The Fed and the Golden Fleece
By William Anderson
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When I teach my economics classes about money, I pass around a $10 gold coin that is a replica of those that were in circulation around 1913, the year Congress created the Federal Reserve System. The coin is made from one-half of an ounce of gold, dating from the time when the dollar was based upon a standard of $20 an ounce.
If I were to value that coin today, according to current gold prices, it would sell for more than $400, which means that according to this way of measuring the value of money, the dollar is worth about 1/40 of what it was when the Fed came into being. Now, this is not necessarily the best or most accurate measure of the decline of the dollar, but it is good enough for the purposes of this article.
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Regardless of how you calculate it or the timeframe you use, the dollar is NOT a store of value.
In my book Church (page 113), ”Money is a matter of functions four, a medium, a measure, a standard, a store.”
The dollar, after the 1913 creation of the Fed, was no longer a measure, standard, or store.
As a youth, reading the Count of Monte Cristo, I dreamt of someday finding a pirate’s treasure. (Hard to imagine anyone not dreaming to find that chest, win the lotto, or such.)
Imagine instead of a chest of gold, finding a chest of dollars. When they were put in, they were valuable. Now they’re worth a fraction.
I often remember my now deceased father-in-law carrying a fifty dollar bill in his wallet ever since he was a young man. He always said: “With that, I’m never poor!” Sad to say, that each year, the value that fifty represented was inflated away. Stolen by the govenrment!
Gold is the only defense.
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