Understanding the gravity of the United States' financial situation requires tracing the history of the dollar, or Greenback as it was known during the Civil War. The term ""greenback"" refers to legal tender issued by the United States during the American Civil War that was printed in green on one side. Currency was backed up by gold at the time, but when the Civil War broke out, the demand for more currency exceeded the United States' gold reserves. President Lincoln's issuance of the Greenback based the greenback's backing solely on the credibility of the United States Government. Just like it is now. Those Greenbacks were largely responsible for funding the Civil War and, by extension, the first industrial revolution.
Today, our faltering US dollar is perilously close to losing its status as the world's reserve currency. The main reason is that our currency is still solely backed by our government's credibility. The Federal Reserve continues to print new """"Greenbacks"""" and lend the money to the US government at interest. The interest is what is enriching Wall Street and the Federal Reserve at the expense of the US economy. Consider the Fed's Quantitative Easing following the 2008 financial disaster. All of this has done is enrich the power brokers while Main Street remains in financial distress.
When Lincoln took office, he knew that the North's resources would be crucial in determining the outcome of the war. Lincoln also recognized the significance of raising sufficient funds to effectively carry out the war effort. With this in mind, Lincoln nominated Salmon P. Chase to be Secretary of the Treasury the day after his inauguration. Lincoln gave Secretary Chase sole authority over all financial matters for the country. Chase, like most people at the time, underestimated the War's severity in terms of duration and cost.
Faced with war expenses, the Lincoln Administration sought loans from New York bankers, the majority of whom were fronts for or connected to European bankers. Given the extremely high interest rates of 24 to 36 percent, President Lincoln refused to accept the loan terms and called for alternative solutions. Colonel Edmund D. Taylor of Illinois proposed that the United States issue its own currency. ""Just get Congress to pass a bill authorizing the printing of full legal tender treasury notes and pay your soldiers with them and go ahead and win your war with them,"" Taylor is quoted as saying. If you make them full legal tender, they will have full government sanction and be just as good as any money."" The Constitution expressly grants Congress, through the Treasury Department, the authority to print legal tender. We must also remember that this was during a time of war, and the Federal Reserve did not exist until 1913.
The idea of printing Greenbacks based on the credibility of the government was not Lincoln's original idea, but with mounting pressure in Congress to accept the plan, the President was quick to endorse it. The government could either print its own money or lead the country into indebtedness to European banks. Congress passed the first Legal Tender Act on February 25, 1862, authorizing the printing of $150 million in Treasury notes. Green ink was used on only one side. The bills were quickly dubbed """"greenbacks"""". These US Notes, also known as """"greenbacks,"""" were receipts for labor and goods delivered to the US. They could be exchanged in the community for equivalent goods or services. This money was used by the union to keep the economy stable and to help pay for the war. There are at least two kinds of notes known as greenbacks. They were known as United States Notes and Demand Notes.
What Abraham Lincoln accomplished was to demonstrate that the United States government, rather than the major banks, could issue its own currency in order to fund the Civil War. The Greenback demonstrated that Lincoln recognized the risks of having currency loaned to the government at high interest rates. He was well aware that increasing interest rates on borrowed funds would increase the United States' debt. Does this sound familiar? It should, because the Federal Reserve is exactly what is driving this country's debt even higher today.
Jackson, Lincoln, Garfield, and Kennedy were all aware of the dangers of high-interest loans to the government as the true cause of the US national debt. A debt that will only worsen and push this country's ability to prosper further away from reality. In other words, the United States' economic and financial stability remains gravely threatened. Today, it is also important to note that this country's debt, and the absence of the gold standard, is the primary reason why disposable incomes are at all-time lows.
Following the Battle of Gettysburg, Congress repealed the Legal Tender Act and reinstated the previous gold and silver-backed currency loaned to the US government with interest by major banks. The banks' influence persuaded Congress to repeal the Legal Tender Act. And, like the Rothschilds who controlled the Bank of England, they now control much of the financial policies of the United States. Today, the Federal Reserve and Wall Street financiers control the monetary policies of the United States, as do far too many members of Congress.
