How have we arrived at a point at which our currency has arbitrary and fluctuating value simply because the government says that it does? Well, it’s been slowly creeping in that direction since the advent of the almighty Federal Reserve in 1913 when a cabal of wealthy and powerful men met on Jekyll Island in Georgia.
It was here, shrouded in secrecy, that they created a behemoth “monster” with “tentacles” that are, still today, intrusive and far-reaching into all facets of the average citizen’s life. Furthermore, on June 23rd, 1933, the US officially abandoned the gold standard via a House and Senate resolution signed into law by the president that denied creditors the right to insist upon gold as payment. Prior to this monumental change, the gold standard had been in place in the US since 1879.
Following a Keynesian philosophy on economics, “inflating” the supply of currency was believed to be the best remedy for a sluggish economy. At the same time, increasing the amount of gold contained in the Federal Reserve would allow for further inflation of that supply of currency.
Prior to the passage of the joint congressional resolution abolishing the gold standard, President Franklin Delano Roosevelt demanded that any and all “gold coins and gold certificates” worth over $100 be exchanged for other currency. A price of $20.67 per ounce of gold had been set by the government. Suddenly, with the assistance of the vice grip of the Feds, the coffers of the Federal Reserve were handily filled to overflowing with gold.
Interestingly, shortly thereafter, the Federal Reserve reset the price of gold and increased the number to a whopping $35 per ounce. And voila, just like that, the balance sheets of the Federal Reserve showed an increase of an astonishing 69% allowing for even more indiscriminate printing of what could now only be termed fiat money.
We’ve all heard the old adage about “how everything he touches turns to gold.” Well, if you asked the Federal Reserve if this was true in the case of FDR, they would most certainly concur, but as for the average citizen, he or she might just beg to differ!
(If you’d like to learn more about the Federal Reserve, we highly recommend you check out the book The Creature from Jekyll Island.)