(The U.S. Dollar and Its Dirty Little Secrets)
Economics is one of those subjects that has always seemed overly complicated to me and I never understood why until I became interested in learning more about our domestic currency, the U.S. Dollar. It appears our monetary (banking) system was designed to be complicated in hopes that the majority would not question or challenge it.
“The few who understand the system will either be so interested in its profits or be so dependent upon its favours that there will be no opposition from that class, while on the other hand, the great body of people, mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests.” – The Rothschild brothers of London writing to associates in New York, 1863.
As you get older, you begin to pay a bit more attention to where your money is going and how well it’s serving you (at least, you should) and you see that making it to your retirement years could actually become a reality. Paying off debt becomes more of a priority and socking away additional funds for those golden years turns into a must. But how much will you need? Of course, this is a question we all must answer for ourselves, but a lot of that depends on what the dollar will be worth in the future, and this can be tricky to determine.
“The decrease in purchasing power incurred by holders of money due to inflation imparts gains to the issuers of money.” – Federal Reserve
Since 1913 (the year President Woodrow Wilson signed the 1913 Federal Reserve Act into law; turning over control of the United States monetary system to an independent, private and nongovernment group) the dollar has lost most of its purchasing power. In the chart below, what could be purchased for $100 in 1913 can now (in 2018) be purchased for roughly $2,550.
Some quick facts about the Federal Reserve that most people do not know:
- The Federal Reserve is a privately owned ‘for profit’ corporation.
- The Federal Reserve has no reserves.
- The name was created prior to the Federal Reserve Act to make Americans believe the U.S. banking system operated in the public interest.
- The Federal Reserve is a private bank owned by private shareholders and runs purely for private profits.
- The result has been the creation of a debt based monopoly that must be paid for by the American tax payer.
- This privately held business pays no taxes on the trillions of dollars it makes.
“I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men.” – President Woodrow Wilson, a few years after the signing of the 1913 Federal Reserve Act
To understand why the dollar’s purchasing power is so much less now, we need to understand how this fraudulent (and grossly repetitive) system works. It begins with the United States government, through the Treasury, generating bonds (I.O.U’s) which puts the public on the hook to pay it back.
“By this means government may secretly and unobserved, confiscate the wealth of the people, and not one man in a million will detect the theft.” – John Maynard Keynes, British Economist
They sell these bonds to the banks, who, in turn, sell them to the Federal Reserve for a profit. The Federal Reserve, which has no reserves at all, purchases these bonds (I.O.U’s) with a check from an account with a zero balance, which magically springs our currency into existence and is deposited into the Treasury.
“When you or I write a check there must be sufficient funds in our account to cover the check, but when the Federal Reserve writes a check there is no bank deposit on which that check is drawn. When the Federal Reserve writes a check, it is creating money.” – ‘Putting it Simply’ Boston Federal Reserve.
The Treasury deposits this currency into various branches of the government so that the government now has money to spend (on promises, public works, social programs and war). The employees, contractors and soldiers receive payment as deposits into their individual banks.
This is where something else astonishing happens. It’s called, Fractional Reserve Banking.
“It should be clear that modern fractional reserve banking is a shell game, a Ponzi scheme, a fraud in which fake warehouse receipts are issued and circulate as equivalent to the cash supposedly represented by those receipts.” – Murray Rothbard, American Economist
Fractional reserve banking is a banking system in which only a fraction of bank deposits are backed by actual cash on hand and are available for withdrawal; typically 10%. In other words, a bank can loan out 9 additional dollars for every individual dollar they have on hand, thus creating money out of thin air. For example, if you deposit $100 into your bank account, that bank can loan out $90 to someone else, but still show that your original $100 is in the account. Now there is $190 in the system where there was only $100 prior to your deposit. This multiplies exponentially because the person who got the $90 loan will, most likely, deposit some or all of those dollars into their bank where the process will further expand.
“The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented.” – Major L L B Angus
We, the public, then work to receive some of this currency which is taxed by the IRS and turned back over to the Treasury in an unachievable attempt to pay back the principle and interest on the original bonds (I.O.U’s) that were purchased from the Federal Reserve who wrote a check from nothing. The world’s largest banks own the Federal Reserve, so they make a profit when they sell our national debt to the Federal Reserve and they make a profit on dividends through their ownership of the Federal Reserve.
Adding insult to injury is the fact that there is no way for the debt to ever get paid back in full. Think of it in extremely simple terms. Let’s say there is only $100 that exists in the world. That entire $100 is loaned out to some poor, unsuspecting individual with interest. Where are they going to get that additional money to pay the interest when it doesn’t exist? As soon as interest is charged, there is immediately not enough money to pay it back. Every dollar in existence is, basically, an I.O.U. with interest attached to it. It’s an impossibility to ever pay it all back.
As of this writing, America’s national debt is over $21,000,000,000,000 with no end in sight.
Unfortunately, so long as this system persists, there will be no great solution. The debt is rising and the dollar continues to shrink and lose its purchasing power. With the emergence of cryptocurrencies, maybe there will be a change for the better. That is, unless the government(s) take control of it and then it will be worse; much worse.
The phrase, “Don’t keep all of your eggs in one basket,” comes to mind. Diversify your investment and retirement portfolios as much as possible and always try to think outside of the box. It’s always better to be prepared for the worst while hoping for the best.
At least, that’s my opinion.
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