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What used to be a very effective method to keep financial markets stable has been gone for a long time now. The move away from gold started in 1913 with the Federal Reserve Act, and what was left after that was stripped away by Richard Nixon 37 years ago, on August 15th, 1971. Advocates for returning to a currency actually backed by something tangible have been mocked in the media, although lately some pundits have started to change their tune. With "real" inflation around 10% (the government doesn't include food or fuel in their calculations), putting money into savings is just an illusion of building wealth. In reality the value of that savings is being reduced through the "inflation tax", a term that the Federal Reserve Chairman Bernanke admitted is true and correct when being questioned by Rep. Paul last month before congress. As new money is printed, the banks that get it first use it before that new money further dilutes the supply, so dollar for dollar (not counting any interest) by the time it reaches the general population, the big banks have already benefited at the expense (literally!) of the consumer. So while it is important to save money and not recklessly spend it (like the government is good at doing), it is important to recognize that even high yield savings accounts and CDs depreciate, and in recent years that rate of depreciation has gone up significantly.
But how about a little background on what the "Gold Standard" is, and how fractional reserve banking, when not held in check, predictably leads to severe economic downturns.
In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold…The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.
Alan Greenspan, 1967
This isn't exactly light reading, a few years ago I probably would have glazed over it and not really paid much attention or understood, but this offers probably the quickest explanation without lots of details to remember of what causes economic cycles, and what role the Federal Reserve had in turning what could have been a short term problem into a global depression less than 20 years after the creation of the Federal Reserve:
Gold and Economic Freedom
Oh, and when you are finished reading that, there are a few pages of new pictures online! |
Restore the Republic 
