The dollar will no longer be used as a money if deficits are printed over.  The purchasing power will continue to fall and will eventually break down entirely.  If the purchasing power continues to fall, the money may continue to be used, but the transaction doesn’t resemble honesty.  International trade will appear to benefit in the short term, but in the long run, another money must be used.

Every holder of cash will become fearful and must dispense of his cash balance.  If not, the holder will continually lose money.  Thus, demand for cash holding is reduced.  All money in the account, and incoming money, will be spent as quickly as possible while it still has value.  Money is spent just to get rid of it.  Money is spent on goods with value that will last longer than the cash.  Mises referred to this as the “flight to real values.”

Goods are purchased that aren’t needed at the moment because they don’t want to hold on to their paper money.  The paper money is an unacceptable medium of exchange.  Demonetization has begun.  Another money must be used.  Commodities can’t be printed, so a commodity will likely be used.  As people begin to panic about their rainy-day fund, the process will speed up.  The demonetization process must come to an end at some point.

The demand for cash holding isn’t as high as it was.  Even if your situation hasn’t changed, you’re not as well off as you once were.  Your rainy-day fund will be saved in a commodity, not cash—likely gold.  While everyone is spending cash as quickly as possible, this will give the appearance that the economy is doing well, this is the “crack-up boom.”  The interest rates will skyrocket.  Not from normal business conditions, the future money will not be worth as much.

Demonetization is not the end of the world.  The capital goods will still exist.  Any cash you currently have, will be a loss.  Printing money is still paving the way for destruction.   They could stop printing money and repudiate the debt, but that won’t happen.  Courage is forbidden.  Demonetization will bring disorder temporarily, but it’s to reorder civilization.  Don’t let delusions conquer you.

Reference

Ludwig von Mises; The Causes of the Economic Crisis