Dollar Sees it’s Days Numbered, Ron Paul last Chance
So Iran has decided to stop using the US dollar, which means we should expect another rise in oil prices very soon. This is the beginning of a trend that can signal the end of the US dollar and our current FIAT monetary system. In order to understand why, let’s explain what a FIAT monetary system is.1870-1914: The period of the most economic growth for the USA, we were on the gold standard and had no central bank
Before we used to be on a GOLD STANDARD, meaning all reserve notes equaled a certain amount of gold that you can redeem. So I could redeem my $100 dollars of reserve notes for $100 dollars worth of gold, cause this is MY PROPERTY. This prevented the government from spending more than it could physically back, preventing deficit spending although in the future credit began to be issued on the gold. At this point, now the federal reserve could print out $10 for every $1 of gold, and every bank can extend $10 of credit for every $1 they had deposited. Now your dollar was no longer redeemable for gold and eventually they abandoned the gold standard entirely. This is called a FIAT monetary system where you print currency to match the demand for it. So if the bank needed to lower interest rates, they printed money. If the government wanted to spend more than it had, they printed more money.
So now the government is the first to use this money, so they get to use it at the current value, but as these dollars trickle down to the average American they have lost their value. This paper money no longer represents ownership of a universally valued commodity but are ownership of the debt to the federal reserve. So to redeem this dollar at the federal reserve only absolves a small portion of a growing debt and gives you nothing. If the dollar crashes, you’d have nothing.
So how does the dollar crash? Right now we’re floating by cause much international commerce is done in US dollars, so the demand is high for our currency which helps balance supply/demand. If countries like Iran stop using our currency, the demand for it goes down while the supply continues to rise cause of deficit spending. So now we have all this currency floating around without demand to keep it’s value stable. If this trend continues and most countries begin to deny the US dollar the supply will be in such excess it will have no value at all.
You might think that while imports now become super expensive, why would this effect domestic goods since no will stop using the dollar domestically? Well, with such a strong international economy many raw materials imported, and with all the manufacturing now overseas, those products too become really expensive. So domestic products that rely on imported materials and manufactured parts no suffer higher prices. Wages do go up in proportion with this type of inflation, and eventually we’d fall into another depression. So we must buck this trend.
How do we save the economy, we adopt Ron Paul’s Honest Money Act. This would legalize competing currencies. So now someone could establish a gold/silver backed currency or another currency that can compete. Of course whichever currency has the strongest and most stable value will be adopted by the market. So hypothetically, I could have a currency based on corn (Corn Notes), although this would not be a stable currency and wouldn’t be adopted. The most stable currencies are based on Metals, which gives us four choices Copper, Silver, Gold, and Platinum. Again, we’d let the market decide. You might even see new currencies back by other currencies like a Euro backed currency. In the end we’d end up with a strong currency again and avoid a force transition via another depression.
This video is a much better tool for understanding these concepts
Save our nation from another depression, Vote Ron Paul in 2008
- Alex Merced
Writer of the Blog: Cause of Freedom
Popularity: 2% [?]
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Comment by Ash on 9 December 2007:
I don’t know that I would point to 1870-1914 as a beacon of sound economic policy. The so-called “Gilded Age,” or more accurately, “Robber Baron Era,” where sure, people became enormously wealthy, but most were desperately poor. Additionally, the United States didn’t go on to the gold standard until 1900, prior to which it was silver.
A better period to use might be 1936 to 1971, where we were on the gold standard, and a huge middle class arose, due to a strong social safety net and trade policies that favored American working folks.
As a historical note, Nixon took us off the gold standard in order to drive down the value of the dollar and make it easier to pay for the Vietnam War, which, like the current conflict in Iraq, was paid for on credit. Putting us back on to gold now, with the highest national debt ever not just in dollar terms, but also in percentage of GDP, would be disastrous.
Comment by GoRonGo on 10 December 2007:
As a historical note, Nixon took us off the gold standard in order to drive down the value of the dollar and make it easier to pay for the Vietnam War, which, like the current conflict in Iraq, was paid for on credit. Putting us back on to gold now, with the highest national debt ever not just in dollar terms, but also in percentage of GDP, would be disastrous.
That’s true and that’s why Ron Paul wishes to allow a competing gold/silver backed currency to bring some choice into the market. Over time this currency would naturally replace Federal Reserve Notes. He also wishes to end the global military presence and military intervention where it is not directly tied to national security. Y’know like Vietnam, Korea, Bosnia, Iraq, Afghanistan and soon Iran which were all wars that were never legally declared by Congress and were all vaguely defined wars without clearly defined goals.
Comment by Alex Merced on 10 December 2007:
The Robber Barons occured cause Rockefellar lobbyed to establish the federal reserve, before that things weren’t so bad.
Comment by Noah Bendele on 10 December 2007:
Hey thanks for the post. Just a note:
affect not effect & now not no
You might think that while imports now become super expensive, why would this effect domestic goods since no will stop using the dollar domestically? Well, with such a strong international economy many raw materials imported, and with all the manufacturing now overseas, those products too become really expensive. So domestic products that rely on imported materials and manufactured parts no suffer higher prices. Wages do go up in proportion with this type of inflation, and eventually we’d fall into another depression. So we must buck this trend.
Comment by Ron Holland on 11 December 2007:
Ron Paul – Could He Really Win?
http://www.ronaldholland.com/presidentronpaul.htm
A two part article on how current economic and foreign policy actions outside the political process could elect Ron Paul as President.
What if at noon on January 20, 2009 Ron Paul is sworn in as the 44th President of the United States? First, how could Ron Paul actually win the GOP nomination? Second, could he beat Hillary Clinton and win the Presidency? Finally, what could a Ron Paul Administration accomplish with the powerful special interests allied against him and his agenda controlling the leadership of the Republican and Democrat parties?
Comment by Jacob Himes on 10 May 2008:
Let’s be realistic here. The dollar is not going to be backed by metals anymore. Our dollar and our credit is backed by the promise of continued progress. Our economy is a consumer driven one. The problem is that our (whites)businesses reap the benifits of our (blues)workers to a much larger extent than is needed. The bussiness leaders need to take less if they want to sustain their wealth. If they don’t then the money they have will be worthless once the workers lose interest in working for nothing. I mean really, where do you think this stimulus money is coming from. The top 2% is starting to realize that they took to much from the bottom 98% already.