It is not gas and food and many other items which are increasing in price, it is the dollar that we use to pay for these that is decreasing in value. Although the Treasury and the Federal Reserve claim that they are working to keep the dollar strong, there is a strong incentive to devalue the dollar because of our debt. The facts show that the dollar has indeed been devalued.
Federal Reserve Notes once said “redeemable in lawful money.” During the FDR administration, gold was confiscated by the government. There has been no silver content in United States coinage since 1965. U.S. gold was no longer sold to other nations after 1971. As of February 2011, it costs about 2.4 cents to mint a penny.
The printing of dollars is necessary to replace worn out dollars and to keep up with growth. Printing less than necessary causes deflation; printing more than necessary causes inflation. The Federal Reserve has been printing more dollars than necessary in order to buy Treasury Notes. Wall Street loves “QE” because they are set up to handle the changes and benefit the most from the “stimulus.” Other nations have been reluctant to buy U.S. debt. Those that trade with us have a vested interest in keeping the U.S. economy afloat - especially China (exports about $130B/yr to U.S.).
The dollar is strong currently – relative to other currencies - because many of our trading partners are in recession (shrinking economies) or have massive debt. Many nations want a new reserve currency like the IMF's Special Drawing Rights (SDR) based on 5 currencies (dollar, pound, euro, yen, yuan). The U.S. economy will collapse when the dollar is no longer the reserve currency. Many – Ron Paul in particular – want to have our dollars backed by gold again. This restrains the printing of money. Inflation works as a tax and hurts the poor and elderly the most.
It is not possible for the current leadership – Democrat or Republican – to pay off our massive debt ($16 Trillion in national debt and another $115 Trillion in unfunded promises). You must run a surplus in order to pay off debt. There is no prospect from either party to do that. Medicare will be bankrupt in less than ten years, and Social Security will be bankrupt soon after that. The “takers” will not allow politicians to fix this. They will vote against anyone who tries. Over 40,000,000 in the U.S. have student loans totaling over $1 Trillion. They will vote against anyone who tries to raise their costs and for anyone who forgives their debt.
Many believe that the federal government can fix all of our problems because they have done so in the past. The facts are that “trust funds” have been raided and the currency devalued to “fix” these problems in the past. Now the trust funds are empty, and borrowing (kicking the can down the road) is no longer an option. No one will loan us money. Reagan told us that “government is NOT the solution, it is the problem.”
The United States is too rich a country to die. We will go the way of Mexico in the 1990s: the old dollars will be exchanged for new dollars in a 1000:1 ratio. If you have $1 Million in savings, then you will get only $1,000. If you got $2,000/month from Social Security, then you will get only $1,000/month or less due to bankruptcy. Doctors will not see Medicare patients – only those with silver or gold or SDRs.
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