Over many decades, America has been fundamentally transformed by debt, money-printing, and globalization. As a result, most investors believe an economic catastrophe is slowly unfolding. One thing is certain. The next depression will not resemble the Great Depression. The United States no longer resembles the independent country it was in the 1930s and 40s. During those lean years, America was a creditor-nation; Americans had almost no personal debt; and the U.S.A. was a manufacturing dynamo.
WHEN THE DOLLAR WAS A DOLLAR
During the Great Depression, the United States had balanced trade accounts and trade surpluses. The nation was not involved in war and had no foreign military bases. America was self-sufficient and supplied manufactured goods to the rest of the world. The welfare-state did not exist as we know it today (most of the population ‘lived off the land’ in rural areas). The dollar was 100% convertible to gold in foreign exchange (1792-1971).
In 1933, money-printing by the Federal Reserve was constrained by the physical supply of gold and silver (the Constitutional dollar was backed by monetary metals). Back then, all Americans owned silver and/or gold coins. The paper dollar had tremendous purchasing power; a person could have exchanged a one dollar bill for a silver dollar or a twenty dollar bill for a $20 Gold Piece. (It now takes 65 times more paper dollars to buy the same 1 oz $20 gold coin above).
THRIFT • SAVINGS • SOUND MONEY
Over the centuries, the virtue of thrift had been deeply ingrained into the American psyche. The following proverbs were quoted universally:
“A penny saved is a penny earned.”
“Neither a borrower nor a lender be.”
“Never spend your money before you have it.”
“Look after the pennies and the pounds will look after themselves.”
UNLEASHING ECONOMIC DESTRUCTION
The frugal habits of Americans began to change after silver coins disappeared from circulation and the dollar was no longer backed by gold [Aug. 15, 1971]. Destructive forces were unleashed just as John Maynard Keynes had warned:
“There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”* ~John Maynard Keynes~
As a result of the debauched currency, the hidden forces of economic law moved the nation in a new direction. Previous generations had created, saved, and invested their own capital to expand enterprises. After the dollar was debased, businessmen began to rely less on private capital. They turned to the banks, instead of saving for business expansion. Over time, the bank (debt) became the third party in most transactions.
Debt began to play a new role in the lives of Americans. The savings rate began to decline; and people began using bank credit cards to fund consumption debt.
AMERICA 2018 – STATE OF THE UNION
Today, most Americans struggle with personal debt; many are upside-down on mortgages; and almost no one owns gold or silver. The majority live in urban areas and cannot produce food. In a few years, 2/3 of the population will be state-dependent in some way. Public employees now out-number manufacturing employees by 2 to 1 (only 10-11% of the workforce is involved in manufacturing).
The U.S. is now dependent on foreign countries for most manufactured products. Our staggering trade deficits are paid with borrowed money. Many cities and states have enormous, unfunded obligations. The nation is involved in two wars (plus multiple covert-operations) and has more than 700 military bases around the world. The U.S. pays the bills with money-printing; the Federal Reserve digitally creates credit by the trillions of dollars.
BEFORE “FREE TRADE”
(United Nations-managed trade)
In the early days of the Republic, the Founding Fathers knew manufacturing would be the key to the nation’s economic independence. (Before the Revolution, colonists had mainly exported raw materials and imported manufactured goods.) Right from the beginning, our forefathers promoted impartial trade with all nations, and created policies that changed the direction of the economy.
The new Congress established tariffs on foreign merchandise, passing the Tariff Act in 1789. Why would they do that and what were the results?
INTER-STATE COMMERCE SKY-ROCKETED.
As a consequence of the legislation, people decided to produce the stuff themselves — rather than depend on foreigners and pay the import tax. The strategy created a production boom. Equipment was invented to save work, save time, and cut costs. Competition was fierce to develop new and better products. Customers ended up paying less; and inter-state commerce sky-rocketed.
A POWERFUL MIDDLE CLASS DEVELOPED.
America’s export economy grew by leaps and bounds. For the next 150 years, customs duties produced 50-90% of all federal revenues (no income tax until 1913). From sea to shining sea, a powerful middle class developed because products were MADE IN U.S.A.
ISOLATIONISM? ABSOLUTELY NOT.
In no way did U.S. economic policies lead to isolationism. The robust manufacturing base led America to supply 40-42% of ALL manufactured products used by the world! Before “Free Trade” (U.N. Treaties/ Trade Agreements, quotas, sanctions, favored nations), the U.S. traded with nations impartially. America supplied the lion’s share of its domestic manufacturing needs and exported high-quality MADE-IN-U.S.A. products to the world.
MANUFACTURING IS A WEALTH MULTIPLIER.
Tremendous wealth was created by manufacturing products using domestic raw materials. Before the dollar became the “reserve currency,” America had become the greatest creditor-nation of all time. The U.S. Treasury held title to more than 80% of the world’s above-ground, officially-held gold reserves (more than 20,000 tons after World War II). The nation did not print money to pay trade deficits; from 1792 until 1971, the United States settled all trade imbalances with gold.
UNITED NATIONS • BRETTON WOODS
In 1944, the United Nations Monetary and Financial Conference convened at Bretton Woods, New Hampshire. Conferees pegged national currencies to the dollar, and adopted a plan to establish a world monetary system.
International trade would be centrally ‘managed’ within a framework of ‘United Nations governance’ by agencies such as the World Court, World Bank, and International Monetary Fund (IMF). In the future, the world economies would be ‘integrated’ and made ‘inter-dependent’ by a series of U.N. trade agreements.
