There was a period in American history, when there was no central bank. The first one was just after the Revolution, followed by the second one, which lasted till President Jackson vetoed it, after the Congress voted for it. Thanks ‘Old Hickory!’ So, from 1832 till December 22, 1913, or fifty one glorious years, America had no Federal Reserve #1, Federal Reserve # 2, or the current Federal Reserve #3, although the current Fed refuses to call itself #3, because the first two were chock full of corruption, graft, theft, and money laundering, and the current one of course, has no of those attributes. Urp.
How did America survive without a ‘Federal Reserve,’ which is not, nor never has been ‘federal,’ and has no ‘reserves’ either? So much for fancy name calling. There was a critical four year period, during the War Between the States, when both the North and South (the South was right), printed tons of un-backed, Nocturnal Airline (fly by night) money, which quickly became worthless. The North’s ‘greenbacks’ and the South’s ‘confederate’ money went the way of all flesh when the market became saturated with them. The value of anything is in direct proportion to its supply, desirability, cost to produce, and this also determines its price.
Water in the desert is expensive, as are Model T Fords, first edition famous books, and the list is endless. Greenbacks and Confederate bills came off the presses as fast as they could print them, so they, as in Venezuela’s currency, with a reported million percent inflation now, couldn’t buy anything, and we all know about the German Reichsmark after WW I. Isn’t it fun to watch Turner Classic Movies and see the forties and thirties cars, which now one would give anything for, be just run-of-the-mill props?
Aside from the four year period of the worst war in history up until that time, the dollar was gold backed, and many carried gold coins in their pockets, plus coinage of halves, quarters, and dimes were 90% silver, hence, there was no inflation. For all practical purposes, your dollar would buy the same things year after year, depending on conditions which may make your purchases scarce, such as bad weather, labor strikes, or other market influencing conditions. If there was a drought, farm items may have become more expensive due to their shortage, as an example. By and large though, there was no inflation, with gold remaining at $20.67, and silver $1.25 an ounce, which is basically how to tell an inflation rate. It was not foolish to store your dollars in a bank, as it is now.
Federal Reserve # 3, was enacted by foul means, and in total secret, as the book “The Creature From Jekyll Island” shows in its 600 pages, and if you haven’t read it, get one and do so. You can get a used one from Amazon for about $14. You will be outraged when you finish it, and a bit of outrage is healthy.
Why do we now have inflation? Because the definition of inflation is simple: “An increase in the money supply,” (Websters’ Dictionary). How does the money supply increase? Simple, once again: The U.S. Treasury borrows the money, increasing the national debt and money supply, which debt now is over $22 trillion dollars, and committed future payments of about $175 trillion. Neither will ever be repaid. Why do they have to borrow the money? Because politicians never balance the budget so they can get votes, have to pay the bills for which they voted, and tax receipts are never enough. (Drain the Swamp). From whom does the U.S. Treasury borrow the money? From people who buy federal debt in the form of treasury bills, foreign fools who also do the same, and from the Federal Reserve, which is not federal and has no reserve. Where does the Fed get the money to loan to the U.S. Treasury? It creates it out of thin air, and it doesn’t even have the expense of printing it. It’s all computer entries, and the U.S. Treasury pays interest on the ‘loan’ to the Fed which created it out of thin air, and this interest causes the debt to go ever larger and larger, making it more impossible to ever repay it, other than ‘Monopoly Money.’ We then have inflation made worse by the national debt ever increasing from interest paid to the Federal Reserve, which created dollars out of thin air.
All past un-backed currencies, and even current ones have been losers to those who saved in them. Turkey now has a 20% inflation rate, and of course those in Venezuela, who worked and saved in their now worthless currency, have lost their savings and all the work and effort which earned the money foolishly saved in banks. It’s much better to save in real money: Gold and silver have been real money for thousands of years, even before Biblical times. We do gold and silver for 1%, including shipment, over our absolute cost from the world’s largest distributor, who gets it directly from mints, if you ever worry about fakes. We have no fakes or numismatics. Just ‘bullion’ coins or bars, whose definition is: ‘Closest to spot price.’ Mints buy at spot price, who sell to distributors, who do huge amounts of business, have no retail outlets, do no advertising, and operate on a small percentage. Our 1% including shipping, is because we do no advertising and have no retail outlets. David, Melissa, and Morgan, as well as me on rare occasions, do it all from our homes with no expensive offices, secretaries, or employees of any kind. Just thought you ought to know. I started this in November of 1977, our reputation has always been A+ on the Better Business Bureau, and if you can maintain that for 42 years without a single complaint, you must be doing something right! don@coloradogold.com