Money out of thin air

Education has been traditionally been touted as a valuable and necessary thing for a society to invest in. After watching a documentary on TV entitled, “The End of the Road,” I felt better educated than I had been about many areas of economics, event the hot topic item of the “fiscal cliff.”

It seems in 1971, Richard Nixon allowed legislation that no longer required the dollar to be backed up by gold or silver. Since the rest of the world was using the dollar as a substitute for gold (an idea instigated in 1944 by the World Bank) this action suddenly made all the world’s currencies become what is called “fiat” currency, which means paper money (inherently worthless) backed up solely by a promise of its being worth anything, instead of actually representing real money (gold or silver). With this concept government can create as much money as it can print, money out of thin air, to spend on whatever it wants. This is probably why Nixon initiated the 1971 action, to keep funding the unpopular Vietnam War.

Historically every country that has ever used a fiat currency system has failed, ending in catastrophic inflation and total economic collapse. And we see the crisis beginning in Greece, Spain and actually the entire globe.

In our democracy, Congress has been given the “power of the purse” by the Constitution. With a gold-backed economic system, the “purse strings” are held by the people. Government must ask its citizens for money, by raising taxes or shifting priorities around. This often leads to shorter terms when elections roll around.

One of Ron Paul’s platforms was to abolish the Fed and go back on the gold standard. Although he did have many supporters, not enough people got on board to be a significant voice for one reason or the other. One large one, no doubt, being the quality and amount of education of the voters.

It is no surprise that education is a prime target for the chopping block of our governments’ excessive spending.

Fred Dawson

Munday