by Burke McKay

Created on: June 03, 2008

The dollar used in America, call it the American dollar if you like, has been losing value for almost a hundred years {95 years to be precise}. The reason isn't that the government is printing money it can't back because our government does not print our money. The Federal Reserve prints our money, decides how much to print, and determines how much it will charge the government for the money it prints.

It is an unfortunate truth that far too many Americans think that the Federal Reserve is part of the government, when in fact it is no more governmental than Federal Express. The Fed is 51% owned by several major NYC banks, but those who own the remaining 49% are kept hidden from the general public. The Sixteenth Amendment provided the basis for the establishment of this "central banking system" in 1913 {95 years ago}. This amendment also provided for the graduated income tax we enjoy today, of which every cent goes to pay the interest on the national debt which is owed to the Federal Reserve. "How do we pay the principal?" you ask? Well that is an answer that you should be getting from your congressman/woman and senator.

We've all heard that the reason prices are going up is because of increased economic competition from the rest of the world, a kind of "supply and demand" situation. This is not entirely wrong, but it isn't entirely right either. The "supply and demand" part is right, but not because of the rest of the world. The Fed has turned the money spigot on wide open, lowered the price of the money it produces {prime interest rate}, and has flooded the market with American currency. This time of "easy money" comes at a rather significant cost because the real value of virtually any product doesn't change, but the amount of money we have to shell out for it will.

If we compare the 2008 dollar to the 1913 dollar we would find that today's dollar is worth about 4 cents. Product values haven't changed significantly, but the amount of our lives that has to be invested in work to earn enough to purchase them has. An excellent example that I've heard is: in the Roman Empire a fine toga and sandals would cost about one ounce of gold, today a fine suit and shoes costs about $800 {approximately the cost of an ounce of gold}. So the value of a fine suit and foot wear hasn't changed in almost 2,000 years, but the amount of time that has to be traded for the money to purchase them has.

If it is beginning to sound like the dollar will soon be devalued to the point where

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