First we go throw money at the financial crisis and then when we run out of it, we print some more. Great idea but who’re we trying to fool? We don’t need Nostradamus to tell us that, do we?
Today, with a heavy heart, I will share breaking news on the immoral monetary activity of the Federal Reserve. Money supply must be tied to economic output of a country or the printed money is merely paper only good for starting fires. …
… I am an American patriot and very proud to be called an American. Today is the saddest day for me as an American. The following graph clearly displays that America has chosen to inflate its money supply without real wealth to back the paper money and money credits. This is immoral in the highest degree. This is no different than if I owed someone a million dollars and I only had one hundred dollars so I handed him Monopoly money and told him that it was legal tender. Money should be like a promissory note and that is the true origin of paper money – a promised note to redeem the above legal tender with gold at the owner’s discretion. This is no longer the case and has proven to be to great a temptation in the hands of our quick fix political leadership.
This isn’t the first time paper money has been used to ‘bail out’ Government. Seems like America is a champion at Monopoly (pun intended).
Read this speech by
HON. RON PAUL OF TEXAS
Before the U.S. House of Representatives
February 15, 2006
An excerpt …
Dollar dominance got a huge boost after World War II. We were spared the destruction that so many other nations suffered, and our coffers were filled with the world’s gold. But the world chose not to return to the discipline of the gold standard, and the politicians applauded. Printing money to pay the bills was a lot more popular than taxing or restraining unnecessary spending. In spite of the short-term benefits, imbalances were institutionalized for decades to come.
The 1944 Bretton Woods agreement solidified the dollar as the preeminent world reserve currency, replacing the British pound. Due to our political and military muscle, and because we had a huge amount of physical gold, the world readily accepted our dollar (defined as 1/35th of an ounce of gold) as the world’s reserve currency. The dollar was said to be “as good as gold,” and convertible to all foreign central banks at that rate. For American citizens, however, it remained illegal to own. This was a gold-exchange standard that from inception was doomed to fail.
The U.S. did exactly what many predicted she would do. She printed more dollars for which there was no gold backing. But the world was content to accept those dollars for more than 25 years with little question– until the French and others in the late 1960s demanded we fulfill our promise to pay one ounce of gold for each $35 they delivered to the U.S. Treasury. This resulted in a huge gold drain that brought an end to a very poorly devised pseudo-gold standard.
Let’s wake up, World! This is not just America’s problem. Tying it in with Wikipedia’s entry on Gold Standard we have an alarming set of statistics to counter.
The total amount of gold that has ever been mined has been estimated at around 142,000 tonnes. Assuming a gold price of US$1,000 per ounce, or $32,500 per kilogram, the total value of all the gold ever mined would be around $4.5 trillion. This is less than the value of circulating money in the U.S. alone, where more than $7.6 trillion is in circulation or in deposit (although international banking currently practices fractional reserves).
If we don’t do something NOW, and something substantially different (or should that be differently substantial), Gloomsday is not so far from Doomsday. And not only for America. For the rest of us as well.