The U.S. Dollar

It might as well be called “the U.S. Doughnut” at this point. Negative interest rate policy has been a topic of discussion for some time; it’s what you get when the rate at which the currency loses purchasing power outruns any yield available anywhere that can offset it.

To add a sense of urgency, with government and corporate debt at historic levels, production of goods in the U.S. having been shipped overseas, many capable of work choosing to sit on the sidelines, small business being driven into non-existence at record levels, and a lack of financial literacy of how these relate to one another, has become a brewing storm of the century. I assure you, “something wicked this way comes”.

The simple explanation is that the more “currency” you have in circulation, the more of it you have chasing the available goods which chases up prices. It’s basic economics. How expensive does the last apple on the life boat get when it’s the only thing left to eat and several survivors are bidding everything they own on it in an effort to stay alive? An extreme example, perhaps, but accurately applied.

Value and abundance, or wealth, exists in commodities (raw building materials), components, and products. The currency we’ve culturally grown accustomed to calling “money” has no inherent value and is actually a “debt instrument”… you aren’t really compensated or paid for your work until you trade your Federal Reserve Notes for something of value at the grocery store or gas station. Once traded, NOW you have something of value. Until that time, you just have a receipt for the work energy you expended elsewhere for which someone owes you something of value in exchange. And, “for as long as they’ll accept the dollar in payment” … and that clock is ticking.

Here’s what has happened over the past one-hundred and ten years or so since the introduction of a central bank to the United States and assignment of “monetary policy” to the organization. This banking cartel known as “The Federal Reserve” is neither associated with the Federal government nor does it implement or back it’s activities (or our currency) with any “reserve”. It would be more aptly named the “Bureau of Smoke and Mirrors”. It’s directive? (called the “dual mandate”) …to manage for maximum employment and negate inflation or “stable prices”. It’s agenda? …to extort value from everyone who uses Federal Reserve Notes as currency after they create it from nothing, a stealth tax, and in effect, the most prolific racketeering Ponzi scheme in the history of mankind. The Federal Reserve is a banking cartel; a group of the world’s largest and most powerful banks who cooperate and create policy for their own benefit.

Cold hard Cash (…and evidence)

Yes, there was a time when cash was truly “cold and hard”. As we discuss what is pictured immediately above, keep the following in mind: the single ounces of silver or gold have not changed. “An ounce of gold is… an ounce of gold” (assuming its purity: refined .999 bullion quality). What changes, and has changed drastically, is the unit by which we measure the price of those ounces. What’s the “price” of an ounce of gold? What is the “price” of an ounce of silver?

Back in 1928 when the $1 Silver Certificate was in circulation you could walk into a bank, place your “receipt for money” on the counter and demand your silver. That contract for a 1:1 exchange ratio is printed on the face of the certificate:

A similar contract is printed on the face of the Gold Certificate for a 1928 twenty-dollar gold piece (1 oz.). Today that same 1 oz. double-eagle is stamped “50 dollars”. The major problem with this today is that the Federal Reserve Notes are not exchangeable for gold and silver in any fixed exchange rate. The value of the dollar continues to fluctuate because the “Federal Reserve Note” is not money, but currency, a “bill of credit”, in application a “debt” that is only redeemed if and when you can trade it for something of value. Bills of credit are unlawful in the United States of America as expressed in Article 1, section 10 of the Constitution for the united States of America.

No state shall enter into any treaty, alliance, or confederation; grant letters of marque and reprisal; coin money; emit bills of credit; make anything but gold and silver coin a tender in payment of debts…”

Article 1, Section 10; Constitution for the united States of America.

One of these things is constant (one ounce weight), while the other is a continually fluctuating value (what can I buy for a dollar today?). The Fed Dollar is only worth what someone is willing to trade you for it; and that value in equity has been dropping steadily since 1913. This snip from the usdebtclock.org display relates the amount of U.S. Dollars (Fed-notes) which are in circulation in relation to the “price” in dollars to purchase one ounce of either silver or gold.

