Two days and 41 years ago, President Richard “Dick” Nixon took the Federal Reserve off of the gold standard (or what was left of it). In essence, all US dollars were now backed by debt rather than partially by gold:
Now, this was all part of the now proven failed Keynesian model of economics. Here’s John Maynard Keynes himself talking about abandoning the gold standard:
Abandoning the gold standard has only led to more instability and more inflation than previously realized:
Notice that while inflation relatively stable, while trending upward, it wasn’t until 1971 that it starts to shoot up in a linear fashion. That was the same year that President Nixon decided to take us completely off the gold standard, temporarily for good, in order to save us from foreign speculators.
Although I have some disagreements with some Austrian economists, it is clear that their theories on fiat currency and its relation to inflation are correct. Inflation is the increase in the supply of money, not the increase in prices in the market. Without a gold standard, Congress allowed the Federal Reserve to turn on the printing presses and pushed banks to lend money out to everyone with a face. This increased the money supply and drove up the costs of living for everyone.
Without a gold standard or some other commodity-based reserve style, we have given Congress free reign to borrow with impunity and to not give a damn about the future because they’ll just inflate away the debt by creating more of it. It’s a massive spiral that they believe they can continue to ride out every year. And no matter what party is in power, at the end of the day we still have an unbalanced budget and the destruction of the personal savings of the common man. Meanwhile, the international banksters make off with all the riches and end up foreclosing on whole countries like Italy and Greece (what else do you call it when an unelected banker is put in charge of a nation?).
As a result of this, people have to resort to risky investments with mutual funds in order to try and beat inflation. It is commonly accepted wisdom in the financial world that you need at least 8% interest in order to beat inflation. The only way to achieve that is to invest in financial products that no common person really understands nor should they.
In light of this, I am declaring a new holiday that we should all observed, in a manner similar to observing a funeral of a tragically murdered friend or relative. Let’s call it National Inflation Day and we should celebrate every year on August 15th. We should remember that the promises of politicians, their economists, and other assorted scoundrels is always a lie. Their assertions are, at best, wishful thinking with a complete lack of understanding of basic human nature.
So mark you calendars. August 15th shall be know as National Inflation Day in the United States.