Fake money

One of this country’s Founding Fathers, Thomas Jefferson, said it best: “If we determine that the dollar shall be our unit, we must then say with precision what a dollar is.”

In 1792, the dollar was defined as 371 and 4/16 grains of silver. What is the dollar worth today? There is no hard definition what the dollar is worth, it is simply legal tender. This loss of a value definition is what creates the economic and financial problems we face today. What happened to the once mighty American dollar?

August 15, 1971. This is the date President Nixon closed the gold window, which in essence meant that the American government will no longer redeem dollar bills in gold. It has been all too apparent that a “discretionary” monetary policy, much like Nixon ushered in, without any backup from precious metals such as gold and silver, leads to serious economic instability, lack of capital creation, soaring interest rates, high price inflation, and massive unemployment (see the real unemployment figures).

Ask any economic historian about the government (Federal Reserve [the Fed] in our case) being the sole supplier of the monetary system, they will likely tell you that it invariably leads to corruption and abuse of power.

The duplication (see quantitative easing [QE]) process that the Fed engages in does not create wealth, instead it does quite the opposite. QE destroys trust in the dollar, discourages savings, raises interest rates (that are not already artificially lowered by the Fed), slows economic growth, and destroys wealth.

As long as there is a fiat currency, one that cannot be redeemed for gold or silver, expect the money supply to increase at historic and unfathomable rates. What can we expect from such profound abuses that the Fed is engaging in? Due to QE, the real wage of the working American is bound to decrease. Perhaps this explains why the average American family lost $10,000 in net worth over the last decade.

What is going to happen as a result from QE? There needs to be an auto-correction. The stock market is not an accurate gauge of the health of the economy as a whole. There will be another recession, or perhaps, a depression in the coming months or years.

Due to the artificial lowering of interest rates set by the Fed coupled with massive monetary printing, the correction will come as a result of malinvestment due to the false information of distorted interest rates. Due to the correction, unemployment will become even worse.

The Great Recession which we have supposedly come out of three years ago was “corrected” by the Fed. There was massive inflation (creation of wealth and credit out of thin air) and artificial lowering of interest rates. Economic growth depends on savings, low taxes, and lowered regulations. Economic growth cannot be obtained by simply printing more dollar bills. Perhaps we should take heed of what Mr. Jefferson espoused over 300 years ago.

Christopher Erdman


Submitted by Virtual Newsroom