From gold to paper: the history of the devaluation of the US dollar

Charlie Taylor

The US dollar was created 228 years ago, and since then, the national currency has been powerful and controversial at the same time. In addition, since 1971, after being backed by precious metals for decades, US dollars have lost their base and estimates say that a quarter of the US money supply was created only in 2020. The US dollar conflict has led to several analysts and economists to believe that US monetary hegemony is in its last stage.

The history of the loss of value of the dollar

While some people may say that bitcoin is too complicated, it is common that they do not also know how the state currency itself works. It is probably the reason why the very structure of how fiat money operates continues today, without question from citizens. First, it is necessary to understand that the Federal Reserve is not a federal entity and also has no reserves. The Federal Reserve, also known as the Fed, is a private organization independent of the US government. The US dollar was officially conceived in 1792 and was created in the likeness of the Spanish dollar. In fact, the Mexican peso and the Spanish dollar were legal tender in the USA until 1857. Years before the beginning of the dollar, the country's Continental Congress decided in 1785 that the dollars and coins would be backed by precious metals.


Want to earn Bitcoins?
We help you with that.
Open a free account!


20 dollar gold certificateBetween 1863 and 1933, the USA issued a paper currency called "gold certificates". Basically, the holder of a gold certificate, a unit of currency denominated in the USA, had a corresponding amount of gold bars. In 1933, US gold certificate notes were withdrawn from circulation and citizens were prevented from owning them until 1964. A rare series of 1934 gold certificates was also created, as the “promise of payment” was changed to “as authorized by law”. Interestingly, the type of representative money called “silver certificates” also started in 1863, but remained in circulation until 1964. At that time, the measurement of 375.64 grains of fine silver (approximately 24 grams) was a standard example until the USA decided to further decrease its guarantees on precious metals. American dollars, particularly the form of paper that followed the coins, were later called “Federal Reserve Notes”, after the infamous Federal Reserve Act of 1913. On Christmas Eve that year, President Woodrow Wilson helped create the Fed.old 5 dollar billIn 2009, the year of Bitcoin's birth, author Thomas Allen wrote a comprehensive article on “America's first flirtation with Fiat money”, which took place during the War of 1812. Allen explained that gold was undervalued before the War of 1812, and in the US money was dominated mainly by precious metal standards. To finance the Civil War, the United States also flirted with non-backed currency when the government issued 'green backs' (1861-1862). Likewise, green banknotes were paid to the owner as authorized by law, but not by gold or silver coins. From 1800 to 1900, the US economy and its precious metal-backed currency grew. At the same time, other types of markets have also started to grow, such as stock exchanges and the creation of central banks. Paper money was issued in 1862 without support and was relied on to pay for the costs of the Civil War. Also in 1812, the United States created unsecured paper notes to finance the War of 1812. Before the Federal Reserve was created, in 1878 the United States temporarily reinstated the silver and gold coin.street speculation in the USAFrom the 19th century to the present day, bankers and stock market players dominate the US economy. Before the introduction of the Fed, the Bank of England, the Swedish Riksbank and the Banque de France were the first to initiate the central bank model modern. In the late 1800s, stock market participants during the turn of the century were accused of running bucket shops. The bankers of the day bet against their clients' funds and were caught on some occasions. In 1906, a US Supreme Court decision created a standard definition of bucket shop: “An establishment, nominally for the transaction of a stock exchange business, or business of a similar character, but actually for the registration of bets, generally of small amounts, on the rise or fall in prices of shares, grains, (e) oil ”, notes the Supreme Court decision of 1906.

Financial panic and a bankers conspiracy supported the creation of the Federal Reserve

After that period, the US economy was very fragile and, in 1907, there was a banking panic called the “Knickerbocker Crisis”. It spawned a national race for banks and trusts in the United States. Due to the "bankers panic of 1907", Americans no longer trusted the US banking system.Welles Bosworth, S.B.P. Trowbridge, J.P. Morgan Jr., William Rockefeller and Theodore N. Vail on Jekyll Island.Jekyll Island has been a destination for the world elite for over 3,500 years, according to historians. The photo above shows the first transcontinental phone call made two years after the Federal Reserve was created. The federalreservehistory.org portal says that the "secret meeting on an isolated (Jekyll Island) off the coast of Georgia in 1910 laid the foundation for the Federal Reserve System". In the image, from left to right: Welles Bosworth, S.B.P. Trowbridge, JP Morgan Jr., William Rockefeller and Theodore N. Vail on Jekyll Island. The financial panic after the 1907 scare, in addition to the Wall Street bankers who were members of the Money Trust or the House of Morgan put pressure on President Woodrow Wilson to enact the Federal Reserve Act. On December 23, 1913, Wilson, with the help of the US Congress at the time, and the Money Trust bankers created the central bank to stabilize long-term interest rates, an offer currency and employment. From this point on, US dollars became Federal Reserve Notes (FRNs), but were still redeemable for precious metals (silver and gold) until 1933. Money Trust bankers, who consisted of members from Morgan, Rothschild, Heinze, Rockefeller, and the Warburg families, not only influenced the markets, but also politicians like the 32nd President of the United States, Franklin Delano Roosevelt. A quick look at the St. Louis Fed documents and Pujo's hearings shows how Roosevelt was something of a Morgan House puppet.Executive Order of NixonFranklin Delano Roosevelt (FDR) also played an important role in the devaluation of the US dollar and worked secretly with Morgan House bankers at this time. The financial panic in America again created an excuse for FDR to work with bankers behind the curtains. As mentioned above, US dollars have already been redeemed for gold, but the FDR bank holiday and the ban on gold ownership changed all of that in 1933. Roosevelt Executive Order 6102 signed on April 5, 1933 “prohibits the hoarding of coins and gold bars. ”It seems that after removing the ability to redeem gold, the Federal Reserve, the US government and other members of the central bank around the world realized that the fiat game without bailout might not last long. Then, 11 years later, in 1944, the Bretton Woods pact was signed, which was the first step towards the establishment of the petrodollar. At that time, all the allied nations of World War II participated and agreed that the central bank association would maintain exchange rates based on the US dollar. Instead of using the gold standard directly, a country would redeem its currency in US dollars.

