There is an unending source of gold in the ground. If you don’t think so, just watch the television show GOLD RUSH on Discovery channel and see several mining operations use heavy equipment to search the Yukon for pay grade to sluice, or pan, for it. So, gold pegged to support a currency is a good thing, is it not?
Long, long ago the US currency was backed by gold, then it was backed by a percent of gold, and the percent kelp getting smaller, and after a while it was no longer backed by gold. So, what does it mean to have gold-backed currency in your hand? The last time, we Americans had to surrender our gold to the government for their currency. Could that happen again?
The Federal Reserve Act of 1914 limited the amount of money that could be printed by the U.S. government. All Federal Reserve notes (paper money) had to be backed by 40 percent gold owned by the Federal government. In other words, for every dollar printed, the government needed 40 cents of gold in the bank.
In 1933, Franklin D. Roosevelt was elected president of the United States by promising to end the Great Depression, which had driven the national unemployment rate up to 25% and gutted the economy. He quickly realized, however, that he could not print enough money to pay for his spending program, even by increasing taxes due to the Federal Reserve Act of 1914. So, he outlawed the personal ownership of gold requiring everyone to turn in their gold by May 1, 1933 in exchange for $20.67 per troy ounce of paper money.
Sadly, FDR’s New Deal did not end the Great Depression. Instead, in 1937, the stock market collapsed by 90 percent and unemployment soared. Then, in the 1970s, the U.S. government removed the last remaining restraint on federal government deficits. In 1971 when foreign countries were exchanging dollars for U.S. gold, Nixon stopped the bleeding and took the dollar off the gold standard refusing to honor foreign exchanges. Then in 1977, President Gerald Ford signed a proclamation which legalized gold ownership but did not reestablish gold as a back up to government fiat or the American dollar.
As a result, deficits continued to mount. Today, the U.S. federal deficit is off-the-chart high, which can be triggered if certain individuals or institutions renege on debts that the Federal government has guaranteed. The purchasing power of the U.S. dollar continues to decrease as well.
JFK wanted a return to gold-backed currency, and he was assassinated by our own government. It was tried again in 2001 and the twin towers and disconnected Building Seven in New York were demolished by the same element, with the loss of thousands of lives.
Soon the U.S. currency will once again be backed by gold in the U.S. Treasury. If it hasn’t happened by the time of this post, it will shortly. And what does that mean? One might think you could exchange your gold-backed currency for gold bars at the local bank but try it and see what happens. Aware of the tendency to confiscate gold from U.S. citizens, one can only wonder if another President will do it again.