They're Messing With the Value of Your Dollar

AmericanMonetaryAssociation.orgAs our nation on the verge of possibly historic hyperinflation, it’s easy to flip on the television and pay no heed to knee-jerk reactionaries like those at the American Monetary Association who are always yapping away about the how the inflation boogey man is going to get you. Sometimes our logical interpretation of history compared to current events gets us looped into the same group as the UFO, crop circles, and Bigfoot crowd. Maybe thinking about runaway inflation makes your brain hurt, or you’re one of the unfortunates who have fallen for Helicopter Ben Bernanke’s assessment that uncontrolled currency creation is a legitimate economic tool.

Whether you choose to accept the reality or not, inflation has been with us in a pretty serious way for a while now, and it’s not leaving any time soon. The incremental rise over time of prices is something most of us accept as a fact of life, but there’s a reason prices rise and dollars devalue, and it has nothing to do with the currency fairy.

Instead, it has to do with this. President Nixon took our nation off the gold standard about 40 years ago. Prior to that, we had a system in which an amount of gold was kept in reserve in federal banks equal to the amount of money in circulation. Theoretically, you could walk up to one of those banks and trade in your paper money for the same amount of gold. But coming off the gold standard was like removing the brakes from your car. It gave the Federal Reserve license to print money with no thought as to how much might begin to have a deleterious effect on the economy. Every problem can’t be solved by throwing more cash at it. Sometimes you have to actually fix the problem.

That’s where we’re at now. With inflation humming along at a nice clip that is much higher than the government will admit to, you have to ask if you’re ready for a $10 cup of coffee, $8 gallon of gas, or $28 gallon milk? If you are, don’t worry, it’s coming. If not, it might be time to put economic and political leaders in place who have not had their spines surgically removed.

The American Monetary Association Team

Flickr / quaziefoto

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