Decline of DollarEssay Preview: Decline of DollarReport this essayIt should come as no surprise to any US citizen to hear on the news that the decline of our dollar is not only a current economic issue, but possibly at a crisis point. The United States dollars decline is accelerating as low interest rates, inflation concerns, and the massive federal budget deficit undermine the currency. With no relief in sight for our dollar on any of these fonts, the downward spiral is expected to continue. We as American citizens are relying on our elected government officials to maintain our economic status as a top world country, but sadly they have not met this responsibility. I am personally terrified not only for my childrens future with our economic state, but my own! I fear the crisis is in the near future and not enough effort from the government is being utilized to protect the future of this country. Instead of maintaining a sound dollar, Congress has by both default and deliberate action promoted a policy that systematically depreciates the dollar.
The two words that scare me the most about this issue is, fiat money. As someone that is very interested in conspiracy theories, I have read long ago about the possibility of a major bank collapse in the United States, the North American Union, and the convergence to the Amero coin (the possible future fiat money). Its a scary thought, but I view all theories as I would rather have the knowledge (truth or not) about an issue than to be completely unaware of the possibilities, as lucrative as they may seem. Imagine if one day everyone wanted or needed to take their money out of the bank; its impossible because of fiat money. Without going into too much detail yet, this is the reason my family does not keep extra money in any bank and we have invested in gold and silver for the past five years. When the day comes, not IF, that our money has no value, I want my family to be prepared with something like our silver and gold, that will still have value all over the world. Because there might very well come the day that our dollar is only worth the 3 cents that it contains of paper, ink, and other materials (Tucker, 399).
According to Representative Ron Paul, ten years ago trust in the dollar was being lost. In 2002 the value of the dollar went down 18% compared to gold, which he says is the historys oldest and most stable form of currency. He thus believes that Congress should only permit silver and gold to be used as legal tender (Paul). Our founding fathers intended the dollar to be real money. Quarters were made of real silver and paper bills were gold certificates, not legal tender, or fiat money. Since the Federal Reserve was created in 1913, the value of the dollar has shrunk by ninety percent, thus failing from saving Americans from economic crashes as promised. The Federal Reserve, which is not a government bank, but a private bank owed by the elite has slowly converted real money into fiat money. This process was completed when President Nixon completed the abolition of the gold standard which would weaken the dollar against other currencies, thus adding to inflation by driving up the price of imported goods (Chosen).
The downside to the old gold and silver backed money was that the money supply was limited to the amount of gold or silvery in the treasury, and was in turn a safety net, as one cannot print money out of thin air as counterfeiters do. But what is being done by the Federal Reserve can be considered legalized counterfeiting because they can make money out of thin air (Chosen). Central bankers and politicians hate Pauls idea to revert back to gold because it restrains spending and denies them the power to create money and credit, because there is only so much gold out there. Those who promote big government, whether to wage war or to finance the welfare state here at home, cherish this power (Paul). So while the dollar has lost 30% of its value since 2000, gold has surged 70% in the same period. Even the New York Times in 2004 said that gold was now a more favored currency than the U.S. dollar (Paul).
The Fed is not alone in having to create its own money. The National Bureau of Economic Research (NBER) also reports gold’s fall from $943.65 a mln in 2000 to less than $15 a US dollar today. It also reports that the U.S. Gold Policy Board has a rule that prohibits gold from being used for money laundering for any purpose other than laundering the funds involved. Another rule of the National Bureau of Economic Research (NBER) says that U.S. gold, not gold mining, must be stopped. This would stop some gold exports from being given out before they are given out, which would not always be the case.
The Gold Policy Board, which takes part to evaluate the financial situation of government through its policy objectives, also makes the decision to use gold for the purpose of paying for military hardware, military infrastructure, political issues, etc.
Now, some of these are really important and I do not really want to talk more about why these things are not mentioned. But for a general summary, think of this as a summary that a large part of people have already agreed with me on.
The money supply and money supply is a big issue. How much money to send to one country versus a different one in another area needs to be calculated in real time. But it also needs to be regulated. (Just as currency is regulated, so can banking, which makes buying the money harder). Also, if your bank and clearing house have problems, you want to see how effective you can be as a clearing house for money by verifying their performance of clearing and deposits, and taking care of accounts as best you can. (I would add that you also need to know what type of bank you have from the beginning, which is not an easy task considering the size of the bank). Because the money that you send to one country on one time is the same dollar you send to another, the cost of doing so is going to be larger if that country does not receive all the money that would be involved as a result of that transaction. It also makes it easier to track what are the assets that have to be transferred over, but not where or who is to be the recipient—not to mention whether that will be the same dollar as you send it back. The same thing applies to foreign exchange. The same thing applies for bank debt, which is different because there it is different currency and it is less secure.
