Decline of the US Dollar
Creation of a Continental Currency
The Continental Congress of the United States spearheaded the creation of a continental currency in 1775. This initial attempt at creating a central currency for the young nation was an abject failure. The thirteen colonies that help established the currency were in no way economic powerhouses and did not have the gold and silver necessary to back-up this new currency.
The currency was very speculative and its value changed depending on good and bad news. A victory over the British often mean an appreciation of the currency while a loss led to a depreciation. Thus the currency was not very stable.
The British saw vulnerability in the new currency and sought to undermine it. They had counterfeiting operations in order to inflate the currency. They drastically increased the money supply until the currency became worthless.
The Creation of the Dollar
The fledgling government learned early on that a currency backed by nothing will eventually be worth nothing. Thus the delegates at the Constitutional Convention in Philadelphia in 1787 thought it be prudent to include a clause that prohibited to "make any Thing but gold and silver Coin a Tender in Payment of Debts." This was the beginning of sound money for the young republic.
The United States Congress established the creation of the United States Mint via the
Coinage Act of 1792. The mint was in charge of converting precious metals into coins for the purpose of facilitating trade and commerce.
The concept of the dollar came from the German Thaler. The dollar was essentially a silver coin in the same vein as the Spanish Peso or Spanish Milled Dollar. The dollar was initially backed by 1.60 g (24.75 grains) of gold and later reduced to 1.50 g (23.22 grains) of gold. The weights of silver coins have lessened through the passage of time as well.
The US dollar switched from bimetallism to being entrenched in the Gold Standard in 1900. It specified a dollar being the value of 25.8 grains or 1.67 g of gold. The Gold Standard was the pet project of President William McKinley until his assassination.
His successor Theodore Roosevelt scrapped the Gold Standard to combat the Great Depression of the 1930's. Scrapping the Gold Standard allowed the FED to manipulate the money supply and help stimulate the sagging economy.
In 1971, President Richard Nixon severed any remaining links of the dollar to gold by
revoking the dollar's convertibility to the precious metal. This was done to avoid any gold runs that would deplete the United States reserves.
From that point forward, the United States dollar became nothing more than a piece of paper with no backing and no intrinsic value.
The Creation of the Dollar
The Good Old Days
The United States Dollar was at one point was the ultimate in terms of currency as basically the world was a customer of the United States either through being a borrower of funds or a customer for US goods and services. The world was flooded with consumer goods such as Mars M&M's chocolates, Hormel Spam luncheon meat and Tide laundry soap. The same went for textiles, clothing, appliances, and machineries. The United States was a manufacturing and financial powerhouse.
The United States was the modern day Roman Empire in terms of wealth and prosperity. Americans were among the healthiest and most highly educated in the world. Most of the world's innovations were American. The light bulb, the automobile, the telephone and most modern day inventions were all American innovations. America had a burgeoning middle class and real wages back then were much higher than they are today. A single income could support a family of five easy. Retirement was also a reality as many were able to retire comfortably.
The Dollar back in the day was real money as the founding fathers intended it to be. Quarters were actually made of real silver and paper bills were gold certificates and not legal tender. As Article 1 Section 10 of the United States Constitution states "No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility."
Made in the USA
Decline of American Manufacturing
America was a manufacturing powerhouse in the 1960's and 1970's. However, American companies started to look for cheaper alternatives in terms of manufacturing costs and labor and started shipping jobs overseas in the 1980's and has not looked back ever since.
A lot of American companies who should have been able to provide thousands of jobs because of their influence in the market such as Nike and Apple have instead chosen to set up shop in China where human and labor rights are not as stringent and labor costs are much lower.
The goal of these companies after all are to maximize profit and not to help america or to employ Americans.
Decline of American Manufacturing
Printing to Oblivion
The temptation throughout human history is to overprint money - thinking it will solve all your problems. Evidence points to the opposite effect. Overprinting money just debases the currency and makes it worthless.
Take the instance of Zimbabwe. The Zimbabwean dollar started off very well in 1980 being at par with the United States Dollar. However, through failed monetary policies and Robert Mugabe not understanding how fiat money works and overprinting the currency, the Zimbabwean dollar became so worthless that there was even a hundred trillion dollar banknote. It took you a wheelbarrow full of paper bills to buy a loaf of bread.
