American Dollar v. John Law's Doomers & Gloomers

Thomas Jefferson is reputed to have said that, “If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered.”

Jim Cook of InvestmentRarities.com, who, in his essay, "Sweeping Towards Destruction", quotes George Washington warning in a letter, "Paper money will…ruin commerce, oppress the honest and open the door to every species of fraud and injustice."

According to Larry Beane in an essay "Dishonest Scales" found at LewRockwell.com, "From 1790-1913, the United States dollar was constant. It was tied to gold and/or silver. A dollar bought pretty much the same thing for Thomas Jefferson as it did for Teddy Roosevelt. A careful look at inflation rates from 1790-1913 shows some minor fluctuation, but for the most part, a 1913 dollar was the same as an 1850 dollar, and was the same as a 1790 dollar."

Didn't the Flying Money of China, John Law's experiment in France, Wiemar Republic, etc...show unequivocally that no matter what century, what empire, or what race of people, the privilege of debauching currency is enjoyed by all.?

Today's gold bugs, doomsayers, and the hide-everything-under-a-mattress crowd are a kind of strange fraternity of "Who's Who?".

They have predicted the hyper-inflation, depression, and demise of America for decades. Of course, the reasons are plenty. Not the least of which include the creation of the 1913 Federal Reserve, FDR's outright theft of the people's gold in 1933, Nixon's abandonment of the gold standard in 1971, imbalanced budget deficits in 31 of the last 34 years, and a national debt measuring in unpayable trillions of dollars--this is all true and real.

The George Soros', Jim Rogers, Peter Shiffs', Ravi Batras', etc...have bet against America...and they yet, may be right, one day.

Fiat currency always has to slouch toward destruction-right? But the dollar in the 20th century does reveal another side to the coin--

Would any American trade the luxuries of 21st century living for a 1200 square foot home, no air-conditioning, few restaurants, and an outhouse for a restroom in the 1920's? 1930's? 1940's? 1950's? etc... I think not. Since WWI and Bretton Woods, the dollar has eroded in value. Yet, we are precariously better off materially than in days of old.

Many doomers pontificate about the impoverished and helpless state American citizens endure. Don't buy it. Consider the following about Americans:

Are not more Americans attending college than ever before? Are not more Americans at the lower end of the socioeconomic scale better off than ever before? Are not more Americans accumulating wealth than ever before? Employment is near record highs. Record numbers of new businesses, sole proprietorships, and corporations are being introduced each year in America. With 86% of all Americans having health insurance, and all Americans having state-of-the-art medicinal treatment at hospitals and clinics every day of the year, can any reasonable person argue that America of yesterday is better off than today? Do not record number of Americans travel and have leisure time like never before? Yet, the dollar is only worth 1/20th of what King Dollar was worth seventy years ago.

So as "King Dollar" slides to peasant status, wealth accumulation, record home ownership, near record employment rates, record entrepreneurial opportunities, unprecedented access to capital, hospitalization, health care, mobility, leisure time, etc...all point to Americans living more like kings, not peasants. Does such living speak of perfection for all citizens? No. Americans do appear to eat more, have more, and live longer than ever before. Wouldn't King George III of England would salivate to have had the standard of living average Americans enjoy today.

Today's poor Americans of all persuasions are living as well as the average American family did in the mid-1960's. Candidly speaking, the least affluent Americans live better than King George III because the dollar has been available for exchange, lending, and investing in a land where private property has allowed the masses of people to accumulate wealth.

So bash Rothschild, Morgan, and Goldman for creating the Fed. Curse Arthur Burns, Greenspan, and Ben Bernanke for the printing of money that thieves us all. Throw rocks at LBJ, liberals, and the wild spending Republicans of the last eight years have engaged in. They have unconscionably spent the next generation's money. You can give me a rock to throw also. But it doesn't change the facts that follow.

More than 97% of American homeowners are not behind on payments or in foreclosure. The bulk of homeowners still have positive equity in their homes. Most Americans believe that tomorrow will be better than today. Most Americans have a choice of careers and jobs that are the envy of the world. Most Americans have their choice of physicians...Steak & Ale or Chili's...Delta or American Airlines...twinkies or ding dongs.

Oh-by the way, did we mention all of this as the dollar is worth only a fraction of its value in previous decades?

Alas-it also should be noted that not a generation of Americans since the Great Depression is worse off than any previous generation, even though traveling to Europe is extremely expensive today. Then again, maybe its high time the Europeans to do their part and come here instead since they receive several weeks of government mandated holidays each year.

If anyone stores their dollar away in a bank vault, they deserve to have trouble years later. The lesson of currency is that paper money is not meant to be a "BFF" (best friends forever) locket that you tuck away holding warm and fuzzy feelings about it for some rainy day. Use it or lose it is the motto.

However, for those who embrace individual liberty, ingenuity, and discipline, which are the high traditions of American values, dollars are tools to be used today to create wealth. Americans use dollars to save, borrow, and invest in ventures of wealth creation even while the currency slouches toward debasement.

Will there be a Panic of 1837, Boom and Bust of 1873, Panic of 1907, Depression of 1929, Crash of 1987, Credit Debt Obligation Crisis of 2008 again? Absolutely. What can we expect with imperfect government officials priming the pump? In spite of the CDO crisis, housing crisis, and market jitters reverberating around the globe, Americans still work, eat, worship, and enjoy life like no Roman, Spaniard, Mongol, or Englishman ever had with dollar sinking and all.

But statistics reveal that Americans under King Dollar rule are by far better off today than in days of our parents or grandparents when speaking of standard of living.

Doomers and gloomers rarely give credit in the modern finance system for things that have gone right.

Had there been no fractional reserve system pumping out more dollars in loans than there was gold or silver toward new ideas, free enterprise, and toward the general engagement of commerce, then general productivity would have suffered. Progress would have stifled. Employments rates would be much higher (see Europe). Wealth creation for the masses wouldn't be available.

The falling dollar since Dexter White and Keynes at Bretton Woods in 1945, has produced the greatest standard of living ever known to mankind.

On the day that the dollar goes the way of the Sterling, we should all toast its greatness. Imperfect men have, indeed, engineered the most remarkable economic growth during the twentieth century ever seen. In centuries to come, the dollar, the Fed, and elected officials will be remembered involved in a time when Americans prospered, invented, and created mass wealth like no people ever before.