. The inflation tax transfers wealth invisibly, which is precisely its political appeal. Congress robbed soldiers and farmers alike without holding a single vote on taxation.