Questions from reader Ben:

1. Has there ever been a paper currency that has withstood the test of time?

To my knowledge, never. Interestingly, the current length of the fiat money system seems to be a current phenomenon. The world's money system has predominantly been based on Gold for the past few hundred years, but again the gold in the hands of the powerful has always been open to manipulation.

2, I can't see an alternative world currency, but it hardly seems fair for the US to flood the world with their green back. It may be impossible now, but in hind sight should Nixon not have abolished the gold standards?

No, Nixon should not have abolished the Gold standard, since it breached the 1944 Bretton Woods agreement, where the world agreed to use US dollars, but the US agreed to back the dollars with gold. It was the same as Bank capital rules, it created discipline. Until 1971, the US diluted the gold backing of their currency, The world worked it out and started to do what it always does, attack the dollar. The US's great coup was to get OPEC to agree to only sell oil in US dollars. And we all remember what happened to oil prices and gold prices in the 1970?s. The result was/is that the world needs US dollars.

3. How can the hyperinfaltion not be a problem, if the US continues to print money out of thin air?

My view is that hyperinflation only (?) occurs if a countries debt is based in a foreign currency. The US government only borrows in US dollars. Nobody can make the US government do anything. The dollars are locked in the US. Like a question the other day, the Chinese $2 Trillion in US debt has already been created. Selling the debt only turns it into a bank deposit. China needs to find another willing buyer to buy it.

4. Are they not spending their grand kids inheritance?

All debt is future Government taxation. I cannot recall many instances in history where Governments consistently were not concerned about anything other than remaining in power.

5. What makes Australia any differant? We create money out of thin air too don't we via government bonds?

Technically, Government creates money by just spending it. When they spend $1 Billion on handouts, it is just an accounting entry, where it appears as a deposit in your bank account. You do what you like after that, but whoever you give it to (Woolworths, Harvey Norman etc.) it forever remains a bank deposit in whoever's hands. The next step is that the Bank must deposit that back with the Reserve Bank to balance the system out. So it is only an accounting entry. The Government has the choice then of whether to convert the RBA deposit into Government Bonds, or just leave it as cash in the system.
All banking is created out of thin air. If ANZ lends you $100,000, it again is just a book entry. You get a liability, but you have to deposit the funds as a bank deposit in someone else's bank account. Debits and credits in the system have just increased by $100,000. Magic.
In 1984 M3 Money Supply was $100 Billion, today it is $1,210 Billion.
So every fiat currency system is the same. They are all based on fiscal discipline and trust. There is no limiting factor though. Banks had 8% capital rules, but securitization required 0% capital, hence the GFC. It happened because it could.
Government debt is the canary in the coal mine. Voters tend not to complain as long as the handouts and promises continue (Spain, Greece).

Is the World's economy sustainable?

Economic cycles will always exist, and eventually excesses are washed out of the system (1930?s), but the cycle just starts again. Like Great Britain losing it dominant power to the US, the US now is clearly in decline. Dollars can't be replaced by Gold, since there is not enough supply. It probably needs to be based on a combination of dominant exporters currencies and base metals.