Another example is that is Venezuela. Venezuela was once the crown jewel of South America due to its having the richest oil reserves in the entire world. Fidel Castro had a lot of programs for the country and the oil money helped fund it. This was fine so long as oil was expensive. When oil prices plummeted and Nicolas Maduro took over, he had no other industries to get money from as Fidel Castro shut down all private enterprises or nationalized them. He had no choice but to borrow heavily and to overprint money to fund his projects and stay in power. Today, Venezuela has the world's highest inflation rate.
The United States is no different. Ever since the Federal Reserve was created, the amount of dollars in circulation has steadily been increasing thus debasing the currency. It does not help matters that the US went oft the gold standard. This enabled the Fed to print as much money as they wanted since the money was no longer tied to gold.
This has led to a drastic increase in the money supply and the steady erosion of the US dollar. Through the century that the Federal Reserve has been operating, the dollar has lost 95% of its value.
100 Years of Dollar Devaluation
The Ever Increasing Money Supply
Cumulative Inflation Since 1913
The new design for the $100 bill.
Ending the Federal Reserve
The problems facing the nation today all started with the creation of the Federal Reserve in 1913. The Federal Reserve is not a government bank as thought by many but a private bank which is owned by the elite. Though the propaganda was that the Fed would save Americans from economic crashes, it has not done so. It failed to do so during the Great Depression as it continues to fail today. The value of the Dollar has shrunk by more than ninety percent ever since the Fed came into existence.
The real money was slowly converted into fiat money which is essentially fake money. This process was completed when President Nixon completed the abolition of the gold standard. The downside of the old gold and silver backed money was that the expansion of the money supply was limited to the amount of gold or silver in the treasury. This in turn was also its safety net as one cannot simply print money out of thin air as counterfeiters do. What is being done today by the Fed is no more than legalized counterfeiting. They simply make money out of thin air.
The money made by the Fed is loaned to the government at interest. The government secures these loans by printing government bonds and exchanging these for Federal Reserve notes. One of the greatest American Inventors Thomas Edison was even quoted as saying "It is absurd to say our country can issue $30 million in bonds and not $30 million in currency. Both are promises to pay, but one promise fattens the usurers and the other helps the people."
What would make matters worse is that the Fed has also propagated the fractional reserve policy where a single Dollar deposited in banks would create up to nine Dollars. This further worsens the problem of inflation as this increases the money supply. Also, if you may remember money loaned from the banks involves the payment of interest and the money to pay for this interest also comes from the Fed again and this new money also has interest attached to it.
In the program Fox Business on Oct 14 2008 Ron Paul has stated that he does not believe that wealth could be created out of a printed press. He could not have been more spot on. Money as it was intended to be ever since people started using them was a store of value. Money represents wealth that is in the country. This is comprised of natural resources, real estate, goods and services. The problem now is that money is being created out of nothing and more and more money is printed out. Each new Dollar printed out steals money from existing Dollars and debases the currency. This is devaluation is commonly known as inflation.
This problem is further compounded by the fact that America is slowly losing its manufacturing capabilities. If you would look at stuff that you buy in the mall, most of it is made in China or some Third World country. Millions of Americans have lost their jobs because companies have closed down due to competition or have went offshore to save on labor costs. With less value being created in the economy due to the weakening of the manufacturing sector where would the real value to back up the currency come from?
Aside from The Fed destroying the Dollar through its monetary policies and practices, there is also talk of this condition being scientifically created to help usher to North American Union. The scientifically created economic collapse we feel today was carefully contrived to create conditions that would swing public opinion to support a new currency called the Amero.
The Dollar is heading for destruction if this keeps up. What can save the Dollar is to return to a metallic currency where money is backed up by something and not by nothing. Silver would be a good candidate as silver is abundant in the United States and cannot be as easily manipulated by the banks. Another is to abolish the Fed. The country survived without the Fed and it is better off without it. The Fed is just a vehicle for the elite to steal from the poor and give to the rich. We should do as President Andrew Jackson did and kill "The Bank." Lastly, we should bring jobs and manufacturing back to the country. What makes a strong currency is the value produced by the economy and not the opinion of Alan Greenspan or Ben Bernanke.
Ever since the Federal Reserve was created in 1913, the dollar has lost 95% of its value and continues to lose value each and every day. If something does not work, then it is time for a change.
End the Fed
The American Dream Film Part 1
The American Dream Film Part 2
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© 2016 Jan Michael Ong