0riginally published on March 5, 2007, but updated in May 2016
Among those whom I like or admire, I can find no common denominator, but among those whom I love, I can: all of them make me laugh.H. Auden 1907-1973, Anglo-American Poet
What is the US dollar backed by?
The US dollar is backed by nothing other than empty promises but the masses are not ready for Gold standard and here’s why.
Many a naysayer, many of which fall under the newsletter writers camp keep pumping the nonsense that all paper money will cease to exist and that everyone will revert to the gold and silver standard in the not too distant future. First of all, they are about 1000 years too late and second of all, they are in sore need of a mental check-up. They forget to take mass psychology into consideration and one must understand that the biggest driving force anywhere is mass behaviour also known as Mass psychology. The Gold standard did not prevent theft and outright robbery; banker was still known for shaving gold coins and other shenanigans
So many gold bugs will ask the following question: What is the US dollar backed by? They will also gladly answer the question by stating that it’s backed by nothing. In other words its as good as rubbish and while that might be true, it does not matter for the masses think otherwise. In summary the answer to the question: What is the US dollar backed by; the answer would have to be nothing but your faith in it.
Walking with bags of Gold is far from convenient
Nobody in hell including yours truly wants to run around with a heavy sack of gold or silver coins strapped to their necks. It just not convenient anymore and since we live in an instant demand and instant gratification society this line of thought will remain a dream. The way to end the problem is to put the following rules into play
- Banks should never be given any power whatsoever. This means that they should not be allowed to lend money they do not have. Now via the fractional banking system, they can create 9 new dollars for every dollar of deposit they have. This outright theft, they are creating money they don’t have and charging a fortune for it.
- Governments should not be allowed to create any debt. Before any new project is approved the government should have the money to pay for it
There small other refinements that can be added, but if those two main rules are enacted, we won’t need the Gold standard. We have inflation and fake boom and bust cycles because bankers control the money supply. Cut their supply and the dirty game comes to an end.
General Motors has made no money selling cars for over 10 years
It’s amazing but it appears that over the last decade or so GM has not been able to make money selling automobiles. Thus, one wonders what the hell they are doing in this business; to make matter worse, their profits have plunged more than 45% in the same period. Its total liabilities have grown from some 200 billion to some 450 billion. How can they ever expect to pay these liabilities down when they gross profits in 2006 were 22 billion dollars.
At some point in time something is going to have to give; expect the workers who are depending on their pension and medical benefits to get a huge surprise in the not to distant future. The other U.S auto manufacturers are in just as much trouble. We stated a long time ago that the only way they could ever compete with the Asians was to completely close shop and move overseas or the other possibility was to hire non-union workers.
However, their pension and medical insurance liabilities are so large now that they need to get the cheapest labour possible and one that does not require too many benefits. Such a scenario is only available in Asia. The article below explains in a clear and concise manner how the US government has helped the Unions bankrupt a once-powerful Icon of the US economy
The US dollar is backed by Nothing and hence the name Fiat
Fiat money is government-issued currency that is not backed by a physical commodity, such as gold or silver, but rather by the government that issued it. The value of fiat money is derived from the relationship between supply and demand and the stability of the issuing government, rather than the worth of a commodity backing it as is the case for commodity money. Most modern paper currencies are fiat currencies, including the U.S. dollar, the euro and other major global currencies.investopedia
How Fiat came to be
In early 1933, in order to fight severe deflation, Congress and President Roosevelt implemented a series of Acts of Congress and Executive Orders which suspended the gold standard except for foreign exchange, revoked gold as universal legal tender for debts, and banned private ownership of significant amounts of gold coin. These acts included Executive Order 6073, the Emergency Banking Act, Executive Order 6102, Executive Order 6111, the Agricultural Adjustment Act, 1933 Banking Act, House Joint Resolution 192, and later the Gold Reserve Act. These actions were upheld by the U.S. Supreme Court in the “Gold Clause Cases” in 1935.
For foreign exchange purposes, the set $20.67 per ounce value of the dollar was lifted,[when?] allowing the dollar to float freely in foreign exchange markets with no set value in gold. This was terminated after one year. Roosevelt attempted first to restabilize falling prices with the Agricultural Adjustment Act; however, this did not prove popular, so instead the next politically popular option was to devalue the dollar on foreign exchange markets. Under the Gold Reserve Act, the price of gold was fixed at $35 per ounce, making the dollar more attractive for foreign buyers (and making foreign currencies more expensive for those holding dollars). This change led to more conversion of gold into dollars, allowing the U.S. to effectively corner the world gold market.
The suspension of the gold standard was considered temporary by many in markets and in the government at the time, but restoring the standard was considered a low priority to dealing with other issues. Wikipedia
29% of the US don’t know that the US dollar is backed by nothing
Although it has been 88 years since the system changed as much as 29 percent of the United States (US) is still unaware, what is US dollar backed by? a study reveals.
A new study conducted via the world’s most popular hash supplier, Genesis Mining has published fascinating discoveries on the perception of the everyday American on money and banking.
The report is dubbed, “Perceptions of Money and Banking in the US 2019” with a 1000 respondents who answered about 23 questions ranging from banking to fiat money and even the Federal Reserve Full story
One never needs their humour as much a when they argue with a fool.
Chinese Proverb Sayings of Chinese Origin
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