Technically the U.S. left the gold standard in 1971 but, in reality, we abandoned it in 1913 with the creation of the Fed…setting the stage for the collapse of the dollar. [Given that this is] the 100th anniversary of the creation of the Federal Reserve, it seems only fitting that we should present a brief history of the U.S. dollar debasement since then. Words: 1144
So says David Ziffer in edited excerpts from his article* as posted on Seeking Alpha entitled A Brief History Of U.S. Dollar Debasement.
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Ziffer goes on to say, in part:
On the 100th anniversary of the creation of the Federal Reserve, it seems fitting that we should present a brief history of US dollar debasement:
1787: U.S. Constitution ratified
“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.”
1792: U.S. Coinage Act ratified
Our first Coinage Act establishes a uniform standard of gold and silver content of U.S. coins, paving the way for over a century of trust in the U.S. dollar that will ultimately catapult the U.S. to world economic supremacy.
1861: Greenbacks and Greybacks
In desperation, and in direct violation of the U.S. Constitution, both the north and south issue paper currency with no gold or silver backing. Following the war, the U.S. returns to its constitutional roots, ceasing production of Greenbacks and making efforts to retire them as the U.S. returns to the gold standard….
1913: Creation of the Fed
In the belief that a central bank will prevent future economic panics, the U.S. government forms a banking cartel called the Federal Reserve, a rather facetious name given that the Fed is not federal and it maintains no reserves. In so doing our government ignores the warning of Thomas Jefferson:
“If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered.”
The stage is now set for the collapse of the dollar….
1934: Gold Reserve Act
After 23 years of dollar debasement by the Fed, Franklin Roosevelt is forced to acknowledge the growing disparity between the century-old fixed price of gold ($20.67/oz.) and its market price. The rift is made painfully obvious by the outflow of U.S. gold into the coffers of foreign nations redeeming dollars for gold at the stated fixed price. In direct violation of the U.S. Constitution, Roosevelt and Congress not only remove gold from circulation but prohibit ownership of gold by U.S. citizens. With the stroke of a pen the dollar is devalued from $20.67/oz. to $35/oz….
In the belief that the world requires a unified monetary standard in order to eliminate trade wars that ultimately lead to shooting wars, leading nations establish a dollar-based monetary system in which currencies are valued in terms of the U.S. dollar, which still claims to be gold-backed. This unwarranted trust ironically gives the U.S. yet more license and incentive to continue its debasement, since the world’s citizens now accept newly printed dollars with the mistaken notion that they can be redeemed for a fixed amount of gold….
In order to finance two very expensive initiatives (the Vietnam War and moon walking), and in direct violation of the U.S. Constitution, Lyndon Johnson signs a new Coinage Act that removes all silver content from U.S. coins. In so doing he provides the following advice to the public, explicitly promising future federal precious metals market manipulation:
“If anybody has any idea of hoarding our silver coins, let me say this. Treasury has a lot of silver on hand, and it can be, and it will be used to keep the price of silver in line with its value in our present silver coin. There will be no profit in holding them out of circulation for the value of their silver content. The new coins are not going to have a scarcity value either. The mint is geared to get into production quickly and to do it on a massive scale. We expect to produce not less than 3 1/2 billions of the new coins in the next year, and, if necessary, twice that amount in the following 12 months.”
In this same speech Johnson states that scarcity of silver is the motivation for the change….
In a repetition of the 1934 crisis, the U.S. gold supply is being decimated by foreign governments redeeming dollars for gold at the stated fixed price ($35/oz.), a completely untenable ratio after thirty more years of dollar debasement by the Fed. In direct violation of the U.S. Constitution, Richard Nixon and the Congress once again stop the outflow, but this time rather than set a new unmaintainable fixed rate they simply eliminate the fixed dollar/gold ratio.
Realizing that the collapse of the gold standard will dramatically reduce demand for dollars worldwide, Nixon strikes a deal with OPEC: trade oil in dollars only in return for perpetual U.S. military support. By 1974 gold is irrelevant to the U.S. hegemony, and so, as his final act of the year, Gerald Ford signs a bill that once again allows U.S. citizens to own gold….
