Trust in Government is based on their ability to maintain a stable currency. When Government takes it upon themselves to print more dollars than the country can absorb a death spiral is set in motion.  Printing dollars in itself is not the number one factor in determining the support of the dollar.  If the dollars were only available in the United States, more dollars in circulation would have minimal effect on its ultimate value. People will have more dollars to spend, but a person would not buy an item for more than it cost the previous day just because of the ramping up of thegovernment printing press. The typical buyer with more dollars to spend would most likely purchase another item with the excess dollars. Many more people would be employed as a result of the increased demand for goods. Production will meet the demand and supply will be in balance.

The other side of the story is trade. Our trading partners accumulate dollars when we buy their goods. They in turn rely on us to purchase their goods. In a perfect world when we purchase the same amount of goods that another country buys from us, the books are balanced. On the other hand, when we purchase more goods from another country than we sell to them there is an imbalance. The question then becomes, what does the other country do with our dollars. They have a choice, they can invest the excess dollars in our long term bonds, treasury bills or  treasury notes or they can exchange our dollars for another countries currency that needs it to buy our goods and will enable them to buy their goods. A circuitous route indeed.  A short economics lesson follows: Country A has excess dollars and Country B is offered these excess dollars, to make it attractive for Country B to buy these excess dollars, Country A reduces the market price or the exchange rate of the dollar. This exchange rate is set by the price of gold where all currencies are convertible to. Hence a devaluation takes place.   When this happens, the surplus dollars become less valuable as the demand for them decreases.

As time passes and more dollars flow out of the country than in; balancing of the books become harder. A very tenuous situation begins to develop as our bonds, notes, bills become due. We owe our trading partners dollars and of course we have plenty of them to pay off our obligations. Remember, we can print up dollars at anytime, that is the problem. And our creditors become more vigilant, they now require higher and higher interest rates as a plethora of dollars begin to circulate. Although our debts are backed by the full faith and credit of the United States, this is only a verbal commitment.  This is where the GOLD comes in.

In 1933, Franklin Delano Roosevelt, closed the GOLD WINDOW. Prior to FDR doing this, it took $20 to buy an ounce of gold. Due to the worldwide economic contraction in the early 1930's the demand by our trading partners for our goods diminished. Their displeasure with buying our debt also became acute. Previously or dollars could be exchanged for gold at $20 per ounce, FDR put a stop to this. To back up a minute, the reason gold is so important is based on the fact and the one fact only, gold cannot be printed. Gold is accepted as a medium of exchange throughout the world. In hard times and good times the value of gold can be interchanged with all currencies of the world. The value of the gold via a particular currency is based on the faith one has in the stability of that currency. For instance if one has less faith in a currency, the higher the price of gold and vice versa.


Click on the youtube video for a short history lesson. http://www.youtube.com/watch?v=3_ex0sTsb_I

The words of FDR in 1933.  "By virtue of the authority vested in me by section 5(b), of the act of October 6,1917, (Trading with the Enemies Act of WW I) as amended by Section 2 of the act of March 9, 1933………., I Franklin D. Roosevelt, President of the United States of America, do declare that a period of national emergency still continues to exist and pursuant to said section do hereby prohibit the hoarding of gold coins, gold bullion, and gold certificates within the continental United States by individuals, partnerships, associations, and corporations…"

"All persons are required to deliver on or before May 1, 1933, to a Federal Reserve Bank or branch or agency thereof or to any member bank of the Federal Reserve system all gold coins, gold bullion, and gold certificates now owned by them or coming into their ownership on or before April 28, 1933…………..Until otherwise ordered, any person becoming the owner of any gold coin, bullion, or gold certificates after April 28, 1933 shall within three days after receipt thereof, deliver same in the manner described………"

He initiated what was, and maybe still is, the largest redistribution of wealth in US history. When he was elected, the official price of gold was $20/ounce. By 1934 the official price was revalued to $35/ounce, an increase of 75%, or in other words FDR devalued the dollar by 40% overnight! Only the wealthy insiders escaped this, they were forewarned and sent millions of BU $20 pieces to safe storage in Europe. Otherwise, gold would be much rarer than it is today - but we don't know how many collectors sent gold over seas and never saw it again.

There was no law "on the books" which allowed the President to confiscate gold in 1933. He also lacked the "dictatorial" powers to  change the law, but he and his advisers decided to anyway by referring to the  "Trading with Enemies Act" and twist it into a law which would allow him to submit a bill to Congress granting almost complete control over the private ownership of gold. The bill was submitted to Congress and passed in 40 minutes without relevant discussion and almost without anyone reading it.

Of major importance here is that foreign nations were still able to buy our gold for $35 per ounce. This all stopped in 1971 when President Nixon, closed the Gold Window, our trading partners were no longer able to exchange the dollars they held for our gold. The end result was massive inflation throughout the seventies. Interest rates sky rocketed to over 20%, house mortgage to 15% and certificates of deposit were paying over 10%. Inflation was rampant.  U.S citizens were given the right (this is almost insane today to believe this, but they were) to own gold again in 1975. This seems like a story from the Twilight Zone, that it was illegal to own gold for 42 years in coin an bullion form. Wow!

Based on the passed history of gold we can expect a cataclysmal event to sneak up on us. What it will be is undetermined at this point in time, but it will affect our currency and ultimate world wide status. When this happens, you the American Patriot need to have insurance in the form of gold to be protected against a devalued dollar. As the dollar becomes less acceptable to our trading partners, their exports to us will be more expensive. This will impact your way of life. There may be a time where the American Citizen will only exchange goods in hard currency. You may ask what is hard currency, it is silver, gold, platinum or palladium. Any metal that acts as a medium of exchange and is a storer of value. It also has to be acceptable by a trading partner.  Be prepared, our present course is taking us into a direction that points to catastrophe. Make sure you understand it. Totalitarianism can emerge here in American, it is now time for the Patriot to act before it is too late. REMEMBER FDR TOOK AWAY THE RIGHT TO OWN GOLD, IF THEY DID IT ONCE, IT CAN BE DONE AGAIN. THE POWER OF THE GOVERNMENT MAY SHOCK YOU AS IT DID TO THOSE IN 1933. WE ARE HEADED IN THE SAME DIRECTION AGAIN. WATCH YOUR BACK!

 American Silver Eagle

Some facts taken from:
The Great Gold Conspiracy by Ed C. Lee (Lee Certified Coins LTD)