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Would you like to see what has been happening to our money since the Federal Reserve Act of 1913 was passed? For a graphic illustration of just how severely the central bank of the United States has crippled the dollar check out the Inflation Calculator.

Here’s a great example. Let’s say we start off with $20.00 in 1819, ninety-four years before the Federal Reserve was created. We then purchase some goods with that money. Now fast forward to that fateful year of 1913 and we see that those same goods could be purchased for only $12.91. Fancy that! Prices actually went DOWN in the ninety-four years leading up to the passage of the Federal Reserve Act. Our money was actually worth more as the years passed.

Now let’s take a look at what’s happened to the value of our money in the ninety-four years since 1913. Again we’ll begin with $20. And here’s where the extent of the damage wrought by the Fed’s years of monetary meddling becomes clear. The goods we could purchase with $20.00 in 1913 would cost us $424.60 in 2007. Our money has lost almost 96% of its value!

Now, everyone seems to understand how counterproductive monopolies can be in the business world. It’s not a particularly difficult concept to grasp. If only business “A” is allowed to supply everything we need to make our daily lives more bearable, we know that we can expect to pay exorbitant prices for those supplies. Add a few more businesses in to the mix to sell the same products and directly compete with business “A” and we see prices fall as each business attempts to lure customers away from the competition. Well, in monetary terms we have been living with a monopoly since 1913, when all of the private banks were cartelized. As the late Austrian economist and hero of libertarianism Murray Rothbard put it :

the Federal Reserve and other central banking systems act as giant government creators and enforcers of a banking cartel; the Fed bails out banks in trouble, and it centralizes and coordinates the banking system so that all the banks, whether the Chase Manhattan, or the Rothbard or Rockwell banks, can inflate together. Under free banking, one bank expanding beyond its fellows was in danger of imminent bankruptcy. Now, under the Fed, all banks can expand together and proportionately.

Furthermore:

In modern central banking, the Central Bank is granted the monopoly of the issue of bank notes (originally written or printed warehouse receipts as opposed to the intangible receipts of bank deposits), which are now identical to the government’s paper money and therefore the monetary “standard” in the country.

So we are left with NO competition. But what if we had competing currencies? Well, it’s not surprising that the only politician who understands how beneficial this situation would be is Ron Paul. Actually, there probably are other politicians who understand it. Unfortunately, only Ron Paul cares enough about preserving peoples’ wealth to say that in order to preserve that wealth, the people, not powerful central bankers must have the freedom to make the monetary decisions that will affect their lives. On February 13, 2008, in the U.S. House of Representatives, Congressman Paul had this to say about the currency issue:

“Madam Speaker, allowing for competing currencies will allow market participants to choose a currency that suits their needs, rather than the needs of the government. The prospect of American citizens turning away from the dollar towards alternate currencies will provide the necessary impetus to the US government to regain control of the dollar and halt its downward spiral. Restoring soundness to the dollar will remove the government’s ability and incentive to inflate the currency, and keep us from launching unconstitutional wars that burden our economy to excess. With a sound currency, everyone is better off, not just those who control the monetary system. I urge my colleagues to consider the redevelopment of a system of competing currencies.”

And just consider this. How free are we in this wonderful “free country” of ours when our money is controlled not by us, but by our government and its central bank?

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One Comment

  1. We are living in economic bondage. The central bankers have us under their boot. The negative savings rate in this country coupled with the plummeting dollar value will drive us into another depression. This is by design and the goal is to force the passage of the NAU. When our “leaders” tell us it is the only way to economic prosperity, Americans will willingly go to the slaughterhouse. There will be dark days ahead my friend.


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