Thursday, April 04, 2013

Honey, Forget The Kids, Who Shrunk The Dollar? Part 1 Of A 2 Part Series


A scene you might see today in any American household.

Wife: Billy needs another pair of sneakers. The ones I got him last month are already worn out.

Husband: How much is that going to cost us?

Wife: I can probably find cheap ones on sale for $25.00.

Husband: Hell, can’t you do better than that? I have to put my car in the shop this week.

Wife: That’s about the best I can do. He needs shoes. Buying cheap shoes doesn’t fix anything anyway, they’ll wear out quick again and we’ll have to buy more in a month or so.

Husband: How much are good shoes, shoes that will last?

Wife: $100-$125, easy.

Husband: HOLY $%^&!!! That’s INSANE!

Wife: You have to give me some money today anyway, the baby is out of diapers and formula.

Husband: What, do you think I’m an ATM machine? I’m working two jobs already! Why aren’t you

buying stuff on sale at the supermarket instead of name brands all the time.

Wife: I hate those cheap brands, they’re horrible. Name brands are better. Cheap brands are useless and you end up wasting more money on stuff that gets used up fast or doesn’t work, just like with the shoes.

Husband: Then you’ll have to do better at cutting down on household expenses, I can’t pay any more than I am. I don’t have it. We don’t have to eat steak twice a week you know.

Wife: Why do I always have to find ways to stretch the dollar? You’re always putting the blame on me.Why don’t you get a better paying job. I’m tired of living like this.

Husband: I’m doing the best I can. Gas keeps going up. Taxes and tolls and everything else keep rising. We have to do something or we’ll be out on the street. Don’t use the air conditioner all day for example, you’re running up the bill.

Wife: It’s too hot for the baby. He cries a lot when he is uncomfortable and extreme temperatures are dangerous for him.

Husband: I guess you’re right but I don’t know what else to do. There’s just not enough money anymore. Something has to give somewhere?

Who in this economy isn’t tired of being broke? This scene is all too common. How many families are busting a hump just to make ends meet, and losing all of their savings in the process. That’s not even the worst of it. Unemployment is at 8%, foreclosures are at an all time high, and while the government may say that inflation is only 2%, it sure seems a lot higher when you’re at the gas pump or buying a loaf of bread. How many people do you know that are out of work or struggling to find a job? How many foreclosures do you see driving down the street?

Let’s face it, the economy is in trouble and it has been since the housing bubble burst in 2008, but in reality, the American economy has been headed for trouble for quite some time. The American Dream has become the daily nightmare for far too many people. In this article, part 1 of a 2 part series, we will examine the reasons that the American dollar, and most other currencies around the world for that matter, seem to be shrinking. Instead of seeing and hearing about tales of fortune these days, look around and all you see and hear are tales of misfortune. Statements like the following are all too common:

“If only I had a few more dollars left after I pay the bills.”

“I can’t seem to make the dollar stretch enough to make ends meet.”

“The dollar just doesn’t seem to go as far as it used to.”

Sadly, all of this is too true. How did we get this way? What happened to the great American industrial economy that used to lead the world in production, that has now led the world into a seemingly endless recession? Did we get lazy? Are we becoming obsolete in a global economy?

Not exactly.

Perhaps it is not us, the American populace, who are broke. Perhaps it is the Almighty American Dollar that is broken, destroyed by an ongoing fiscal policy that has robbed from the present to pay past debt for many decades at the expense of the future, and that future has caught up to us.

The American economy was originally built on the trading of hard commodities for goods and services. Pelts and livestock and vegetables and dairy were traded for weapons and tools. Hard commodities like gold and silver, as has transpired around the globe over the ages, were traded as currency for doctor’s services and goods. In the case of America, specifically thanks to the gold boom in California in the 1840’s and 1850’s, gold became the main trading asset utilized by citizens and the public. The gold standard became the norm. Gold in the United States was money. Banks traded promissory notes for gold, allowing people to safely park their gold in banks. A dollar’s worth of gold (an ounce) equaled a $1 promissory note. Bank customers could gain interest by sitting their gold in banks, and could redeem these notes for their gold at any time. This exchange was the foundation of the cash that we use today. The note, or “cash,” was a contract, a bond that entitled the holder to redeem their commodity at any time.

America hummed along for many years, steadily growing at a healthy rate. Trade was good. Production was fantastic. But then this fractional nation, made of independent states united as one union, came to a crossroads. The federal government wanted, or felt it required, more power to unionize the states so that everyone in the country maintained equal rights and laws. Slavery became an issue between the North and South. States rights became the mandate in the South, and federal power became the desire in the North, causing great friction in Congress and in the country. This dispute grew until, finally, the Civil War began in 1861. In part 2 of this 2 part series, we will examine how Lincoln and the Civil War started the economy on its downward spiral, and how many Administrations since have furthered that spiral.

Posted by 12mimi22 on 04/04 at 09:14 PM | Permalink
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