After the end of WW II, the mighty American dollar ($1.00) was King of the economic universe. Our American dollar was viewed as being 'as good as GOLD'. Gold (and silver) has been the foundation of money systems for most of our monetary history. Foreigners (the Central Banks) were allowed to exchange this American dollar for GOLD at the ratio of $35 dollars for one ounce of pure gold. The viewpoint of currency traders was that the U.S. Dollar was EQUAL to 1/35th of an ounce of gold (therefore as good as gold). This history is key to understanding money and our current situation of international trade.
In August of 1971, America's inflation had risen to unacceptable levels (politically) and foreigners chose to exercise their privilege of exchanging their excess reserve dollars for our gold. America had over 700 million ounces of gold at Fort Knox after WW II. Gradually, however, this hoard of gold (some 70% of the world's supply) was reduced to a mere 272 million ounces in 1971. The supply was dwindling fast and President Nixon got the word from his Treasury Secretary that all our GOLD could disappear totally if the trend continued.
Nixon panicked and announced to the world of finance (on August 15, 1971) that America would no longer honor the exchange of reserve dollars into our gold supply. This ended the historical 'tie' of the American dollar to gold (and simultaneously to anything physical). The new American dollar ($1.00) was now a Fiat unit of nothing (a mere bookkeeping entry). The American dollar was a mere bookkeeping entry (for most purposes). It was viewed as without any material value (other then a subjective value within one's consciousness). This situation changed somewhat in 1975 with the Petro dollar.
Since 1971, the American dollar has been viewed (mostly) as a weighted average of other Fiat Currencies by the International Monetary Fund (an mere mental abstraction of the mind). It acquired some credibility in 1975 when our dollar was psychologically 'tied' to OPEC OIL and made the pricing digit for oil (internationally). This so-called Petro Dollar saved America to some extent as traders viewed our dollar as more than an abstraction of the mind. It was viewed as 'tied' to oil as long as OPEC accepted this arrangement and forced other nations to buy oil with the American dollar.
The Nixon decision on August 15, 1971, changed our mighty American dollar from an equivalent to 1/35th ounce of gold to a unit of nothing (in reality). Our 'nothing' dollar was saved psychologically (as noted above) when it was 'tied' to oil (1975). Kissinger arranged a deal with Saudi Arabia to PRICE oil exclusively in the American dollar. This arrangement (with Saudi Arabia and OPEC) continued until recently (2022) when this Petro dollar deal was broken by Saudi Arabia. Today, oil is PRICED in alternative currencies and our dollar is being rejected by many nations (the BRICS are an example).
So as I write this missive, we can view the American dollar ($1.00) as mostly a 'bookkeeping entry' with no substance in material reality. I call it a mere 'unit' of our consciousness (nothing). It's a digit in cyberspace (our computer screen) for distribution purposes. This digit ($1.00) is now created by our Central Bank (the Fed) with the click of a computer key. Creation is via a DECISION of this Central Bank and their administrators. QE (called quantitative easing) is an example of digit creation by Fiat (a decision of the Fed administrators). I call this procedure 'official' counterfeiting!
Since 2008, trillions of dollar digits ($$$$$$$$$$$$) have been created out-of-nothing (the mere consciousness of our Fed administrators). The dollars created get recorded as 'bookkeeping entries' in our ledgers of finance. What a shame on the character of America now that our dollar ($1.00) has become a unit of nothing (a mere abstraction within the human mind). America trades with a 'bookkeeping entry' (a mere symbol) for goods and services (internationally). China accumulates these 'bookkeeping' entries as does Japan, Germany, Vietnam, South Korea, England, and a host of international nations.
America enters these dollar digits on their bookkeeping ledgers so as to record our DEBT...which can never be paid back. Our debt accumulates as new bookkeeping entries (numbers) and get added to the past accumulations. Today, America's debt grows exponentially and our leaders ignore the consequences of their behavior/thinking. Our Fed creates digits via the computer (called QE) and ignores that this is technically 'counterfeiting' of our dollar. Official 'counterfeiting' is ignored by our Congress and the media. The American people (the public) are mostly ignorant of all these shenanigans and criminal decisions.
Our world system of finance is crumbling and America is MOSTLY the culprit. America dropped gold from backing our dollar (in 1971) and allowed a mere 'abstraction' of the mind to emerge as international money. The cover for this abstraction was oil from 1975 to 2022. Today, there is NO cover and our politicians (Biden, et al) spend mere digits (mental abstractions) for our purchases from foreign nations. America's trade deficit (negative since 1976) was grown to over $1 trillion (annually). There is no solution to this situation as Americans have become dependent on foreign goods and services. America is now technically bankrupt and few seem to comprehend. See the evidence here:
www.usdebtclock.org
It's shameful to expose this corruption within finance to the public. But my viewpoint is that America needs to KNOW this history. Can we continue this charade indefinitely? Can our Fed cover-up this criminal behavior indefinitely? Can Biden and his Treasury Secretary, Janet Yellen, cover-up this history so as to continue the CHARADE? I don't think this is possible given our interconnected global communication system. Russia is now aware of this charade. China is aware. Saudi Arabia is aware. Brazil is aware. A growing body of nations are BECOMING aware of America's criminal behavior (on issues of finance).
At some point, our politicians will recognize that this GAME of money must END. The American public will also get educated gradually on these issues. America now has a mere 'BOOKKEEPING' entry for their currency unit. The unit is a 'name', 'number', and 'symbol'. See it here: $1.00. What is a 'symbol' derived from the human MIND? Is it real money? Is it a viable unit of VALUE for international trade? Can our Fed cover-up their money shenanigans indefinitely? Can Biden? Can Janet Yellen? We can watch and wait! It's a SHAMEFUL system IMO!
America's dollar was a 'thing' of nature until Nixon closed the gold window on August 15, 1971. Today, our dollar is a mental abstraction and gets recorded as a 'bookkeeping entry'...our public debt! It's shameful that so few citizens understand this history!Have a great day! I am: Donald B. Swenson, Economist/Philosopher, donaldswenson.blogspot.com.
http://kingdomecon.wordpress.com
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