With a better understanding of our banking system, we can see how Americans' future is linked to the nation's debt. A debt that is only increasing. With past and current wars around the world, as well as the current Administration's total ignorance of the financial crisis we are in, this nation's future is in grave danger. It could be argued that President Nixon's decision to remove the dollar from the gold standard in 1972 was a financial blunder and effectively killed the US dollar.
The 47th anniversary of President Nixon's financial blunder occurred on August 15th. The blunder that severed the dollar's final link with gold. According to some, no single action taken by Nixon had a more profound and irreversible impact on the American people. A dollar was previously worth 1/35th of an ounce of gold. The end of the gold standard by Nixon marked the beginning of the worst 47 years in American economic history. And it appears that the next 40 years will be a continuation of the previous 47.
By taking this action, Nixon promised that the requirement of maintaining the dollar's gold value would enable the Federal Reserve to use monetary policy to increase the general prosperity of the American people. We were also promised that manipulating the quantity and value of the dollar would prevent costly recessions, increase employment, and generate economic growth. On a global scale, we were also promised that depreciating the dollar would reduce our trade deficit and improve the overall economy.
We have experienced numerous recessions and the worst financial disaster since the Great Depression since 1972. Our unemployment rate has ranged from more than 15% to around 5.5%. The unfortunate reality is that wages have fallen in relation to the cost of living. Our economic performance since 1972 has been dismal in comparison to the post-World War II economic boom that lasted until 1972.
For the past 47 years, economic growth has averaged just under 3%. If the gold standard had survived, our economic growth would have reached 4% or higher. We must emphasize that a 4% economic growth rate always results in more employment and higher wages. A 3% growth rate only maintains the status quo and results in an economy that is $8.5 trillion smaller. All of this means that if Nixon had maintained the gold standard, medium family incomes would be 50% higher today, or roughly $75,000 per year.
This also means that the tax base for all federal, state, and local governments would not be subject to the budget shortfalls that currently plague every budget in the country. Our current fiscal challenges would be eliminated, and our economic future would be far more stable and secure. The dollar has lost more than 75% of its value over the last 47 years, and we still have a trade deficit of more than $400 billion.
When we look back before 1972, a dollar only goes as far as $.20 today. And, with little reason to believe that the dollar will retain even this pitiful value, the average American family has no meaningful way to save for their children's education or their own retirement. Millions of Americans are facing financial insecurity today, with little hope that their economic fortunes will improve.
A gold standard is required to keep the dollar's purchasing power stable. Inflation was less than 2% from 1948 to 1967. Interest rates were low averaging less than 4% which provided a reasonable cost to borrowers and a fair return to savers. Inflation rates today continue to rise year after year. It is also interesting to note that had the dollar kept it's value to 1/35th of an ounce of gold a barrel of oil would sell for less than $2.50. The whole notion of the energy crisis and the more intrusive government regulation dictating usage are based on the illusion that the price of oil has gone up more than 30 times when in fact it is the dollar whose value has fallen relative to gold, oil, and all other goods and services over the past 47 years.
Since 1972, the United States has been in the grip of a crippling economic and financial crisis. The deviation from a sound dollar today can and must be corrected if we are ever to regain the economic growth and prosperity similar to what this nation experience for the 30 years prior to 1972. Many of the baby boomer generation have recollections of how their parents handled financial affairs. Disposable incomes were plentiful and that dollar went so much farther than it does today all because the dollar was backed up by gold.
A much different set of circumstances exist today. More sober, more unsettling, and even a more sinister approach has taken over the majority of families spending habits has arisen. The greenback is not worth what it was compared to back in the early 1960's. To restore the value of the dollar and reestablish it's true worth is to have the gold standard reinstated whereby every fiscal transaction is geared to insure that more disposable incomes are available for all. The surest way is to like Lincoln did is to have the Treasury and not the Bank of New York or today's Federal Reserve print those all important greenbacks, interest free.
To this day having the Federal Reserve solely responsible for printing this nations currency and not the Treasury Department as stated in our Constitution with the gold standard not backing up our currency the American people are held hostage by this nations debt with all the accrued interest each and every one of us has to pay. Consequently the Greenback dollar will only continue to keep Americans disposable incomes from increasing. what is urgently needed is to put the Treasury Department in charge of our currency interest free and not the Federal Reserve where the interest rates for all the dollars loaned back to the US government has only crippled the United States financial and economically."""