Learn Liberty VIDEO of the Week: "Gold vs. The Full Faith & Credit of the U.S. Government"

This #LearnLibertyClassic takes a look what it means for money be backed by gold instead of the more abstract "full faith and credit of the U.S. government."
Posted by Learn Liberty on Friday, January 15, 2016

The U.S. Dollar Has Lost -35% Of It's Purchasing Power Since 2002!...

The Dollar In 1970 Is Only Worth 18 Cents Today...

Chart of The Day: Currency Debasement Is as Old as The Roman Empire...

People who focus on the decline and fall of the dollar are really into passing this chart around.

It shows, basically, that currency debasement is as old as currency itself, as the Romans gradually chipped away at the amount of silver in their coins.

The further lesson, from history, apparently, is that in addition to currency debasement being a characteristic of great empires, total collapse is, too.

Let's hope not.


Chart and Commentary Courtesy of BusinessInsider.com

U.S. Dollar Purchasing Power Drops -20% in the Past 10 Years...

U.S Dollar - Safe Haven No More?

For years, whenever significant political or financial turmoil reared its head anywhere on the globe, investors would turn to the U.S. dollar as a safe haven.

Yet as the chaos in North Africa has grown over the past month, investors have largely shunned the dollar and sought shelter elsewhere. They have turned to other traditional islands of stability, buying Japanese yen and the Swiss franc.

What has especially raised eyebrows has been the move by investors to buy euros, a currency traditionally seen as a riskier prospect than the dollar, especially with the euro zone's debt problems still largely unresolved.

This has sparked a debate over whether the dollar has lost its safe-haven status.

"Over the last 20 years, people have always moved into the dollar on any sort of uncertainty in the global economic space, but what we've seen over the past two weeks is actually a terrific move out of the dollar," says Douglas Borthwick, a managing director at Faros Trading in Stamford, CT... 

So for now, the argument goes, there are better safe havens available to investors than the U.S. currency.

Even on individual days when events have sent a scare through the financial markets, the dollar hasn't benefited.

On January 25, when the protests in Egypt first flared up, the euro advanced more than two cents to almost $1.39.

This contrasts with other episodes of flight-to-safety currency buying in the past. During the 2008 global financial crisis, the dollar rose by roughly +24%.

Analysts at BCA Research also point out that some investors also are looking to gold as a more appealing safe-haven investment. "We would agree with this assessment," the analysts wrote.

Gold rose +5.7% in February, its biggest monthly gain since April 2010. With investors increasingly wary of the ability of the U.S. to solve its fiscal problems and the Fed perceived to be "printing dollars" as part of its quantitative-easing strategy to support the economy, there's less confidence that the U.S. dollar is "safe" in the sense, Mr. Borthwick says.

"It's the knee-jerk reaction that matters," he said. "Nowadays the knee-jerk reaction is buy euros and not to buy dollars. The mindset of buying euros is a complete switch."

Source: Wall Street Journal

How the U.S. Dollar Has Plunged vs Foreign Currencies (FX) in the Past 10 Years

Back in 1999…

An average house cost $129,000. Now it’s $180,000 (+40% increase)...and that’s after the real estate market crashed. 

 A gallon of gas was $1.15 and now it’s over double that (actually +143% higher) at $2.80!

A loaf of bread was $1.26 and now it’s $2.39 (+90% higher).

A dozen eggs cost 88 cents, now $1.49 (+69% higher).

A postage stamp was 32 cents and now its 44 cents (+38% higher).

What can we thank for the higher prices over the last decade? As strange as it sounds in the current deflationary environment, inflation stole your dollar’s value over the last 10 years.

The Dollar’s Purchasing Has Lost 21% of Its Purchasing Power During This Decade

The reality is that the costs of EVERYTHING you touch are going up astronomically and the dollars in your bank account buy less and less all the time.

What’s worse is that while the costs of goods are on the rise again…unemployment is hitting its highest levels in 26 years. That means that companies can’t raise salaries to keep up with the ever-rising cost of living.