THE END OF ECONOMIC NATIONALISM
At the close of the Bretton Woods Conference, Henry Morgenthau, Jr., Treasury Secretary of the United States, said the establishment of the United Nations banking system marked the end of “economic nationalism.”
By the incremental loss of economic independence, countries such as the United States would gradually lose national sovereignty (nationhood). Monetary integration, economic inter-dependence, and global government would be achieved by U.N. treaties — beginning in 1948 with the General Agreement on Tariffs and Trade (the 22,000-page GATT treaty).
UNITED NATIONS “MANAGED TRADE”
National economies were ‘integrated’ and made ‘inter-dependent’ in phases. In 1994, the U.N. North American Free Trade Agreement was “fast-tracked” and signed by President Clinton. NAFTA signaled the beginning of a manufacturing exodus. Why? Super-cheap labor, low taxes, fewer regulations, lower prices, lower quality, and no employee retirement or healthcare. Millions of America’s industrial jobs vanished [and millions of U.S. government workers were hired]; production declined; and debt ballooned.
In 1995, the General Agreement on Tariffs and Trade [U.N. GATT Treaty] was replaced by a sweeping United Nations ‘management system’ called the World Trade Organization [“WTO”]. In the decade leading up to the 2008 crash, the U.S. manufacturing exodus accelerated. Almost 50,000 manufacturing plants (with 500 or more employees) moved operations off-shore. Domestic, high-tech manufacturing began to disappear.
Image courtesy of The Atlantic.
A CONSUMPTION ECONOMY IS A DYING ECONOMY.
Until credit froze worldwide on Aug. 9, 2007 and markets crashed in 2008, people enjoyed the illusion of growth and prosperity as a result of easy credit at low rates. The last ten years of Quantitative Easing (QE), 0% interest rates, and government programs have helped to disguise the structural increase in unemployment. More than 95 million Americans are no longer counted in the work-force; an all-time high number of young, eligible workers do not have jobs.
From 1900 to 1971, the U.S. had balanced trade accounts and trade surpluses. But in 45 of the last 47 years, we have had trade deficits. America has undergone a fundamental transformation:
from economic independence to economic dependence
from the greatest manufacturing economy to a consumption economy
from the greatest creditor–nation to the greatest debtor-nation in the history of the world.
Today, the U.S. exports mainly raw materials (wheat, fertilizers, coal, tobacco, meat) as we did 300 years ago.** As a result of switching from a manufacturing economy to a service/ consumption economy, America’s preeminent position among the nations has slipped; wages and the economy are stagnant; and the average person’s standard of living is falling.
It is not an accident the U.S. has become economically dependent and indebted beyond belief. Lawmakers debased the dollar and hitched America’s wagon to U.N. Global Governance.
United Nations agencies are establishing world government –incrementally– by treaties that govern much more than trade. According to the World Court, U.N. treaties have the force to over-rule U.S. law (trade agreements over-ride the Constitution’s Bill of Rights).
The following U.N. trade agreements serve to destroy America’s sovereignty and national autonomy: World Trade Organization [WTO] (Marrakesh Agreement, Uruguay Round, etc.); North American Free Trade Agreement [NAFTA]; Central America Free Trade Agreement[CAFTA]; Security and Prosperity Partnership of North America [SPP]; Trans-Pacific Partnership [TPP]; Korea Free Trade Agreement; Columbia Free Trade Agreement; Panama Free Trade Agreement; Transatlantic Trade and Investment Partnership[TTIP], [TISA], etc.
THE FOUNDERS & THE CONSTITUTION
Closed-door trade negotiations by un-elected bureaucrats are rapidly replacing open government by our own elected representatives. However, the U.S. House of Representatives alone has Constitutional authority to regulate commerce with foreign nations. The Treaty Provision of the U.S. Constitution requires two/thirds Senate approval [Article II, Section 2].
In 1796, President George Washington warned against foreign alliances in his “Farewell Address:”
“The great rule of conduct for us in regard to foreign nations is in extending our commercial relations… our commercial policy should hold an equal and impartial hand… It is our true policy to steer clear of permanent alliance with any portion of the foreign world….” Washington’s famous Farewell Address.
Thomas Jefferson was America’s first Secretary of State (1789), Vice President (1796), and President of the United States. In his first Inaugural Address, Jefferson outlined “the essential principles of our government,” in which he emphasized the danger of international entanglements and the preservation of “constitutional vigor:”
“…peace, commerce, and honest friendship with all nations – entangling alliances with none….” President Thomas Jefferson, Inaugural Address, March 4, 1801.
by Denise Rhyne
* John Maynard Keynes, The Economic Consequences of the Peace, pp. 148-149, 235-236, (London: McMillan/ St. Martin’s Press for the Royal Economic Society, 1919, 1920, 1971).
** U.S. CONSUMPTION ECONOMY/ PCE [Personal Consumption Expenditures]: From 1998 through the third quarter of 2007, government spending plus consumer spending [81.3%] equaled 96% of the growth in GDP; U.S. exports plus business investment accounted for only 3% of GDP growth. In the 25 yrs leading up to the 2007/ 2008 debt crisis, consumer spending [debt] accounted for 82.5% of real GDP growth. Each year, PCE grew 3.5% continuously compounded. [William Emmons, Jan. 2012, Federal Reserve Bank of St. Louis]
WHO WERE THE BANKERS AT BRETTON WOODS (see the first-ever list): http://www.youshouldbuygold.com/who-were-the-bankers-at-bretton-woods/
FEDERAL RESERVE DOUBLE WHAMMY: http://www.youshouldbuygold.com/federal-reserve-double-whammy/