The incredible shrinking dollar (and penny too!)

I am worried about our nation’s financial health. You should be too.

Our leaders boast that the recent recession is over (President Obama in his 2011 State of the Union speech, for instance), and we are on the road to recovery. Yet we still have over 13 million officially unemployed. The actual number of adult citizens able to work but not doing so is almost 24 million. By comparison, the number of unemployed at the peak of the Great Depression was just over 11 million, so why am I so underwhelmed?

Then, after assuring Americans that the economy has bounced back, the president strikes fear into all of us with his dire warning that failure to increase the $14.3 trillion dollar debt limit would catastrophically destroy the nation’s economy. If I read him right, our economy would have failed if Communist China, and other nations that hate us, chose not to lend us any more money. So which is it, Mr. President: our economy is stable or it is on the brink of collapse? Any elementary-school student (at least back when I went to public school) could assert that any entity that must borrow to stay afloat is doomed.

Digging deeper into history, I discovered that at the time of the Great Depression, by law, the gold standard required the Federal Reserve notes to have 40 percent gold to back paper currency, thus the expansion of the money supply was limited by the amount of gold held by the Treasury. Today the Fed is no longer restrained by a gold standard. When times get tough, the Treasury Department can simply borrow and print as much new money as it feels is necessary to get us out of any economic crisis the government created and later, in theory, remove excess money from circulation when it is no longer required.

There are three worrisome consequences to this Keynesian economic plan, however. 1) the incentive to work, contribute to society and become self-sufficient is removed from the population when people receive as much on the dole as they do laboring all week, 2) the strength of the dollar as a global currency is diminished as the number of dollars in circulation and our nation’s debt increases, and 3), like a credit card in the hands of a child, the progressive’s game plan creates an insatiable desire for further waste and abuse by Congress rather than responsibly managing the economy.

I worry that a more selfish, insidious plan is in the works to purposely create a majority population dependent on government support, like slaves owned by a plantation owner, thereby assuring that Marxist totalitarian regimes shall henceforth have control of America.

Currency printing costs average 9.6 cents per monetary note. By comparison, the cost to produce a nickel at the U.S. Mint is 9.2 cents. The metal value of today’s nickel is $.06; the real value of a $10,000 Federal Reserve Note — zero. There is nothing but the word of Timothy Geithner that the fiat paper the Bureau of Printing and Engraving produces has any value at all.

Federal Reserve Notes are only redeemable for more of the same colorful paper or coins, nothing else. In the past, fiat currencies printed in the U.S. that were not backed by hard assets like gold or silver ultimately became worthless, be it Confederate dollars or paper issued by the Continental Congress.

Coins are no longer a safe haven either. An older penny (95 percent copper that is intrinsically worth $.026 today), was replaced in 1982 with a 97.5 percent zinc coin worth $.005 when melted down. Other examples of coins minted today with cheap metal include dimes (worth $.02), quarters (worth $.05) and the presidential dollar, which has less than $.07 worth of metal in it).

For individuals, the best defense in uncertain economic times has been tangible assets, gold and silver being the obvious. China, for example, has recently been buying up massive amounts of copper and other useful metals. With today’s inflation, even corn flakes are a better investment than dollars. When times get really tough, liquor and tobacco products are perhaps the best investments based on consumer trends during the last Great Depression.

States and individuals are not allowed to print or mint currency for legal exchange (controlling counterfeiting would be a nightmare). Becoming an expatriate isn’t promising either since most civilized nations of the world are just as bad off economically as we are for the same reasons. Thus, we need to take steps to end the failed economic policies of our own federal government.

Let’s start by demanding a complete physical inventory of the nation’s gold and silver reserves. Annual independent audits, as required by law, mysteriously stopped in 2005. The Federal Reserve, a self-serving, unconstitutional cabal of private bankers that has been destroying our nation’s economy since its inception, must be eliminated and management of our nation’s money supply returned to the U.S. Treasury. We must replace fiscally irresponsible legislators and the president with people who can balance a checkbook.

And finally, for our nation’s long-term survival, the states must demand and pass a balanced-budget amendment before it is too late.

Merlette is a resident of Bigfork.