Don't look now, but every day you deal with terrorists. No, they don't have guns or roadside bombs, but instead they have fiat currency. Alan Greenspan, the toady of banks and our government took us along the road to further calamity by allowing them to create more and more fiat money.
Fiat Money: Currency that a government has declared to be legal tender, despite the
fact that it has no intrinsic value and is not backed by
reserves. Historically, most currencies were based on physical commodities such as gold or silver, but fiat money is based solely on faith.
It is all smoke and mirrors as our government doles out the fake currency to everyone. It isn't just our government, but many of the nations of this world are doing the same thing. Worthless, meaningless, script that eventually will ruin us all. Why? Because it is a giant sucking machine of credit. And it is backed by taxes. Taxes that we are all expected to pay to support this no-value money.
The Fall of the Human Empire
This has happened before you know, and civilizations collapsed because of it. Here are some examples:
910 AD - China experiments with paper money - It takes several hundred years but the system is abandoned due to unacceptable levels of inflation as money printing exceeded production.
1500'S - Spain gathered gold from Mexico and the new world, becoming the richest nation in the world. Instead of developing their own economy they sent gold to trade partners in a consumption orgy not dissimilar to the US today. Then they went on a military rampage to extinguish pirates, (terrorists?) in an imperialistic march into other lands, dropping any distinction between terrorists, (I mean pirates) and the countries that harbor them. Their excessive consumption ran through their gold hoard, so they turned to financing the war with debt, bankrupting them.
1716 - John Law convinced France to use paper money and declared all taxes must be paid with it to gain acceptance. The idea snowballed and paper money became more desired than coin. It led to excessive printing, additional moneymaking schemes and fraud. Exaggerated values coinciding with money printing eventually blew up the system.
1791 - The French Government again tries its hand with a paper currency. The Government confiscated land from aristocrats and issued "assignats" which paid interest against the properties. Land was auctioned off in exchange for these notes, inflation rose to 13,000% by 1795. Napoleon ended the revolution and replaced the "assignats" with the gold franc, which set off over a century of prosperity for France. In the 1930's Socialists came to power and brought the Bank of France fully into the Government. They quickly removed gold backing of the currency and made the franc a managed fiat currency. In only 12 years the currency lost 99% of its value.
1853 - Argentina went on a gold standard and thrived for close to 100 years. A central bank was created in 1932, beginning a long downfall. Juan Peron took charge in a 1943 coup and depleted reserves causing trade to fall. Argentina continued on this path of paper money, falling from the eighth largest economy to a mere shadow of its former self, which it has not recovered from as of today.
1862 - Abraham Lincoln passed the Legal Tender Act allowing the Government to issue paper money, backed by nothing but government promises. A huge inflation transpired that caused the practice to fall out of favor until the Federal Reserve System was put in place in 1913.
1923 - Weimar Republic - After World War I, Germany, crippled from its loss in the war, was held accountable for its war reparations. The country was destitute so found no other choice but to simply print the money in massive quantities to pay the reparations. The result was the plundering of the entire middle class, wiping out all value of savings, and paving the way for Hitler in front of an angry public.
The US dollar went off the gold standard in stages:
1934 - President Roosevelt revalued gold from its official price of $20.67 to $35 an ounce in an attempt to print more money, with the hope that this would lift us out of the depression.
1944 - The Bretton Woods Agreement was made to treat the dollar as a substitute for gold, since a dollar was defined as 1/35th of an ounce of gold, which was pegged at $35 per ounce. The door was opened worldwide to print money; foreign nations could print if they had gold or US dollars.
1971 - President Nixon closed the gold window, ending convertibility of dollars to gold. This came about because the US was printing too many dollars and living beyond its means. Foreign nations led by France, recognized this and began demanding payment in gold, breaking the system as the US experienced a major gold drain.
Do you see a pattern here? We are headed for a mighty fall when all of this hits the fan. Maybe it already is hitting the fan. I am not an economist. Nor do I own any gold of any quantity. I wish I did. But that is a whole other subject. This is not a doomsday prophecy like "the sky is falling" or "The End of the World is Near", but our whole economic structure is based on fake money and faith. No amount of praying will save us folks.
Today's price of gold: $919.20 USD/oz