Look at the usdebtclock.org example with this thought in mind: “If the currency was actually backed by gold or silver, what should the bank give me as receipts in exchange for an ounce of gold or silver which has real inherent value?” According to this chart, $3001 per ounce of silver, and $21,923 per ounce of gold. The market exchange rate, referred to as the “spot price” is nowhere near that at present. And…to lay your hands on an ounce of either one, you’ll need to add a percentage called a “premium” which includes delivery costs and profit for the bullion dealer.

When people stop accepting “bills of credit” in trade for their goods and services, the value of the Federal Reserve Note, a piece of fancy paper with no inherent value, reverts to it’s natural value: zero. In Weimar Germany following WW1 the German mark was valued more for its BTU rating in how much heat could be generated by burning it than any value for which it could be traded. The set of circumstances we’re in currently with debt among many sectors, the amount of currency, the lack of manufacture of anything of value, and more people out of work are a combination unlike anything at any time before in history. “Something wicked this way comes.”

No state shall …coin money; emit bills of credit; make anything but gold and silver coin a tender in payment of debts;

Article 1, Section 10 the Constitution for the united States of America

The Federal Reserve and all its member banks are, and have been for quite some time, violating (with impunity) the supreme law of the land. Why was that so important to include in the Constitution? Because gold and silver cannot be “manufactured” or printed. These are not compounds. These are elements on the periodic table which were created by God in the nuclear fission engine of stars at supernova. They require effort in mining and refining to produce them and therefore represent the “effort”, the stored work energy invested to produce them. Plus, they have inherent features that fulfill the function of money like very few other materials.

In the Coinage Act of 1792, the dollar (and other denominations) are defined as a “weight” of a commodity, something that has an inherent value. The U.S. Dollar is defined as “371 and 4/16 grains of fine (refined) silver”. Today, the U.S. Dollar Federal Reserve Note bears little resemblance to the Lawful description and holds nearly none of the original value.

Since 1913 and the introduction of the Federal Reserve, the U.S. dollar has increasingly lost value and today is only worth 2% in trade when compared to its 1913 trade value. Check today’s spot price of gold (Au) and silver (Ag) for .999 refined bullion quality and make a note of the current exchange rate. Remember to add 10-15% as a premium for the bullion dealer who is in business to feed their family. The harder it is to get the silver or gold to market, the higher the premium is likely to be.

Today, banks are in trouble. Governments are in trouble. Corporations are in trouble. Most people are in more trouble than they realize but haven’t noticed quite yet because they still have “a pile of numbers” in the bank. But quickly, that’s all Federal Reserve Dollars are transforming into: a pile of numbers.

We’ve been trusting the people who are running these organizations to manage them responsibly so that we can have jobs, feed our families, and enjoy some semblance of a “lifestyle”. That house of cards is on a shaky table and the fat cats seated around it are clumsy idiots who already “have theirs” and are eyeballing what’s left of yours. They could care less if there’s going to be anyone left to drive you home from the party if the experience leaves you a bit messy. As far as they’re concerned, you are on your own.

It’s time to gather good information and put it to use to protect yourself and those you care about. You’re going to need two things:

1. to manage what you have most efficiently
2. alternate sources of cash flow that you control

I’ve shifted my website to become a source of that information through the dp Newsletter, my MoneySmart book, the online courses that proceed chapter by chapter, and the Guide to Wealth course which concludes with an inventory of skill sets and brain-storming for how one might offer their skills and talents to others who might need their help and pay them for it.

Many people we care about around us don’t see this coming. They are going to need our help. The sooner we alert them and they get started on their own financial literacy and anti-fragile strategy, the less help they will need and the better equipped they’ll be to help those close to them.

Whatever you find that elevates your understanding, helps you implement strategies that make you more financially unshakeable, share them with those around you in discussion, emails, and social media. What we’ve seen over the past two years plus is that government couldn’t care less about our well-being! America is “…of the people, by the people, and for the people…” It’s time to act like it.