scootr
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Monetary Digest, Quoted 20 yrs ago
Since August 15, 1971, when President Richard Nixon closed the gold window, the entire world has been on a fiat paper money system. No country’s paper money is redeemable in either gold or silver. History shows that whenever a country moves to a fiat paper currency, eventually politicians print that currency until it becomes worthless, resulting in hyperinflation, which destroys that nation’s economy and impoverishes people who are ignorant of the dangers of paper money.
The consequences are horrible enough when countries go on paper money systems, but when the whole world goes on paper money, we do not know how bad things will get. Truly, we have been in uncharted waters for the last thirty years, and over the last few years, one crisis after another has risen, suggesting that the world’s paper monetary system has been stretched to its limits.
With each crisis, the politicians print more paper money, laying the foundation for future crises. In the days following the terrorist attack on the World Trade Center and the Pentagon, the Federal Reserve “increased liquidity” by $200 billion. And, immediately before the reopening of the New York Stock Exchange the following Monday, the Fed lowered interest rates another half-point. On October 2, the Fed dropped rates still another half-point, the ninth rate cut this year. Most everyone is aware of the Fed’s rate cuts for they are highly publicized, but “liquidity” increases are less known because the media do not make a big deal of them. Money supply indicators measure the amount of money in the system.
Since August 15, 1971, when President Richard Nixon closed the gold window, the entire world has been on a fiat paper money system. No country’s paper money is redeemable in either gold or silver. History shows that whenever a country moves to a fiat paper currency, eventually politicians print that currency until it becomes worthless, resulting in hyperinflation, which destroys that nation’s economy and impoverishes people who are ignorant of the dangers of paper money.
The consequences are horrible enough when countries go on paper money systems, but when the whole world goes on paper money, we do not know how bad things will get. Truly, we have been in uncharted waters for the last thirty years, and over the last few years, one crisis after another has risen, suggesting that the world’s paper monetary system has been stretched to its limits.
With each crisis, the politicians print more paper money, laying the foundation for future crises. In the days following the terrorist attack on the World Trade Center and the Pentagon, the Federal Reserve “increased liquidity” by $200 billion. And, immediately before the reopening of the New York Stock Exchange the following Monday, the Fed lowered interest rates another half-point. On October 2, the Fed dropped rates still another half-point, the ninth rate cut this year. Most everyone is aware of the Fed’s rate cuts for they are highly publicized, but “liquidity” increases are less known because the media do not make a big deal of them. Money supply indicators measure the amount of money in the system.