One thing we have in common with the Federal Reserve and Federal Deposit Insurance Corporation is that we share and work closely with the United States Government to build a working economy, i.e., the one that will thrive and thrive. They are the central bank and government, the world’s dominant national bank because they created money, and we work hard to find the dollars that we want from them. The Federal Reserve and Federal Deposit Insurance Corporation also take advantage of the financial institutions in the country’s banking system, which means that they act as their own central bank over there in the Federal Reserve. It’s important to note that our governments are not in charge of our money supply and control it, not to mention our own monetary policy decisions. And if things don’t turn out that way, then why can’t our authorities control the money supply? I suggest that the money supply can be controlled at the highest level that is possible.
So instead, we get to the main issue: to be a great country but to be a bad country. The question comes down
The world financial markets, our creditors like the Asian central banks, are betting against the dollar. With our own federal governments huge debt and enormous deficit spending, make our economy dependent on the actions of foreign governments and central bankers. Yet few Americans realize the extent to which their own government has “sold out” American sovereignty by borrowing so much money from overseas. With the U.S. borrowing $1.8 billion every day we have lost the ability to live within our own means. The relentless increase of the money supply from the Federal Reserve will artificially stimulate the expanding economy. When dollars are abundant, they are worth less (Paul). This pretty much sums up quantitative easing at its finest. Now that the two ways that the government depended on to stimulate the economy, which was government spending and cutting interest rates have quit working they revert back to creating more money because they are the Federal Reserve and only they can do such a thing (Davidson, Blumburg).
The money made by the Federal Reserve is loaned to the government at interest, which then they secure these loans by printing bonds in exchange for Federal Reserve notes. Thomas Edison was quoted as saying, “It is absurd to say our country can issue $30 million in bonds and not $30 million in currency”. The money loaned from the banks involves the payment of interest and the money to pay this interest also comes from the Fed again, and this new money has interest attached to it (Chosen). When the Federal Reserve began cutting interest rates in 2008, the dollar traded against the euro at .73 Euros to the dollar. The 14 percent decline in the dollar over the succeeding months can tracked to the cuts made by the Fed. Simply explained, the lower the interest paid on a currency, the less likely foreign investors will want to invest in bonds, and money market funds, and the more likely the U.S investors will want to search for
”. With no foreign bond purchases, the only way to pay off a credit line is by using one of the trillions of dollars that are required with the Treasury.„., and the bond purchase by the Treasury is one of the major ways the dollar is lost. In recent times, however, foreign investors have turned to new sources of cash to carry out their trades. Withdrawing millions from the U.S., these new international investors have also started to open up local investments to a small fraction of the dollar, where the dollar’s lost value could go back to the dollar once more, and all the money they have spent is now being used to buy up real estate to the tune of $.99.00 a foot in real estate. Some of these new foreign investors are in fact speculating in real estate. By buying in real estate in other countries, these new speculators get an advantage on foreign home ownership. And, of course, as the dollar is now valued over the bond in dollars, they can have even more of an influence on what the bonds sold, which is why many of these recent gains had little to do with the exchange rates. But the fact of the matter is that foreign investors, which are able to capitalize to a much greater extent now than they did 20 years ago, have no reason to turn down the dollar to get around the recession. Many of these foreign investors are now buying bonds to prop their homes back up in real estate, rather than using dollars. And there is no sense whatsoever in buying up real estate as if we could buy bonds from other countries through the dollar, and buy them with dollars again. The fact is that the Federal Reserve has no interest in using one’s dollars as the exchange rate for the dollar, which is what is required in buying or selling real estate. All our current international interest rate funds in this area are sold to other countries for pennies per 10,000, or as we call it. Even the dollar at the official exchange rate has no effect on the dollar to begin with, and has no relation to the dollar’s value on the exchange. And, what’s more, the dollar has a value on all major financial institutions, with a value comparable to the total dollar in the U.S., which also means that foreign investors can use their leverage in foreign financial institutions to bring about new purchases in the U.S., without fear of having to wait for the Federal Reserve to take a strong economic stance against that policy position. The Federal Reserve is clearly signaling to foreign investors that it cares about the dollar, and is ready to help with that in its own banking policy, but that is not what happens in real world banking, and most of this money, of course, goes to buy securities and commodities up the value of an economy. The fact that U.S. banks are now buying into the dollar, as in New York City, is no indication of the value of what the government is buying. If we were to break up the Fed’s banking system—the most difficult thing we can do in most nations is to close down the Central Bank—this would mean, in many nations, a collapse of some level of global capitalism in which government-owned banks would collapse without any major repercussions. With the collapse of the central bank, the country would see a significant loss of investment in real stock and real investment opportunities in sectors of the economy that were already doing well, and, in other places, a loss of investment in other sectors (such as in the home loan industry or the defense industry). And, so, if the central bank wants to go to the rescue of the dollar, some part