2000: Iraq threatens the petrodollar
Shortly after the creation of the Euro, Saddam Hussein makes Iraq the first major oil exporting country to sell oil in a currency other than the dollar, thereby threatening the global petrodollar arrangement. Citing this “weapon of mass destruction” while misleading the public into a preposterous belief that he is really referring to conventional weapons that could somehow threaten the U.S., George W. Bush reacts swiftly by invading in 2003 and quickly reverting Iraq to dollar sales. To make our point exceptionally clear to world leaders, the U.S. (using proxies) hunts down Hussein and executes him in 2006….
The master of dollar-printing is 100 years old. The Fed marks its birthday by engaging in the largest debt purchase program in history ($40 billion of mortgage-backed securities and $45 billion of Treasurys per month).
Awaiting the collapse of the petrodollar arrangement and the subsequent radical reduction in the purchasing power of the dollar, the price of gold is bid up to over $1600 per ounce….
The dollar will almost certainly continue losing purchasing power indefinitely, in terms of both commodities and other currencies, and when the oil-producing nations finally agree to accept payment in currencies other than the dollar, expect a precipitous drop. Invest accordingly.
[Editor’s Note: The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.]
In order to generate phony economic growth and to “pay” our country’s debts in the most dishonest manner possible, the Federal Reserve is 100% committed to the destruction of the dollar. Anyone with wealth in the U.S. dollar should be concerned that economic leadership is firmly in the hands of irresponsible bureaucrats who are committed to an ivory tower version of reality that bears no resemblance to the world as it really is. By upping the ante once again in its gamble to revive the lethargic economy through monetary action, the Federal Reserve’s Open Market Committee is now compelling the rest of us to buy into a game that we may not be able to afford. Words: 1410
[According to the chart in this article,] all currencies are being debauched. The price of gold in each currency approximates a parabola, meaning the use of printing presses is accelerating. Each unit of currency is losing purchasing power at an increasing rate. The trend points to a worldwide currency collapse unless the creation of money stops. [Take a look!]. Words: 282
This is the scenario nobody thinks is possible but really at the end of the day, it’s not like the US can print money and live on debt forever right so when something cannot go on forever what happens when it stops?
As Ayn Rand said “We can ignore reality, but we cannot ignore the consequences of ignoring reality” so, with apologies to Ayn Rand, let’s explore some examples of ignoring reality. (Words: 1132; Charts: 1)
What would happen if someday the rest of the world decides to reject the U.S. dollar and that process suddenly reversed and a tsunami of U.S. dollars come flooding back to this country? It is frightening to think about. Just take a moment and think of the worst superstorm that you can possibly imagine, and then replace every drop of rain with a dollar bill. The giant currency superstorm that will eventually hit this nation will be far worse than that.
I keep wondering to myself, do our money-printing central banks and their cheerleaders understand the full consequences of the monetary debasement they continue to engineer? [Below is what I think awaits us.] Words: 1013
Before China and Russia can boot the U.S. military out of Asia and Eastern Europe, they have to strip the dollar of its dominant role in world trade, especially of Middle Eastern oil and that’s exactly what they’re trying to do. [Let me explain.] Words: 816
A major portion of the U.S. dollar’s valuation stems from its lock on the oil industry and if it loses its position as the global reserve currency the value of the dollar will decline and gold will rise. Iran’s migration to a non-dollar based international trade system is the testing of the waters of a non-USD regime…transition to a world in which the U.S. Dollar suddenly finds itself irrelvant. [Let me explain.] Words: 1200
The EU has delivered on its threat to ban the import of crude oil from Iran, in response to its nuclear programme. The latest round of sanctions prohibits any new oil contracts, while allowing for existing deals to run until July but Tehran is apparently finding ways to keep business pumping. Reports say Iran will keep supplying one of its biggest customers – India – but will get payment in gold instead of dollars. Video* length: 02:37 minutes.