Vietnam War Expenses Reveal US Dollar Problems

As usual, war spending has caused the Federal Reserve, the US currency managers, to continue to create many more dollars. Part of the Bretton Woods agreement was the US dollar used because, at the time, the US held three quarters of the world's gold. That is, the US government and the Federal Reserve were reliable, as the alleged gold could support the money supply.War sceneUS wars are the number one reason for creating excessive money without ballast. Events such as the War of 1812, the Civil War, the Vietnam War and all conflicts in the Middle East are caused by the states that benefit from the war. Today it is no different, as this week Democrat Joe Biden became the third consecutive American president to attack Syria. During the Vietnam War, war spending was so great that other countries began to notice the United States printing abundant amounts of dollars. President Richard Nixon was then forced to act and in 1971, Nixon announced that the gold standard was completely abandoned to support US dollars, breaking the Bretton Woods agreement unilaterally. monetary hegemony of the country alive. By withdrawing the American currency from the gold standard in 1971, at the same time Nixon also made a deal with Saudi Arabia. The two countries decided that oil prices would be set and sold in USD. Essentially, this meant and still means for several countries today, that anyone who wants to buy oil must exchange their currency for US dollars. After the agreement with Saudi Arabia, the other OPEC countries followed suit and priced their oil in the currency of the United States.petrodollarAfter the Bretton Woods package started to crumble because the Fed went crazy printing money for the Korean and Vietnam War, several countries like France wanted their gold reserves to be returned. After the 'Nixon Shock' in 1971, the US leveraged the petrodollar business to keep the dollar strong, but it also needed military strength to keep the game going. From this point on, the unaudited Federal Reserve and the military-industrial complex of the USA has grown massively. Under President Reagan, Bush, Clinton, GW Bush, Obama, Trump and even current President Joe Biden, battles in the Middle East have continued unrelenting to keep the petrodollar strong. For example, this week the Biden government authorized air strikes unconstitutional on Syria without approval American generations have been at war every year for decades, ever since. Shortly before 2008, the descendants and friends of the same families of bankers at Casa Morgan destroyed the American economy by betting on the country's mortgage industry. The Fed created large amounts of dollars at this time also to save the economy and further devalued unsupported notes.

About a fifth of the US money supply was created in 2020

After covid-19, it was much worse, as the coronavirus was used as an excuse to create absurd amounts of paper money. In 2020 alone, estimates show that about 23.6% of all U.S. dollars ever created were issued in less than 12 months.M2 chartMoney supply M2 according to FRED data. “M2 consists of M1 plus savings deposits (including money market deposit accounts); small denomination time deposits (time deposits in amounts less than US $ 100,000) ”, notes the Federal Reserve. The U.S. central bank has never been audited since its inception and provides its own published data on a monthly basis. For decades on end, the US government has been experimenting with creating large amounts of unsupported money and this is usually done to finance conflicts like the War of 1812, the Civil War, the Vietnam War and, literally, all the wars of the country. Covid-19 allowed the Federal Reserve to create much more than all war spending in the U.S. combined. For all these reasons, defenders of solid money, defenders of precious metals and a large part of cryptocurrency defenders want alternatives. to modern central and fiduciary banks. Bitcoin's mathematical, calculated and scarce supply is invigorating for people in a world full of fiduciary manipulation. Bitcoin looks nothing like the US dollar, and it is probably the reason why wealth managers in 2022 are selling USD and buying BTC. Anyone can easily see that the value of the US dollar has deteriorated a lot over its history. . It is well understood among economists that the U.S. currency is not sustainable in this way for much longer, and many other state currencies are in the same boat. Bitcoin is the lifesaver of many individuals and organizations to escape devastation or get caught up in. wake of the collapse of the US currency.What do you think of the history of the US dollar? Let us know what you think about this subject in the comments section below.Read more: Is the dollar a fraud?

Click to rate this post!
[Total: 0 Average: 0]
Next Post

Coinbase cites Satoshi Nakamoto as a risk to its business

As the cryptocurrency exchange prepares for its initial public offering (IPO), Coinbase warns that Bitcoin pseudonym Satoshi Nakamoto could harm the company's business.In its official registration with the United States Securities and Exchange Commission (SEC) to receive IPO approval, Coinbase explains that demand for Bitcoin may deteriorate or its price […]

Subscribe US Now