I picked out a submarine sandwich from the deli along with a pint of whipping cream and rushed to the checkout. The cashier rang up $11 for the two items. She glanced at me and said, “Isn’t that awful? Eleven dollars for that!” To which I responded, “I remember getting a dime from my Dad, and riding my bike to a small grocery store. You could get up to 20 pieces of penny candy for a dime!” She said, “Yes, and I remember 3 cent stamps!” Young people cannot relate, but I wonder what a sandwich and a pint of cream will cost them in 50, or so, years? They will tell you that it is all relative, — or is it?
In the 50’s and the early 60’s, most families were supported by one income. Most mothers stayed home and raised the children. Fathers worked a forty hour work week, and comfortably supported their families. My folks purchased a new three bedroom home for $5,000 in 1956, and had a new Oldsmobile in the driveway. In 1965, my Dad and some friends were in the front yard of that same house talking about the latest controversy, — the removal of silver from United States coinage. Today, those same silver coins (pre 1965) are called “junk silver,” and are worth much more than each coin’s stated amount. Later, the Vietnam Conflict escalated into a full blown (undeclared) war, and President Johnson unleashed his “Great Society,” — the modern day equivalent of the “New Deal.” In February of 1965, Charles De Gaulle of France gave a famous speech in which he accused the United States of issuing debt “for free” via the dollar’s reserve currency status. We said, “The dollar is as good as gold.” To which he replied, “Then give me gold!” He sent the navy to pick it up in August 1971. President Nixon was forced to close the “Gold Window.” Our Nation’s gold reserves had declined from over 20,000 metric tons to 8,000. The rest of the world had figured out that we were printing more currency units (dollars) than we had in gold reserves. What the late John Maynard Keynes referred to as the “Golden Handcuffs” had been removed, and the United Sates was (and is now) on a total “fiat” monetary system.
Currency markets fell into disarray for a time. It did not last, as Henry Kissinger struck a deal with Saudi Arabia and OPEC where all trade in oil would be conducted in USDs. This guaranteed that the “dollar” would remain the dominant reserve currency of the world. This has given the United Sates a huge advantage in conducting trade. Americans I talk to do not seem to understand the advantages this has given us over the past 42 years. Since world trade has had to be settled in dollars, other countries have had to purchase USDs (in their currency) in order to settle trade. Up until now, this has created a huge demand for USDs, — making the selling of US Treasuries easy. This has allowed us to finance persistent trade deficits, which in turn — have allowed the Federal Government to run large fiscal deficits. Putting it simply, — we print paper in exchange for real stuff! Hate saying this, as much as I do not admire Charles De Gaulle, — he was right those many years ago.
The ability to borrow has been a wonderful thing for politicians. It has given them the ability to buy votes. As a liberal friend of mine once said, “It is the job of our Congressional Representatives to bring home the bacon.” To which I responded, “Gee, I thought it was their responsibility to represent their constituents with respect to Constitutional Liberties.” While having the illusion of wealth, the United Sates has gone from being a creditor nation, — to the most indebted nation in history. Debt slavery to a Central Bank, and the rest of the world is not my idea of freedom.
The average life of a “fiat currency” is 27 years, — while resets occur every 30 to 40 years. How long will the rest of the world go along with this paradigm? I have long contended that the present monetary system is broken. Historically low interest rates worldwide may be a symptom of this phenomena. After all, if you can borrow a currency for next to nothing, what is it worth? This USD-centric system is simply not sustainable when you cannot have an honest settlement of trade. There are many websites one can go to calculate the loss of purchasing power of the USD since 1971. Depending on what you use as a measurement (commodity, replacement costs, purchasing power, wages, or others), today’s dollar only retains 17% of its 1971 value! Who will step up and tell the American People the truth? Who will dare try and educate the voters? Here are a few quotes from those who warned us in the past.
From pages 220-233 of The Economic Consequences of the Peace (1919) by John Maynard Keynes, “By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method, they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls… become ‘profiteers’, who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished not less than the proletariat. As the inflation proceeds… all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless.”
Quote by Nicolaus Copernicus — 1525.
“Nations are not ruined by one act of violence, but gradually and in an almost imperceptible manner by the depreciation of their circulating currency, through its excessive quantity.”
Read more at: http://www.azquotes.com/quote/760844