Conspiracy theory notwithstanding, claims that the reserve status of the U.S. dollar unfairly benefits the U.S. are no longer true. On the contrary, it has become a burden, both for America and the world. [Let me explain.] Words: 825
Yesterday, another brick was taken out of America’s dollar fundamentals. China and Russia have announced that they intend to stop using the U.S. dollar and begin to pay for trade between their two countries in renminbi and rubles, respectively, from now on. It begs the following question: Will the OPEC countries of the Middle East follow suit in abandoning the U.S. dollar? Words: 614
Those in the U.S. power structure know what the plan is if the U.S. dollar should fail. They are not admitting publically that there is even the remotest chance that it could happen but, rest assured, there is a plan. There is always a plan. To paraphrase Franklin Roosevelt, nothing happens by chance in government, so don’t be caught up in such a ‘surprise’ event – whatever it may be and whenever it occurs. Words: 1345
Within the recent retracement of the U.S. currency there has been endless speculation about the future role of the dollar as the world’s primary reserve currency. Moreover, there has even been conjecture that the dollar will no longer exist at some point in the near future but any case made for the vulnerability of the dollar falls short when it comes to naming alternatives. Words: 631
I came to the conclusion several years ago that it was just a matter of time before the world realized that the relative functionality of the U.S. dollar was about to go belly up – to collapse – and that that time happened to coincide with that fateful date all the prophecies are going crazy about – 2012! Words: 881
Today, more than 60% of all foreign currency reserves in the world are in U.S. dollars – but there are big changes on the horizon…Some of the biggest economies on earth have been making agreements with each other to move away from using the U.S. dollar in international trade…[and this shift] is going to have massive implications for the U.S. economy. [Let me explain what is underway.] Words: 1583
Frustrated with what they viewed as being ignored by the West and not having a prominent role in institutions like the World Bank and the International Monetary Fund, Brazil, Russia, India, China and South Africa (also known as the BRICS countries) have held their second summit…[and declared war on the U.S. dollar. Let me explain.] Words: 572
Over the past few years, there have been many rumors about a coming global currency, but at times it has been difficult to pin down evidence that plans for such a currency are actually in the works but not anymore. A shocking new report by the IMF is proposing just that – a global currency beyond national control! Words: 820
Any thinking person with a calculator knows that the current global monetary system is going to fail given enough time. Rather than going through the charade of more quantitative easing, what if the central banks, the collaborating Western governments, and the financial elites decide to let the system fail now? [What if]…people in control…have a plan…to accelerate the emergence of a new dollar.
If the debt ceiling deal agreement is fully implemented [it is only going to exacerbate America's financial and economic woes and accelerate the demise of the U.S.] Dollar Standard which is inherently flawed and increasingly unstable. Its demise is imminent. The only question is will it be death by fire—hyperinflation—or death by ice—deflation? Fortunes will be made and lost depending on the answer to that question. [Let me explain how the collapse of the dollar could well unfold.] Words: 944
I’m starting to believe that we’re heading down a path where precious metals are once again confiscated, outlawed, or at least severely restricted in many countries. [Here's how I think such might well unfold.] Words: 783
The United States has seen four different gold confiscations — the last of which was in 1933. Few people realize that when the freedom to own gold was restored in 1972, the President retained the power to require us to surrender our gold which he can do again any time (probably on a Friday) with the mere stroke of a pen. That means all confiscated gold could possibly be compensated at only $42.22 per 1oz. and not at the world market price. Don’t take this decision lightly. It was another blatant warning that the government may be contemplating grand larceny — AGAIN. Words: 1740
Imagine living in a country where the government suddenly decides to make it illegal to hold a certain type of asset, and goes on a systematic process to relieve its citizens of such an asset? Such actions happen in wartime and by politically-corrupt regimes but how about private-asset seizure in the good old U.S.A.? Well, it has happened before. [The 64 trillion (in keeping with the times) dollar question is: "Will it happen again?"] Words: 585
The laws of gold confiscation are very clear in the U.S.: During any time of national crisis, it becomes illegal to buy, sell, or “hoard” gold bullion in any form. It is delineated under an Executive Order and can be re-administered as quickly as the assets in your checking account can be frozen. The penalties for violation are 10 years in prison, $10,000 fine, or both. Words: 821
There has been a persistent fear among…owners of gold that…their gold will be confiscated by their governments, as was the case in 1933. For very different reasons, we believe that that danger persists and is growing by the day. We feel that because gold is rapidly returning to an active role in the global monetary system…investors should be aware of the conditions in which this would happen. We also indicate what we feel to be a solid solution for protecting yourself against a gold confiscation. (Words: 1581: Charts: 2)
FDR confiscated American’s gold for the same reason Lenin confiscated it in Russia and Hitler confiscated it in Germany, namely, to get it out of the hands of the people. [That view is contrary to the prevailing belief that such was done] to re-establish confidence in the dollar. [Let me explain the background of this confiscation and my rationale for coming to such a conclusion.] Words: 815