What is your dollar worth?
Prescient question, no? Have you ever actually wondered what the worth of our money really is? At one point, not so long ago (about 200 years) a dollar used to be worth it's weight in gold - literally - about 17g of gold or between 371 and 416 grains of silver. We of course don't use dollars, we use Federal Reserve Notes and if you don't believe me then pull out a "dollar" from your pocket and examine the text on top. Yes, it also mentions the world dollar, but only because the Federal Reserve deemed it so - and the once equivalent 17g of gold is long gone. Although it is no longer backed by precious metal it is backed by the full faith and credit of the US Government, a hefty promise indeed. In more simple terms, it simply means that the Federal Reserve Notes are backed by you and other American's ability to produce and pay taxes.
The problem arises when the full faith and credit of an institution is in question and regrettably the time has come. I am not trying to sound alarmist, but if money makes the world go round and suddenly something happens such that this "money" is no longer valuable, then the world stops. Yes?
Below I present a picture, courtesy of ZeroHedge and it would behoove you to study this simple picture for a few minutes. It is a graphical representation of what the Federal Reserve is currently holding and how many federal reserve notes are currently in circulation.
What do you see? The right numbers represent mortgage backed securities and Agency paper or in more simple terms, pieces of paper representing the value of mortgages in the United States originating from Fannie Mae, Freddie Mac and the FHA. On the left is the circulation of FRNs, the total monetary base (depends on one's definition) and the "reserves" of the banks that comprise the Federal Reserve system.
We can deduce the following from this picture.
Total money in circulation: 920 billion
Total "value" of MBS/Agency paper: 997 billion
Total amount of reserves in banks: Over 1.06 trillion! (Required minimum reserves: 60 billion)
Therefore we can conclude.
Virtually every dollar that is out in circulation is backed by the "full faith and credit" of rapidly dwindling mortgage backed securities/FHA issued agency paper! Let that sink in for a moment. Our money is backed by mortgages of houses whose current value only exists because the Federal Reserve wishes it to be and whose real free-market value is considerably lower because an item's value can only be measured by what someone is willing to pay for it. We have a massive supply of houses and an equal bigger shortage of people able to buy these houses, yet due to the ILLEGAL actions of the Federal Reserve these houses are now tied to the only medium of exchange that we know of; the Federal Reserve Note. We can also conclude that the value of the dollar has dropped (as can be seen my the monetary base) and the banks are NOT lending.
Needless to say ladies and gentlemen this is a very precarious situation and this is putting it lightly. Not only has the Fed overstepped it's original charter and purchased something it was never allowed to purchase, but has compromised the integrity of our currency! We are currently in unchartered territory and while history always repeats itself, there is absolutely no precedent in American history for this type of situation.
The only solution is to immediately provide Americans an ability to buy/sell goods and services via another medium of exchange, whether it be gold/silver or another commodity is not relevant. A society cannot function when the value of it's currency can be modified at will and systematically destroyed by a quasi-government institution. Our constitution protected us from this kind of peril by explicitly prohibiting the use of paper money and preventing Congress from monopolizing the creation of currency. We need to establish a free market banking system and free market commodity money creation with Congress ensuring correct weights and measures or we will plunge into chaos. Oh wait...
The problem arises when the full faith and credit of an institution is in question and regrettably the time has come. I am not trying to sound alarmist, but if money makes the world go round and suddenly something happens such that this "money" is no longer valuable, then the world stops. Yes?
Below I present a picture, courtesy of ZeroHedge and it would behoove you to study this simple picture for a few minutes. It is a graphical representation of what the Federal Reserve is currently holding and how many federal reserve notes are currently in circulation.
What do you see? The right numbers represent mortgage backed securities and Agency paper or in more simple terms, pieces of paper representing the value of mortgages in the United States originating from Fannie Mae, Freddie Mac and the FHA. On the left is the circulation of FRNs, the total monetary base (depends on one's definition) and the "reserves" of the banks that comprise the Federal Reserve system.
We can deduce the following from this picture.
Total money in circulation: 920 billion
Total "value" of MBS/Agency paper: 997 billion
Total amount of reserves in banks: Over 1.06 trillion! (Required minimum reserves: 60 billion)
Therefore we can conclude.
Virtually every dollar that is out in circulation is backed by the "full faith and credit" of rapidly dwindling mortgage backed securities/FHA issued agency paper! Let that sink in for a moment. Our money is backed by mortgages of houses whose current value only exists because the Federal Reserve wishes it to be and whose real free-market value is considerably lower because an item's value can only be measured by what someone is willing to pay for it. We have a massive supply of houses and an equal bigger shortage of people able to buy these houses, yet due to the ILLEGAL actions of the Federal Reserve these houses are now tied to the only medium of exchange that we know of; the Federal Reserve Note. We can also conclude that the value of the dollar has dropped (as can be seen my the monetary base) and the banks are NOT lending.
Needless to say ladies and gentlemen this is a very precarious situation and this is putting it lightly. Not only has the Fed overstepped it's original charter and purchased something it was never allowed to purchase, but has compromised the integrity of our currency! We are currently in unchartered territory and while history always repeats itself, there is absolutely no precedent in American history for this type of situation.
The only solution is to immediately provide Americans an ability to buy/sell goods and services via another medium of exchange, whether it be gold/silver or another commodity is not relevant. A society cannot function when the value of it's currency can be modified at will and systematically destroyed by a quasi-government institution. Our constitution protected us from this kind of peril by explicitly prohibiting the use of paper money and preventing Congress from monopolizing the creation of currency. We need to establish a free market banking system and free market commodity money creation with Congress ensuring correct weights and measures or we will plunge into chaos. Oh wait...
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